Lawstreet Journal

Ambani Hints at Longer-Term Partnership Deal in RIL- Aramco Deal

Lawstreet Journal 18 Jul 2020 11:01pm

Image courtesy: Lawstreet Journal Business Ambani Hints at Longer-Term Partnership Deal in RIL- Aramco Deal

Mukesh Ambani, announcing a delay in the proposed agreement with Saudi Aramco, raised concerns as to whether the Reliance Industries-Saudi Aramco transaction is now less desirable. Mukesh Ambani, chairman and managing director for RIL, informed shareholders on Wednesday, 15 July 2020, “Due to unforeseen circumstances in the energy market and the Covid-19 situation, the deal has not progressed according to the original timeline.” The billionaire punctuated his remarks on the deal saying, “Our equity requirements have already been met”. 

A year ago, in August, when Ambani first announced Saudi Aramco's intention to invest in RIL's Oil to Chemicals (O2C) business, the deal was crucial to RIL's net debt-free target. The needs and options for both the seller and the buyer have shifted in less than 12 months. RIL now claims to be free of net debt and may not require cash proceeds. 

For Saudi Aramco, the stake in Bharat Petroleum Corporation (BPCL) is another opportunity to engage in India's fuel demand growth story. “Ambani’s comment on the deal is a message to Aramco – RIL is no longer desperate for the deal,” stated an analyst. 

In less than four months, RIL has earned Rs 2.12 trillion through rights concerns, joint investment in Jio Platforms, and BP's investment in its fuel retail business. This, Ambani said in his statement, is more than the company's net debt of Rs 1,61 trillion as of March. 

“However, if the Aramco deal happens, the cash proceeds will help buffer any shocks in case RIL’s infrastructure investment trust (InvIT) plan does not work out. The… Continue Reading...

Tagged: Reliance Industries Limited   Reliance Industries  
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