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GROUP 4
ANKITA PANDEY (10SBCM
PRIYANKA LAL (10SBCM
SARIM RAHBAR (10SBCM
SAURABH RATHI
(10SBCM0534)
SUKESH BHATT (10SBCM
ACKNOWLEDGEMENT
The satisfaction and euphoria that accompanies the successfull completion of
any task would be incomplete without mentioning the names of the people who
made it possible, whose continuous guidance and support crown all efforts with
success.
It is a matter of great satisfaction and pleasure to present this presentation on
FINANCIAL ANALYSIS OF RELIANCE INDUSTRY LIMITED of refinery
industry.
I would like to thank Dr. P. Janaki Ramudu for his continuous support and
guidance for creating a conducive environment in the institute for purposeful
education.
EXECUTIVE SUMMARY
The project assigned to us was to study the financial analysis of any organization in the
country.
We decided to choose Indias largest company Reliance Industries Limited, by market
capitalization, in a sector that has rapidly grown in last few years.
Through this report, we try to analyse the financial environment in which RIL is operating.
Through a thorough financial analysis, we have tried to evaluate the ratios to the company
growth and performance in last five years.
The financial statement of last five years are identified, studied and interpreted in light of
companys performance, critical decisions of distributing dividends, issue of bonus
debentures and other current news are analysed and their impact of bottom line of the
company is assessed.
Finally we study ratio analysis, fund flow analysis and cash flow analysis of the company to
analyse the financial position of the company in last 5 years.
RELIANCE
INDUSTRIES
LIMITED
OVERVIEW
FINANCIAL
ANALYSIS
RATIO
ANALYSIS
Profitability Ratios
Gross Profit Ratio
2006
13.67
2007
13.95
2008
13.14
2009
13.35
2010
10.13
gross profit
8
6
4
2
0
2006
2007
2008
2009
2010
Gross Profit ratio indicates the efficiency of production and pricing strategies applied by a company. In
simple terms, it measures the margin left after meeting all the manufacturing expenses including labour,
material and other manufacturing costs i.e. the costs which are directly related to the business. Going by
this definition it can be assumed that service industry players will normally have higher gross margins as
compared to players in manufacturing industries. This is primarily because they have lower
manufacturing costs. Moreover, range of gross margin varies across industries. The ratio is calculated as
follows:
Gross Profit Ratio = Net Sales - Cost of Goods Sold / Net Sales
Trend of the gross margins over a period of time provides a better meaningful insight into the business
strength rather than a single year's gross margin figure. A company earning a consistently high gross
margin over couple of years is in a better position to face the downturn in business cycles. However, a
company earning lower but a consistent gross margin over time is considered to be more stable compared
to a company boasting higher but a volatile gross margin. Significant fluctuations in the gross margin
figure can be a potential sign of fraud or accounting irregularities.
After the world starting recovering from the economic slowdown the demand of the crude-oil and other
related products soar up heavily which led to great demand of these products and hence the sales of the
RIL grew heavily. Also most of the refinery products of RIL is exported and the petrochemical(polyester)
products is consumed heavily in India itself with heavy market share of 84% in Polyester industry. So
RIL gross profit ratio is stable from 2006-2009 and it was decreased due to increase in net sales which is
good sign for the company.
2006
11.13
2007
10.64
2008
14.45
2009
10.65
2010
8.35
net profit %
8
6
4
2
0
2006
2007
2008
2009
2010
Net profit margin measures the profit available for distribution amongst shareholders (both equity and
preference) after meeting all the expenses during the given period of time. It indicates the efficiency of all
business activities conducted during the given period, such as production, administration, selling,
financing, pricing, and tax management. It is calculated as follows:
Net Profit Ratio = Net Profit / Net Sales
Analysis of profit margins along with the study of a company's cost structure enables the analyst to
identify the sources of business efficiency.
In Reliance Industries the Gross Profit has increased by Rs.2114.21 crores whereas the Net Profit has
risen by Rs. 926.35 crores only; this is mainly due to the increase in current taxes that is to be paid,
though the provision for deferred taxes has been reduced considerably.
2006
2007
2008
2009
2010
17.37
18
15.68
10.96
11.35
ROCE of RIL
20
18
16
14
12
roce
10
8
6
4
2
0
2006
2007
2008
2009
2010
Return on capital employed shows the relationship between profit & investment. Its purpose
is to measure the overall profitability from the total funds made available by the owner &
lenders. The return on capital employed of 11.35% indicate that net return of Rs. 11.35 is
earned on a capital employed of Rs.100. this amount of Rs. 11.35 is available to take care of
interest, tax,& appropriation.
