‘RIL gearing up for global buys, telecom roll-out’

Flush with billions of dollars of cash, Mukesh Ambani-led Reliance Industries may soon announce overseas acquisitions and a faster roll-out of its telecom services.

“Over the next few months, we anticipate positive news flow on several fronts including broadband roll-out and potential acquisitions, as well as the gas business,” global financial services major HSBC said in a brokerage report on Reliance Industries (RIL).

There are expectations of a number of major announcements from RIL chief when he addresses the company’s shareholders at its Annual General Meeting on June 3.

Speculations are rife that Mr Mukesh Ambani would announce major business initiatives and investment plans for RIL’s various existing businesses as also new ventures in telecom, power and financial services.

Earlier in April, the company said in an investor presentation that it would pursue both organic and inorganic growth opportunities to meet its growth aspirations.

Besides, it also disclosed an “investment programme of over $10 billion to cater to domestic market” in petrochemicals business.

Earlier at an investor conference in February, RIL had projected investments totalling $25-30 billion (Rs 1,10,000-1,35,000 crore) for the next five years in its various businesses, including energy and telecom sectors.

The company has already identified ‘new partnerships’ that will be the core vehicle for its growth initiatives going ahead, after successfully entering into over 50 partnerships over the past five years, including a tie-up with global energy giant BP.

Commenting on RIL’s sale of 30 per cent stake in its 23 oil and gas blocks to BP, HSBC said that RIL faces an “abundance of cash” situation post this transaction.

“RIL has already received $two billion and another $5.2 billion is expected to come in over the next 12 months.

“We believe RIL will be more eager to deploy this surplus cash, rather than return it to shareholders. Hence it is possible there will be announcements regarding acquisitions and the potential faster roll out of its telecom venture,” it added.

RIL’s cash balance nearly doubled to a record high level of over Rs 42,000 crore in the last fiscal ended March 31, while its very low debt-equity ratio can allow the group to borrow further funds for various businesses.

Last year, the company had raised $1.5 billion of debt in dollar-denominated bonds at very competitive rates and talks are already on for overseas borrowing of an equal amount.

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