Reliance to raise Rs 53,125 cr via 1:15 rights issue at Rs 1,257 per share

Billionaire Mukesh Ambani's Reliance Industries Ltd (RIL) on Thursday announced fundraising of Rs 53,125 crore by way of a 1:15 rights issue, the first such issue in nearly three decades, as it steps up efforts to pare debt.

One share will be offered for every 15 shares held at Rs 1,257, a 14 per cent discount to the closing price for April 30.

In its earnings statement for fourth quarter, RIL said this would be India's biggest rights issue.

The move comes within days of RIL agreeing to sell a 9.99 per cent stake in its digital platform to Facebook Inc for $5.7 billion or Rs 43,574 crore.

Ambani had in August last year unveiled plans to cut debt to zero by 2021. As part of this plan, RIL has been seeking strategic partnerships across its businesses while targeting to deleverage the balance sheet. With the rights issue, Facebook and BP deal, RIL now aims to raise Rs 1.04 lakh crore in this quarter, which experts see as part of deleveraging exercise.

At the end of March quarter, RIL had an outstanding debt of Rs 3,36,294 crore. It also had cash in hand of Rs 1,75,259 crore, bringing the net debt position to Rs 1,61,035 crore.

RIL said its board also approved a dividend of Rs 6.50 per equity share for the financial year ended March 31, 2020.

O2C hive-off

Meanwhile, the company said that its board has approved hiving off its $75 billion worth oil-to-chemicals business into a separate division to enable the sale of 20% stake in the unit to Saudi national oil company Aramco.

The hiving off will be subject to the approval of the National Company Law Tribunal.

Profits tank

During the fourth quarter of FY20, the net profit of the slipped 37% to Rs 6,546 crore -- way below the street estimates and lowest in three years -- as a rise in consumer-facing business was not enough to shield the firm from fall in the petrochemical business. The profit was also down due to one-off spending.

In the fourth quarter, the company said it had an exceptional item of Rs 4,267 crore which dented the profit.

Revenue fell 2.5% to Rs 151,209 crore.

Net profit excluding exceptional items increased by 3.7% to Rs 10,813 crore, it said.

This is the second quarter in 2019-20 that saw a dip in profit. It had reported a quarter-on-quarter decline in Q1 FY20.

Jio shines

Reliance Jio, which is now the world's largest telecom operator with 387.5 million subscribers, has reported a stellar 72.7% sequential growth in Q4 profit at Rs 2,331 crore.

Subscriber base at the end of December 2019 was 370 million.

Jio's topline grew by 6.2% sequentially to Rs 14,835 crore in Q4, while at the operating level, EBITDA increased 10.7% to Rs 6,201 crore.

Commenting on the results, Ambani, chairman and managing director of RIL, 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."