The return on capital employed is show-mixed trend, i.e. it increased in 2007 and finally
decrease in 2008,then increased in 2010.The highest is in 2007 i.e. 18% This indicates a very
high profitability on each rupee of investment & has a great scope to attract large amount of
fresh fund.
2007
2008
2009
2010
9.6
10.65
10.57
12.92
8.29
INVENTORY TURNOVER
8
6
4
2
0
2006
2007
2008
2009
2010
If we analyse the above graph the inventory turnover ratio of RIL was high in 2007-2008 but significantly
reduced in 2010 which is not so good sign. As low turnover ratio indicates the decrease in cost of goods
sold and the increase of average inventory. The inventory has increased up to Rs. 12,144.90 from sales of
Rs. 159.01 of inventories.
ASSET TURNOVER RATIO
2006
2007
2008
2009
2010
0.96
1.13
1.29
1.01
0.94
ASSET TURNOVER
2007
2008
2009
2010
This ratio is useful to determine the amount of sales that are generated from each dollar of
assets. As noted above, companies with low profit margins tend to have high asset turnover,
those with high profit margins have low asset turnover. Reliance Industries Limited asset
turnover seems to be relatively low, meaning that it makes a high profit margin on its
products. For companies in the retail industry you would expect a very high turnover ratio mainly because of cutthroat and competitive pricing.
Liquidity Ratios
Current ratio
Current ratio may be defined as the relationship between current assets and current
liabilities. This ratio is also known as "working capital ratio". It is a measure of general
liquidity and is most widely used to make the analysis for short term financial position or
liquidity of a firm. It is calculated by dividing the total of the current assets by total of the
current liabilities.
Formula:
Following formula is used to calculate current ratio:
Current Ratio = Current Assets / Current Liabilities
This ratio is a general and quick measure of liquidity of a firm. It represents the margin of
safety or cushion available to the creditors. It is an index of the firms financial stability. It is
also an index of technical solvency and an index of the strength of working capital.
A relatively high current ratio is an indication that the firm is liquid and has the ability to pay
its current obligations in time and when they become due. On the other hand, a relatively low
current ratio represents that the liquidity position of the firm is not good and the firm shall not
be able to pay its current liabilities in time without facing difficulties. An increase in the
current ratio represents improvement in the liquidity position of the firm while a decrease in
the current ratio represents that there has been deterioration in the liquidity position of the
firm.
2010
1.54
45%
0.94
9.3%
2009
1.06
8%
0.86
-3.3%
2008
0.98
9%
0.89
2.3%
2007
0.90
12.6%
0.87
6.4%
2006
1.03
-6.3%
0.93
-2%
1.8
1.6
1.4
1.2
1
RIL
Industry
0.8
0.6
0.4
0.2
0
2010
2009
2008
2007
2006
In managing its short term obligations RIL has an edge over the average of the industry over
the last 5 years .RIL does not have a very good current ratio, but it has a relatively better
current ratio as compared to that of the industry. RILs current ratio has steadily increased
since 2007, but there was a huge increase in the year 2010, when the growth was of 45%. RIL
has a high current ratio as compared with the average of the industry which implies that it has
the ability to pay its current obligations in time and when they become due.
QUICK RATIO
Quick Ratio = (Cash + Accounts Receivable + Short-Term or Marketable Securities) / (Current Liabilities)
Year
Quick
Ratio of
company
Quick
Ratio of
industry
2009
2008
2007
2006
2005
2004
2003
2002
2001
0.8182
0.4992
0.3301
0.5022
0.5502
0.3319
0.3314
0.6649
0.3003
0.4497
0.3071
0.2953
0.3523
0.3675
0.3004
0.3006
0.3828
0.2847
0.9
0.8
0.7
0.6
0.5
0.4
0.3
0.2
0.1
0
2009 2008 2007 2006 2005 2004 2003 2002 2001
INTERPRETATION:
For quick ratio the rule of thumb is higher is better and the ideal ratio is considered 1:1. All
the current ratio value of industry and company is below 1 and all the values are positive. The
cash position of industry and company is increasing year by year but the performance is quite
satisfactory in case of company not industry. As the quick ratio of company is increasing
from the year 2007 which indicate that the company is improving their performance. Quick
ratio of company is more than quick ratio of industry.
