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Fitch affirms ratings of India's RIL - Outlook Stable
03 Mar '07
3 min read
Given the commodity nature of its business, RIL is exposed to cyclicality, but "through the cycle" (FY02 to FY06) credit metrics are comfortable with average Funds-from-operation (FFO), adjusted net leverage at 2.04x, adjusted net debt/ EBITDA at 1.88x and total adjusted debt/total adjusted capitalisation at 37.8%.
The effect of RIL's substantial investment plans including those for its retailing, special economic zone (SEZ), new refinery and petrochemical units are moderated by its strong cash flows and equity infusion plans, which are expected to keep the credit profile consistent with the rating assigned. RIL has recently announced the setting up of a new petrochemicals unit (cost USD3bn), investment details of which have yet to be finalised; issue of equity warrants worth approximately USD3.74bn on exercise, is expected to cushion impact on credit ratios.
RIL is the largest private sector company in India with FY06 revenues equivalent to 2.8% of India's GDP and exports accounting for 8% of the country's exports. RIL is primarily an oil refining and petrochemicals company which is gradually integrating its operations upstream and downstream into exploration and production (E&P) and retailing of petroleum products respectively.
The effect of RIL's substantial investment plans including those for its retailing, special economic zone (SEZ), new refinery and petrochemical units are moderated by its strong cash flows and equity infusion plans, which are expected to keep the credit profile consistent with the rating assigned. RIL has recently announced the setting up of a new petrochemicals unit (cost USD3bn), investment details of which have yet to be finalised; issue of equity warrants worth approximately USD3.74bn on exercise, is expected to cushion impact on credit ratios.
RIL is the largest private sector company in India with FY06 revenues equivalent to 2.8% of India's GDP and exports accounting for 8% of the country's exports. RIL is primarily an oil refining and petrochemicals company which is gradually integrating its operations upstream and downstream into exploration and production (E&P) and retailing of petroleum products respectively.
Reliance Industries Ltd
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