Reliance Industries to raise over ₹53,125Cr through the biggest ever rights issue by an Indian company

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Labourers rest in front of an advertisement of Reliance Industries Limited at a construction site in Mumbai, India, March 2, 2016. India's richest man, Mukesh Ambani, is muscling into the country's cable TV sector as part of a media and telecoms offensive that pits him against his once-estranged younger brother and threatens to shake up both industries. REUTERS/Shailesh Andrade

Reliance Industries is India’s largest private sector company on all major financial parameters.  It is an Indian multinational company headquartered in Mumbai. Reliance owns businesses across India engaged in energy, petrochemicals, textiles, natural resources, retail, and telecommunications. Reliance is one of the most profitable companies in India, the largest publicly traded company in India by market capitalization, and the largest company in India as measured by revenue after recently surpassing the government-controlled Indian Oil Corporation.

Recently Reliance Industries Ltd  announced that fund raising of Rs 53,125 crore by way of a 1:15 rights issue on Thursday i.e. 30th April, that means it has to give one share for every 15 shares held at ₹1,257 per share . It told that the proposed Rights Issuance will be the first by RIL in three decades. The issue will be structured as partly paid shares and will enable shareholders to phase out the outlay on their investment over a period of time.

Well this announcement is the largest price issue offering till date. A couple of years ago many of company like Bharti Airtel Ltd and Vodafone Idea Ltd or others have been doing price issues , but nobody has done such a big offering that is of Rs 53,125 crore , half of which will be promoter share holding so hence they will be apply for 25,000 crore plus.

Reliance: Due to the pandemic situation that Covid-19 is significantly impacting business operation of the firms, by way of interruption in production, supply chain disruption, unavailability of personnel, lockdown and shutdown of production facilities. So during March 2020 or April 2020, there has been significant volatility in oil prices, resulting in reduction in oil prices, which comes from RIL note.

At 50% shareholding, Mukesh Ambani will have to pump in at least ₹26,600 crore to subscribe to his portion of the rights issue. Ambani and other controlling shareholders have pledged to buy to the full extent of their entitlement and also subscribe to all unsold shares in the rights issue.

The announcement of the record fundraising came after the Reliance company reported a sharp drop in quarterly profit because of a slump in fuel sales due to lockdowns around the world. The earnings were impacted by a one-time loss of ₹4,267 crore due to a fall in fuel prices and demand destruction post covid-19.

At last the message that is company actually giving when promoters themselves are putting such a large sum to the company, it is giving such a confident to share holders because as per the announcement everybody will apply. Moreover it is one of the record that made by Reliance Industries.

Also Read: Mukesh Ambani will forgo his entire compensation while senior executives will have 30-50% pay cuts

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