Mumbai, Jan. 15: Reliance Industries, smarting from Moody’s rebuke, had enough reason to cheer today when it won an AAA rating from Crisil on its debentures.
That grade, the best a company can secure, was assigned by the rating agency on the firm’s Rs 1000-crore debenture issue planned over the next few months. What came as another shot in the arm was the reaffirmation of outstanding ratings on other debt instruments.
Reliance rarely reacts to ratings, but it broke its silence to emphasise the fact that its strong position in the domestic petrochemicals business has been enhanced by its acquisition of a 46 per cent equity stake in IPCL. Between them, the two companies now control almost three-fourth of the polymer market and are among the top ten manufacturers of the item in the world.
The rating boost from was tempered by remarks from Crisil that large investment plans in existing and new business ventures, which have a potential to stretch the balance-sheet in the next few years, could dilute gains. The large cash accruals, favourable cash debt-service coverage ratios, and high financial flexibility of RIL also provide comfort to its financial profile, Crisil said.
Pointing to the huge investment outlay, which includes large expenditure in oil and gas exploration and development, oil refining and marketing, and telecommunications business, has increased considerably.
“Although a large part of the expenditure will come from internal accruals, borrowings are likely to rise. The adjusted capital structure is expected to remain moderately high (at about 1.0 times), as against Crisil's earlier expectation of a gradual improvement,” Crisil said.