RIL to invest sales proceeds in infocom

Our Corporate Bureau

Mumbai, Nov 19: The Rs 767 crore deal struck by Reliance Industries (RIL) to offload its 10 per cent stake in L&T to Grasim Industries, has left every one guessing on the end use of the sales proceeds.

Industry observers said that RIL is clearly seen to be investing the amount in its upcoming infocom venture. The deadline for completing the nationwide fibre optic backbone of RIL is end of 2002. Reliance is expected to roll out its services and offerings in a phased manner in the next financial year. The clinching of the L&T deal has come at an opportune time for Reliance, added analysts.

RIL, in the first two quarters of the current fiscal, is said to have invested around Rs 1,000 crore in Infocom and a similar investment would be needed to complete the task. The total investment in the infocom venture is expected to be of the order of Rs 25,000 crore, which will be funded in a debt-equity ratio of 2:1.

Reliance Infocom is the holding entity implementing all infocom and related ventures under its umbrella. RIL is the lead investor in this entity with up to 50 per cent equity.

Analysts pointed out that earlier the obvious source of funds for the infocom venture was RIL’s investment in Reliance Petroleum Ltd (RPL). This was expected to be unlocked through divestment of its 13 per cent stake in RPL in one or more tranches, which based on market price of RPL share would have fetched RIL Rs 3,283 crore.
However, RIL managing director Anil Ambani had said that the current status of the financial markets was not conducive for such an issue.