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04-23-2012, 09:55 AM #1
Reliance Industries becomes debt-free 10 months after Mukesh Ambani promises to do so
Reliance Industries (RIL), Mukesh Ambani's oil and gas behemoth, is now a debt-free entity, thanks to a huge cash pile of over Rs 70,000 crore. The feat was achieved 10 months after the billionaire had promised to do so to the company's investors and shareholders.
At the end of 2011-12 ended March 31, RIL had total cash balance of Rs 70,252 crore ($13.8 billion), against an outstanding debt of Rs 68,259 crore ($13.4 billion) - making the country's most valued firm debt free on a net cash basis.
RIL's outstanding debt rose marginally by about 1 per cent during last financial year, but the surge in its cash position was much larger at about 66 per cent during this period.
As on March 31, 2011, RIL had outstanding debt of Rs 67,397 crore, against a cash balance of Rs 42,393 crore. RIL's cash outflow on account of capital expenditure last year was Rs 7,426 crore, while its net capital expenditure for the year was Rs 12,563 crore.
Chairman and Managing Director Ambani had told RIL's shareholders at their Annual General Meeting on June 3, 2011, that the company would become debt-free during 2011-12.
"Reliance will be completely debt free, net of cash balances within this year," he had said at that time.
Meeting the target, RIL's full-year financial results for the fiscal ended March 31 showed that the company has become "debt free on a net basis as compared to the gearing level of 13.5 per cent as on March 31, 2011".
The company said its has primarily invested its cash in fixed deposits, certificate of deposits with banks, mutual funds and Government securities or bonds. While its fourth-quarter net profit declined by 21 per cent to Rs 4,236 crore, it recorded a record consolidated net profit of Rs 19,724 crore for the year ended March 31, 2012.
It's full-year turnover rose 31.4 per cent to an all-time high of Rs 339,792 crore.
Commenting on the company's financial performance for the fiscal year 2011-12, Ambani said: "We have created a strong foundation for future growth and are investing in our core upstream and petrochemical businesses in India. Response to our organised retail business has been very encouraging and we continue to expand our footprint by building more stores across verticals, formats and geographies. We remain committed towards providing world class, high speed wireless data services through the launch of our broadband access business," he added.
In an investor presentation of its 2011-12 results, RIL said it will look to capture a $500 billion market opportunity through its world-class consumer retail business.
With regard to its broadband business initiatives, the company said that India was the world's largest and most competitive wireless market and broadband wireless would be a key driver to growth of data services.
RIL's cash outflow on account of capital expenditure last year amounted to Rs 7,426 crore, while its net capital expenditure for the year was Rs 12,563 crore, including Rs 6,706 crore on account of exchange difference on long-term *****.