Reliance Industries: Recent developments

Reliance Industries Ltd. (RIL) was engaged in discussions with Aramco and had offered to sell it at least 20 per cent stake in a special purpose vehicle (SPV). The SPV was focused on covering refining, petrochemicals and marketing, with a special emphasis on expansion. However, the talks have ceased over issues concerning the valuation and structure of the deal. Reliance is seeking a higher valuation and wishes to transfer the debt of the holding company to the new SPV, as per news reports.

RIL reported a drastic drop in free cash flows as they declined to the lowest levels seen in the last 11 years. The drop in free cash flows is primarily on account of rising capital expenditure. As a result, the company required more time to convert its investments in inventory into cash. As of June 30, the company reported an outstanding debt of Rs. 2.88 trillion with cash and cash equivalents coming in at Rs. 1.32 trillion.

Recently, the company jumped 42 places to become the highest-ranking Indian corporate on the Fortune Global 500 list. As such, it displaced Indian Oil Corporation (IOC) from its position.

Furthermore, sources report that RIL is also looking to increase its stake in EIH by purchasing the same from ITC. Presently, RIL is in a position to purchase 6 per cent stake in EIH from ITC without prompting an open offer.

On Thursday, the shares of RIL opened at Rs. 1,267.95, and hit a high and low of Rs. 1,268.80 and Rs. 1,238.50, respectively. At 12:23 pm, the stock was trading at Rs. 1,242.60, down 1.29 per cent.