CASH RATIO
Cash Ratio = (Cash + Short-Term or Marketable Securities) / (Current Liabilities)
Year
Cash
Ratio of
company
2009
0.6783
2008
0.2033
2007
0.1088
2006
0.1708
2005
0.2634
2004
0.0218
2003
0.0155
2002
0.2611
2001
0.0244
Cash
Ratio of
industry
0.2725
0.0852
0.3344
0.0754
0.1013
0.1863
0.0610
0.0961
0.04572
0.8
0.7
0.6
0.5
0.4
0.3
0.2
0.1
0
2009 2008 2007 2006 2005 2004 2003 2002 2001
INTERPRETATION:
For the cash ratio the rule of thumb is also higher the better and the ideal ratio is 0.5:1. Cash
ratio of industry and company shows fluctuation trend and shows positive values. In the year
2009 the cash ratio is above 0.5 which shows that the company has earn sufficient of cash.
But the cash ratio of industry is below 0.5 which means the industry is not having enough
cash.
INTER COMPANY
ANALYSIS
INTER-COMPANY ANALYSIS
CURRENT RATIO
year
RIL
BPCL
HPCL
IOCL
2006
1.03
0.81
0.94
0.88
2007
0.9
0.73
0.88
0.85
2008
0.98
0.7
0.94
0.84
2009
1.06
0.6
0.98
0.76
2010
1.07
0.6
0.86
0.76
1.2
1
0.8
ril
bpcl
0.6
hpcl
0.4
iocl
0.2
0
2006
2007
2008
2009
2010
competitor of RIL i.e. BPCL, IOCL and HPCL has current ratio under 1 which suggests that
the company would be unable to pay off its obligations if they came due at that point. So by
analysing the current ratio we can observe that RIL has better position than its competitors.
RIL
BPCL
HPCL
IOCL
2006
21.9
3.77
4.72
17.78
2007
22.45
18.66
17.14
19.35
2008
21.64
14.4
12.61
18.34
2009
15.69
8.41
5.4
8.36
2010
13.37
12.2
11.68
21.62
25
20
RIL
15
BPCL
10
HPCL
IOCL
5
0
2006
2007
2008
2009
2010
The ratio of net income after taxes to total end of the year net-worth of the company is called
the RONW for that company. This ratio indicates the return on stockholder's total equity that
is invested in the business
RIL
BPCL
HPCL
IOCL
2006
65.1
8.04
11.97
21.04
2007
82.2
49.94
46.35
31.45
2008
105.3
43.72
33.48
29.2
2009
49.7
20.35
16.98
12.15
2010
49.7
42.53
38.43
42.1
120
100
80
RIL
BPCL
60
HPCL
40
IOCL
20
0
2006
2007
2008
2009
2010
Earnings per share, as it is called, are a company's profit after tax (PAT) divided by its
number of Outstanding (equity) shares. It is therefore measured as the portion of a company's
profit allocated to each outstanding share of common stock. EPS serves as an indicator of a
companys profitability. As we can see in graph RIL EPS is much higher than its competitors
indicating that RIL is in better position than its competitors.
ril
9069
11943
19458
15309
16236
bpcl
292
1806
1581
736
1538
hpcl
405
1571
1135
575
1301
iocl
4915
7499
6963
2950
10221
25000
20000
RIL
15000
BPCL
10000
HPCL
IOCL
5000
0
2006
2007
2008
2009
2010
It the net profit earned by the company after deducting all expenses like interest, depreciation
and tax. PAT can be fully retained by a company to be used in the business. However
dividend is paid to the shareholders. From this residue by analysing the above graph we can
see that PAT of RIL is much higher than its competitors from 2006-2010 which shows that
profit gain by RIL is much higher of its competitors. This clearly indicates that RIL is in good
position.
2009
0.63
40%
0.84
16.7%
2010
0.46
-27%
0.7
17%
2008
0.45
2.27%
0.72
4.35%
2007
0.44
0%
0.69
3%
2006
0.44
-4.35%
0.67
10%
0.9
0.8
0.7
0.6
0.5
RIL
Industry
0.4
0.3
0.2
0.1
0
2010
2009
2008
2007
2006
It's often used as an indicator of the amount of risk inherent in the shares of a particular
corporation .From the graph one can imply that the RILs debt equity ratio is not that good
as compared to the industry as its debt equity ratio is lower throughout the last 5 years. This
shows that the company is not enjoying good run in the industry. The industrys average is
good as it is more than 0.7 in the last 3 years. But RIL has even lower ratio than the industry,
which shows that RIL is not using much of debt as compared to equity.
