Mukesh Ambani Plans First Rights Issue in Three Decades to Make Reliance Debt-Free

Mumbai : Reliance Industries Ltd (RIL), the country’s largest company in terms of market capitalization, is considering a rights issue for debt redemption. In fact, Reliance Industries told the stock exchange on April 27 that it would consider the rights issue in the board meeting to be held this week.

The RIL Company board meeting will be held on April 30, in which the proposal to issue equity shares on the basis of rights to existing shareholders will be considered. This will be the first time in nearly three decades that RIL is thinking about the rights issue.

In August last year, Mukesh Ambani, chairman of Reliance Industries Limited, had said that his company would be completely debt free by 18 months i.e. by March 2021. Currently RIL is in debt of about Rs 3.5 lakh crore.

A few days ago, the RIL board approved a proposal to raise Rs 25,000 crore through non-convertible debentures (NCDs). The market cap of the company has increased to Rs 9.1 lakh crore as soon as the Facebook Jio deal is approved last week.

RIL Chairman Mukesh Ambani will preside over the board meeting to be held on Thursday. According to BSE data, RIL’s current shareholders currently number 2.3 million. The company has a 50 per cent stake in Ambani and his family.

In the board meeting, the company will also consider conducting a standalone and consolidated audit of the results for the quarter and financial year ended on March 31. However, Reliance has not given much information about the rights issue. Earlier, in 1991, Reliance had approached the common people to raise funds.

What is a Rights Issue
Companies listed on the stock market bring rights issue to raise capital. Under this, companies allow their existing shareholders to buy additional shares only. Shareholders can only buy shares in a fixed ratio. The company decides this ratio. Shareholders can buy shares under a rights issue on behalf of the company. Ownership of the company is not affected by the shares issued through the rights issue.