InvestorQ : What is the size of Reliance's overall debt and how did it become such a high debt company?
manisha Kolvenkar made post

What is the size of Reliance's overall debt and how did it become such a high debt company?

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Mahima Roy answered.
2 years ago
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Interestingly, Reliance Industries was a zero-net debt company till 2012. Here, we are referring to net debt and not to gross debt. As of March 2020, RIL had gross debt of Rs.3.30 trillion and cash reserves of Rs.1.70 trillion leaving the company with a net debt of Rs.1.60 trillion. RIL is looking to address the net debt of Rs.1.60 trillion by March 2021. You are right in asking, how this massive debt mountain came about if RIL was zero-net debt as late as 2012? There have been two factors that drove this debt mountain at RIL. The first trigger was the Reliance Jio foray. The company used the massive profits of the refining and petchem businesses and combined them with long-term borrowings in the market. Secondly, RIL also invested heavily in upgrading its refining and petchem capacities. In all, RIL had invested Rs.550,000 crore since 2014 and this was substantially funded by debt. RIL has always been cautious about high levels of net debt and that is why it is now focusing on a more flexible balance sheet to mitigate the financial risk.

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