2010
1.16
-4%
3.44
4.5%
2009
1.21
8.6%
3.60
4%
2008
1.39
3.7%
3.46
1.5%
2007
1.34
0%
3.41
2%
2006
1.34
-6%
3.34
7.5%
3.5
2.5
RIL
Industry
1.5
0.5
0
2010
2009
2008
2007
2006
RILs fixed asset turnover ratio is relatively worse than the industry constantly in the last 5
years. It shows that the company is not been able to utilize its fixed assets as efficiently as the
other firms in the industry. In the last 5 years the RILs average fixed asset turnover ratio is of
1.3 as compar4ed to industrys 3.4.
2006
17.52
2007
13.75
2008
9.8
2009
14.49
2010
14.97
Dividend Payout
Ratio
5
0
2006 2007 2008 2009 2010
The dividend pay-out ratio provides an idea of how well earnings support the dividend
payments. More mature companies tend to have a higher pay-out ratio.
A reduction in dividends paid is looked poorly upon by investors, and the stock price
usually depreciates as investors seek other dividend paying stocks.
A stable dividend payout ratio indicates a solid dividend policy by the
company's board of directors.
In the above figure, dividend payout ratio of RIL sharply decreased in 2007 and it reached its
lowest point in 2008 because RIL reduced the dividend due to financial crisis that hit across
the world.
FOREIGN EXCHANGE RESERVES
The company doesnt holds any foreign exchange reserves for the last 5 years.
MARKET CAPITALISATION
Year
2006
2007
2008
2009
2010
RIL
11095
8
19068
0
32917
9
23972
1
35145
0
BPCL
12781
HPCL
10957
IOCL
68229
10927
8371
46673
14868
8655
53132
13617
9112
46186
18680
10783
72049
400000
350000
300000
250000
RIL
200000
BPCL
150000
HPCL
IOCL
100000
50000
0
2006
2007
2008
2009
2010
The market capitalization of the company is defined as the market value of the number of
equity shares being traded in the market at that point of time .Across companies too,
the market capitalization has shown a net increase representing a good growth component in
the sector and the confidence of the buyers who continue to buy the stocks of such
companies.
Z SCORE
EBIT/TA
YEAR
RIL
HPCL
2006
0.12
0.07
0.18
0.16
0.14
0.12
0.1
0.08
0.06
0.04
0.02
0
2006
2007
0.13
0.15
2008
0.16
0.1
2009
0.08
0.11
2010
0.09
0.13
RIL
HPCL
2007
2008
2009
2010
One of the methods to find the Z-score is the ratio of earnings before interest and tax and total
assets. The standard value of this ratio is 2.3. In the above figure, this ratio is fluctuating year
after year for both RIL and HPCL. In 2008, RIL witnessed its highest value at 0.16, but in
2009, ratio of RIL declined drastically and HPCL surpassed RIL in 2010.
EBIT/TA
YEAR
RIL
BPCL
2006
0.12
0.08
2007
0.13
0.2
2008
0.16
0.16
2009
0.08
0.13
2010
0.09
0.13
0.25
0.2
0.15
RIL
0.1
BPCL
0.05
0
2006 2007 2008 2009 2010
As shown in the above figure, RIL is consistently underperforming as compared to BPCL for
the last five years. BPCL reached its highest point of 0.2 in 2007 while RIL reached its peak
value of 0.16 in 2008.
EBIT/TA
YEAR
RIL
IOC
2006
0.12
0.17
2007
0.13
0.24
2008
0.16
0.19
2009
0.08
0.12
2010
0.09
0.2
0.3
0.25
0.2
RIL
0.15
IOC
0.1
0.05
0
2006
2007
2008
2009
2010
As shown in above figure, IOC is performing reasonably well compared to RIL in the last
five years. IOC reached its highest value of 0.24 in 2007 while RIL reached its highest value
of 0.16 in 2008. Despite being PSU, IOC performing well enough as compared to privately
owned RIL.
