- Jio Platforms may not declare dividends in the future as per its DRHP for IPO
- The company may retain earnings to fund operations and growth instead of paying dividends
- Jio has not declared or paid any dividends since its incorporation to date
Mukesh Ambani-led Jio Platforms Ltd. has flagged that it may not be able to declare any dividends in the future in the draft red herring prospectus (DRHP) for its initial public offer on Friday.
The company underlined that it may retain all or part of its earnings to fund operations and growth, and thus there is no assurance that dividends will be declared or paid.
If dividends are not paid, any return on investment will depend solely on appreciation in the market price of the equity shares, which is not guaranteed, Jio said, adding that in case dividend is declared, it would be subject to applicable taxes.
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The telecom major pointed out that till date it has neither declared nor paid any dividends on the equity shares since incorporation, and any future plans to do so will depend upon its earnings, financial condition, cash flows, working capital and capital expenditure requirements among other things.
"The company has neither declared nor paid any dividends on the Equity Shares since incorporation. Any future dividends will depend on our earnings, financial condition, cash flows, working capital and capital expenditure requirements, compliance with restrictive covenants in our financing arrangements, and applicable Indian law," Jio stated in its DRHP.
Jio IPO details
RIL's telecom subsidiary will issue up to 27 crore fresh shares to raise funds via its IPO, according to the DRHP. The issue price for Jio IPO to be determined via book building process, added RIL. Reliance Industries Ltd. holds 66.43% of paid-up equity share capital of Jio Platforms Ltd. (JPL). Meta and Google hold 17.71% out of the balance 33.57%.
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Key Risks In IPO
Reliance Jio has identified its dependence on Reliance Group companies, the need to continuously secure telecom spectrum and licences, rising competition from emerging technologies such as satellite communications, and the capital-intensive nature of its business as some of the key risks in its draft red herring prospectus for its proposed initial public offering.
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