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Reliance launches India’s biggest rights issue to cut debt

Reliance Jio.jpg

Reliance Industries Limited has launched India’s biggest rights issue to date to reduce the US$44.4 billion it holds in outstanding debt.

The company is hoping to wipe up to one third off its debts by issuing one equity share for every 15 shares held by eligible shareholders. If successful, overall debt will also decline by 16%.

According to its most recent financial results, RIL’s cash and cash equivalents stood at $23.2 billion as of March 31.

Elsewhere, the financial results brought strong growth for RIL’s digital services business.

The subscriber base as March 31 was at 387.5 million, a 26.3% YoY growth, pushing Standalone Net Profit up 88% year over year.

Total wireless data traffic during the quarter saw 34.3% YoY growth and total voice traffic during the quarter up 21%  year on year.

Mukesh D. Ambani, chairman and managing director of Reliance Industries Limited said: “Today I am pleased to announce that despite the daunting challenges arising from the fallout of the global pandemic, our company has once again delivered a resilient performance for FY 2019-20.

“Our consumer businesses further strengthened their leadership positions and recorded robust growth on all operating and financial parameters during the year. Both Retail and Jio, continue to work towards providing superior products and services to Indian consumers,” he added.

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The firm reported zero outages as a result of Covid-19 and strong network performance, “despite disruptions due to high degree of virtualisation and network automation. Traffic surge has been handled with combination of capacity augmentation and technology.”

The results also highlighted its recent $5.7 billion deal with Facebook, which has seen the launch of a WhatsApp backed online grocery store. The value if Jio Platforms Ltd post deal now places it among the top five listed companies in India by market capitalisation within just three and half years of launching commercial services.

The report read: “The partnership between Facebook and Jio is unprecedented in many ways. This is the largest investment for a minority stake by a technology company anywhere in the world and the largest FDI in the technology sector in India.

Looking at the performance of the wider company, RIL achieved a consolidated revenue of $ 87.1 billion, an increase of 5.4% on the previous year. the increase in revenue is primarily on account of higher revenues from the Consumer businesses, while the Digital Services business and Retail business recorded an increase of 40.7% and 24.8% respectively in revenue, compared to the previous year.

 “We are fully committed on our investment plans in our consumer businesses and new initiatives. We are at the doorsteps of a huge opportunity and our rights issue and all other equity transactions will strengthen Reliance and position us to create substantial value for all our stakeholders,” Ambani said.

He added: “Indeed, converting the corona crisis into a new opportunity, Reliance will innovatively step up its plans to create much greater societal and shareholder value. I am confident that our India and Reliance will emerge stronger in the post Covid-19 world.” Corona Haarega, India Jeetega!”

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