SALES/TA
YEAR
RIL
HPCL
2006
0.96
2.1
2007
1
1.3
2008
0.9
2.41
2009
0.6
1.54
2010
0.8
1.6
3
2.5
2
RIL
1.5
HPCL
1
0.5
0
2006 2007 2008 2009 2010
Another method of calculating Z-score is the ratio of sales and total assets. The standard
value of this ratio is 1. The value of this ratio for HPCL is always exceeded 1 for the last five
years indicating that its total sales exceeded its total assets every year. On the other hand, the
value of this ratio for RIL is consistently below 1 indicating that RIL has heavily invested its
money on the assets.
SALES/TA
YEAR
RIL
BPCL
2006
0.96
2.31
2007
1
2.58
2008
0.9
2.13
2009
0.6
2.03
2010
0.8
1.4
3
2.5
2
RIL
1.5
BPCL
1
0.5
0
2006
2007
2008
2009
2010
The value of this ratio for HPCL is always exceeded 1 for the last five years indicating that its
total sales exceeded its total assets every year. On the other hand, the value of this ratio for
RIL is consistently below 1 indicating that RIL has heavily invested its money on the assets.
But BPCL is gradually reducing its investments in fixed assets as shown in the figure.
SALES/TA
YEAR
RIL
IOC
2006
0.96
3.14
2007
1
3.5
2008
0.9
2.22
2009
0.6
3.45
2010
0.8
2.83
4
3.5
3
2.5
2
1.5
1
0.5
0
2006
RIL
IOC
2007
2008
2009
2010
As shown in the above figure, for IOC, total sales was more than double the total assets in the
last five years where as RIL has invested heavily in assets either by acquiring smaller
companies or by purchasing fixed assets.
WORKING CAPITAL/TA
YEAR
RIL
HPCL
2006
0.04
0.11
2007
0.05
0.15
2008
0.1
0.19
2009
0.05
0.08
2010
0.08
0.07
0.2
0.15
RIL
0.1
HPCL
0.05
0
2006 2007 2008 2009 2010
Another method of calculating Z-score is the ratio of working capital and total assets.
Working capital is a measure of both a company's efficiency and its short-term financial
health. The standard value of this ratio is 1.2. In the above figure, this ratios value for RIL is
lesser compared to that of HPCL. But in 2010, RIL surpassed HPCL by 0.01.
WORKING CAPITAL/TA
YEAR
RIL
BPCL
2006
0.04
0.15
2007
0.05
0.09
2008
0.1
0.17
2009
0.05
0.08
2010
0.08
0.2
0.25
0.2
0.15
RIL
0.1
BPCL
0.05
0
2006
2007
2008
2009
2010
Positive working capital means that the company is able to pay off its short-term
liabilities. Negative working capital means that a company currently is unable to meet its
short-term liabilities with its current assets. In the above chart, the value of this ratio for
BPCL is almost two times that of RIL since the last five years.
WORKING CAPITAL/TA
YEAR
RIL
IOC
2006
0.04
0.12
0.18
0.16
0.14
0.12
0.1
0.08
0.06
0.04
0.02
0
2006
2007
0.05
0.07
2008
0.1
0.17
2009
0.05
0.04
2010
0.08
0.1
RIL
IOC
2007
2008
2009
2010
Working capital also gives investors an idea of the company's underlying operational
efficiency. If a company is not operating in the most efficient manner (slow collection), it
will show up as an increase in the working capital. In the above figure, in 2008 IOC and RIL
have witnessed their highest value of 0.17 and 0.1 respectively, but in 2009 there was drastic
decrease in the values of both the companies.
2006
.61
2007
.65
2008
.66
2009
.56
2010
.63
RETAINED
EARNINGS/TOTAL
ASSETS
0.65
0.6
0.55
0.5
2006 2007 2008 2009 2010
2006
.005
2007
.007
2008
.01
2009
.003
2010
.005
MARKET VALUE OF
EQUITY/TOTAL
LIABILITIES
The company Reliance Industries Limited has been giving dividend in every year for the last
10 years. The company issued bonus shares in the year 2009 and hence after that the share
prices of the company has been range bounded between Rs. 965- Rs. 1237. The company
share prices have been on a high during the boom period of2007-08 after which the economic
slowdown affected the share price of the company drastically and hence there is a dip in the
graph during the year 2008 to early 2009. The company during the period of 2008-09 also
merged its group company Reliance Petroleum Limited into itself by issuing 1 share for every
16 shares of RPL shareholders. The market has a strong sentiments value added to the share
price of the company. The share price of the company has a weightage of 12.14 % on the
index of National Stock Exchange (NSE) as per its market capitalization. The company also
made an all-time high of Rs. 2299.40 before the company issued the bonus shares in 2009.
