Wondering why Reliance is all around the news when all other businesses are reeling under the Pandemic?
Read on as we unravel how Reliance achieved a near-impossible feat and pulled off Corporate India's largest deleveraging drives.
Reliance Industries Limited (RIL) has turned net debt free by raising a staggering Rs 168,818 crore in just two months through the country’s largest ever rights issue and a series of stake sales in its technology services arm Jio Platforms.
Over the past few years Ambani had come under shareholders ire for rapidly rising debt balances and negative cashflows. The situation was so bad that the India's biggest company was downgraded by several brokerages on debt concerns.
Then in August last year, Chairman Mukesh Ambani took to the stage at Reliance's 42nd Annual General Meeting and announced his ambitions to drive the company's net debt to zero by March 2021.
On Friday, Ambani announced that the company had become net debt-free way ahead of the schedule—almost 9 months before the set target.
The company followed a two pronged strategy to reduce its debt. First, it raised Rs. 115,693.95 crore through stake sales in Jio Platforms by 11 deals, including a 9.99 per cent stake sale to Facebook which was followed by giants like Vista Equity, KKR, UAE's Mubadala and Saudi Arabia's PIF among others.
Second, it raised over Rs 53,000 crore via India's largest ever rights issue and the largest globally by a non financial company in the last 10 years.
As a result of its blockbuster fundraising, RIL became the first Indian company to cross $150 billion in market cap when it made the announcement on Friday.
With the debt concerns assuaged, Ambani is all set to lead Reliance through it's golden decade and simultaneously reward it's shareholders with lots of bonus issues, dividends and stock buybacks.
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