InvestorQ : With the Facebook acquisition done, how soon can we expect Reliance Industries to start reducing its total debt in the books?
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With the Facebook acquisition done, how soon can we expect Reliance Industries to start reducing its total debt in the books?

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2 years ago
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With the $5.7 billion Facebook stake in the digital subsidiary of RIL (Jio Platforms), the debate is back to how soon RIL will start winding down the group debt. Currently, Reliance group has gross debt of around Rs.300,000 crore and net debt of Rs.155,000 crore. RIL has set a target to wind down the net debt to zero over the next two years. But how soon can this possibly happen? RIL has announced it will use around Rs.28,000 crore from these funds but that will still leave around Rs.125,000 crore of outstanding net debt in the books of Reliance group. The challenge is that asset sales in the energy business are likely to be difficult to come by, and free cash flows could be lower than expected owing to the impact of the lockdowns. RIL’s operating cash flows are likely to fall by 15-20% and so they may want to conserve more of the cash for operational use. The Saudi Aramco deal worth $15 billion is in cold storage and looks unlikely to happen at current oil prices. For now, all eyes will be on the net debt position of RIL when it announces its March quarter results.

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