Agreement between Facebook and Jio
Importantly, Reliance Industries has set a target of being completely debt free by March 2021.
Experts say the deal will fetch Reliance about Rs 38,000 crore after capital gains and income tax.
However, this is not the biggest deal in terms of Reliance. Earlier in 2011, Britain’s BP PLC bought a 30 per cent stake in RIL’s oil and gas block for about 7. 7.2 billion. The company then withdrew some of its investments due to heavy losses in oil exploration and production.
At the Annual General Assembly (AGM) of Reliance Industries on August 11 last year, Mukesh Ambani told shareholders that the company had invested Rs 5.4 lakh crore in the last five years. He said that Rs 3.5 lakh crore of this is being spent on Geo. In addition, about Rs 1 lakh crore has been spent on expansion in the petrochemical business.
But due to this massive investment, the debt burden on Reliance has increased six-fold in the last decade to Rs 3.06 lakh crore. As of December 2019, Reliance had about Rs 1.53 lakh crore in cash, so the company has a net debt of about Rs 1.53 lakh crore after it was taken out. Mukesh Ambani told the AGM that he wanted the company’s debt to be zero by March 2021.
Taking steps in this direction, Reliance first formed two Infrastructure Investment Trusts – Digital Fiber Infrastructure Trust and Tower Infrastructure Trust – in 2019. Reliance Industries has transferred Reliance Jio’s infratel fiber and tower business and loans worth about Rs 1.07 lakh crore to the two trusts.
In another deal, Reliance Industries will sell about 20 per cent of its oil and gas business to Saudi Arabian giant Aramco for Rs 1.1 lakh crore. However, the deal could be delayed due to the Corona crisis and the historic collapse in crude oil.