Depreciation
Depreciation on fixed assets is provided to the extent of depreciable amount on written down
value method (WDV) at the rates and in the manner prescribed in Schedule XIV to the
Companies Act, 1956 over their useful life except, on fixed assets pertaining to refining
segment and SEZ units, depreciation is provided on Straight Line method (SLM) over their
useful life; on fixed bed catalyst with a life of 2 years or more, depreciation is provided over
its useful life; on fixed bed catalysts having life of less than 2 years, 100% depreciation is
provided in the year of
addition; on additions or extensions forming an integral part of existing plants, including
incremental cost arising on account of translation of foreign currency liabilities for
acquisition of fixed assets and insurance spares, depreciation is provided as aforesaid over the
residual life of the respective plants; on development rights and producing properties,
depreciation is provided in proportion of oil and gas production achieved vis-a-vis the proved
reserves (net of reserves to be retained to cover abandonment costs as per the production
sharing contract and the Government .
Year
RIL
2010
10497
2009
5195
2008
4847
2007
4815
RIL
12000
10000
8000
RIL
6000
4000
2000
0
2010
2009
2008
2007
2006
2006
3401
The depreciation has increased drastically from 5195 crores in 2009 to 10497 crores in 2010
due to the huge investment in the Plant & Machinery. Plant & Machinery at the end of 2009
stood at 124600 crores, but at the end of 2010 it went up to 186950 crores. With such a huge
investment in the Plant & Machinery the depreciation on Plant & Machinery is bound to
increase .From 2006 to 2009, depreciation has steadily increased from 3401 crores to 5195
crores as per the steady increase in the fixed assets.
Inventory
Year
RIL
2010
34393
2009
20109
2008
19126
2007
13456
2006
11245
RIL
40000
35000
30000
25000
RIL
20000
15000
10000
5000
0
2010
2009
2008
2007
2006
Items of inventories are measured at lower of cost and net realizable value after providing for
obsolescence, if any. Cost of inventories comprises of cost of purchase, cost of conversion
and other costs incurred in bringing them to their respective present location and condition.
Cost of raw materials, process chemicals, stores and spares, packing materials, trading and
other products are determined on weighted average basis. By-products are valued at net
realizable value. Cost of work-in-progress and finished stock is determined on absorption
costing method.
There was a huge jump of 70% in the value of inventory in 2010 over 2009. This is mainly
because of the huge increase in the value of raw materials and finished goods inventories. In
2009, the value of raw material was 6000 crores ant it went up to 15000 crores. In 2009, the
value of finished goods was 4700 crores and it went up to 9655 crores. Because of this there
was a huge increase in the inventory. From 2006 to 2009, there was a relative increase in the
inventory value.
63,000 crore without factoring in the cash profits to be generated from the
December-March quarter. According to some group officials, the BP deal awaits
government's approval and the money should come in by the April-June quarter
of
2011-12.
Analysts feel that much of the cash reserves would go into the existing
exploration business and capacity expansion of the petrochemicals arm. The RIL
spokesperson declined to comment as to what the firm would do with so much
money. "RIL has decided to go big in shale gas in the US and aggressively buy
blocks. Most of the funds may go there. Apart from this, RIL has identified 4G
(fourth generation) telecom as a growth area and could pump in funds for this
business," said a research head of a foreign brokerage who asked not to be
named. Mukesh Ambani has already outlined plans to foray into power,
broadband, education and hospitality businesses, and the market has been agog
with
speculation
since
many
months
that
he
may
buy
out
Reliance
Communications (RCom) from younger brother Anil Ambani. This could not be
independently
verified,
though.
The BP deal and recent statements by Mukesh Ambani indicate that RIL is
adopting an asset light strategy. And if this is true, the Reliance Communications
deal may not happen. But nothing can be ruled out if a good asset is available
cheap, analysts felt.
Reliance Industries has bought 95% stake in Infotel Broadband Services for Rs.4,800 Cr.
Infotel will issue fresh equity shares to RIL. Infotel Broadband Services has won pan India
Broadband Wireless Access spectrum license for 22 circles for around Rs 12,848 crore ($2.7
billion). The company has been promoted by Anant Nahata, son of Mahendra
Nahata of Himachal Futuristic that makes optical cables and fibres. So the company is
indirectly entering into the Telecom industry by entering into the Broadband Wireless
Auction and taking a call on the future technology that will rule the upcoming generations.
RIL