Archive for January, 2013

RIL To Raise $500 mn Via Perpetual Bonds

January 29, 2013

Reliance Industries Limited (RIL), India’s largest private sector company will be the third one in Asia to raise long-term debt fiscal by selling US dollar Denominated perpetual bonds as it intends to attract investors who are looking out for high returns in the gloomy market. The Mukesh Ambani led conglomerate aims to raise up to $500 million that equals to Rs. 2701 crore via these perpetual bonds from investors in foreign countries, for its expansion project.

According to an RIL official who did not wish to be named, informed PTI that the final amount will be determined based on the investor’s approach. However, they have set the initial price at six percent over the US treasury, which can be brought back after five years. Reliance Industries has been a key fundraiser from India in the foreign market. This is the fifth time in this fiscal that it is raising long-term debt wherein it has raised USD $ 4 billion from overseas. The company may have to invest close to $ 10 billion for its petrochemical expansion and varied oil and gas exploration activities. It may drill a development well in the satellite fields and will be devising an integrated field development plan (IFDP) in the next quarter. It seems the company will capitalize on the low interests in the market to reduce the cost of its debt. The official also claimed that this is the first time a domestic company is raising a long rated bond issuance.

Standard and Poor, rating company, have given a ‘BBB’ Long term issue rating to the bonds and in a statement mentioned that this manifests the company’s robust positioning and its varied business interests. Besides, the company benefits because of its low leverage, good cash inflows and liquidity. Apart from that, it is a good sign that the company is taking measures to resolve its issues and recently reported a profit of 24% in its Q3 profit. Its ‘Intermediate’ risk profile manifests its low debt. RIL, with its huge cash reserves, is poised to tackle any kind of difficult situations that can crop up, in unexpected situations.

Perpetual bonds are bonds that do not have a maturity date. While they are not redeemable, they ensure a continuous stream of interest, forever. The price of the perpetual bond is the fixed interest payment divided by a constant discount rate.

RIL To Continue Investing In Venezuela

January 22, 2013

President Hugo Chavez’s deteriorating health condition does not deter Mukesh Ambani, India’s most powerful business magnate and the Chairman and Managing Director of RIL (Reliance Industries Limited), from investing there. The company plans to infuse an investment of over $ 2 billion in Venezuelan oil fields. Sources who have confirmed the news claim Mukesh Ambani believes that the health condition of the president will not pave way for any political mayhem eliminating the chances of it affecting the businesses there.

The conglomerate yesterday reported an overall increase in its net profit for the third quarter year on year to Rs. 5,502 crore. By an increase of 10.1% year on year, its turnover has also climbed to Rs. 96,307 crore wherein the revenue of petrochemical sector posted an increase of 11.5%. The petroleum sector has been a stimulus to this overall profitability. RIL’s earnings have mounted to $9.6 for every barrel of crude this year as compared to $6.8 a year earlier. While the company is rejoicing at this success, it is not leaving any stones unturned to accelerate this growth further. Diesel deregulation could also act as another contributing factor to its success, if enforced.

Along with state run company Petróleos de Venezuela (PDVSA), the company has been probing into the commerciality of its four investments in four oilfields. Based on the results of this study, it will carry out further activities. Having the largest oil reserves capable of producing cheaper and heavier grades of oil, Venezuela has been a preferred destination for Reliance Industries as it complies with the need to process at two adjacent refineries.

Chavez who is a third time president, re- elected in October was diagnosed with Cancer. While he headed to Havana for a fourth surgery on December 10th, nothing is known about him since then. Piorre Noel from The International Institute for Strategic Studies at the economic and energy security domain ensured that there is no need to panic, as the government policy will continue to remain the same unless there is a change in the regime. He also mentioned that Chavez has always been always in favor of oil trading with foreign countries especially Asian.

Processing heavier grade of Venezuelan crude has enabled the company to increase its margins at its refineries. The company has been banking on countries like Venezuela for heavy crude oil supplies as Middle East countries exploit their supplies for their own needs.

Mukesh Ambani Speaks about RIL’s Growing Bonding with Gujarat

January 15, 2013

Mukesh Ambani, Chairman of RIL (Reliance Industries Limited) and the country’s most renowned entrepreneur, in the Vibrant Gujarat Global Summit 2013, spoke about the company’s colossal investment of Rs. 100 crore in Pundit Deendayal Petroleum University and revealed its further plans of infusing Rs. 500 crore in the coming years. He also spoke about his keenness on launching the finest next generation mobile broadband infrastructure in the country.

Praising Narendra Modi, Chief Minister of Gujarat, he deemed him a leader with a great vision and determination, who has successfully converted his vision into reality. He also mentioned that he is proud of being a Vibrant Gujarat Summit attendee every year and reckoned it as the testament to his everlasting support and commitment to the state.

Speaking about the roots of the company, he said that he was proud of the fact that Reliance was a Gujarati company and an Indian company and a global company, as perceived and envisioned by his father, Shri Dhirubhai Ambani. He said that Gujarat has always been a place of reverence, in the country and one among the top three most eminent regions in the country. Besides, he also announced that Gujarat would always be an ideal destination for the company, to invest.

He revealed that the company has found roots in Gujarat with its initial set- up at Naroda near Amdavad and has come to the fore in Gujarat with the tremendous growth it attained at Hazira near Surat, and Jamnagar in Saurashtra. He also thanked the state that is a home to the majority of its shareholders and stated that he will always come back to the state to invest considering the fact that the company found its roots in the city. He claimed that his investment and expansion plans in Jamnagar, Hazira and Dahej would pave way for a number of job opportunities and augment India’s positioning with respect to exporting.

He also informed the Pundit Deendayal Petroleum University (PDPU) would soon launch a global university that will cater to research and international exchange in the forthcoming years. Collaborating with the Government of Gujarat, this university will up the ante in the state by ensuring financial sustainability. An investment of over 500 crore will be required for building this excellent university. Mukesh Ambani also said that the state was poised to produce Nobel laureates from this institution.