The Google deal in Jio Platforms Ltd (JPL) will help Reliance Industries (RIL) enter the net cash zone with a surplus of Rs 11,931 crore in the September quarter from a net debt of Rs 1,61,035 crore in March 2020. The company will have net cash (having more cash and cash equivalents on books than gross debt) after a gap of nearly seven years. The company had last posted net cash of Rs 7,375 crore in December 2013.
Back-to-back deals in JPL helped the parent company RIL set off the net debt on the balance sheet. JPL sold 32.94 per cent stake to 14 investors for Rs 1,52,056 crore in the last three months. Besides, RIL sold 49 per cent stake in fuel retailing business to BP Plc for Rs 7,629 crore. It has also concluded the Rs 53,124-crore rights issue in June. Of this, the company has received 25 per cent (Rs 13,281 crore) of the amount during the time of subscription. The remaining amount will come next year.
These deals will help RIL raise Rs 1,72,966 crore by end of the second quarter in September. After accounting for the amount, the net debt of RIL, which stood at Rs 1,61,035 crore in March 2020, will turn positive with net cash of Rs 11,931 crore. Including the whole amount committed in the rights issue, RIL's cash position will further improve to Rs 51,774 crore.
According to sources, RIL will use a substantial portion of the proceeds to reduce the gross debt of Rs 3,36,294 crore and keep the rest as cash investments. The company had a cash and cash equivalent of Rs 1,75,259 crore at the end of March 2020 and the deal proceeds will add to it.
Google will invest Rs 33,737 crore for a 7.7 per cent stake in JPL, while Facebook will be the largest minority stake holder with 9.9 per cent stake, for which it invested Rs 43,574 crore. With this, JPL has now four strategic partners -- Facebook, Intel, Qualcomm and Google, the company said. It has also six technology and financial investors and three sovereign funds, taking the total tally of investors to fourteen.
In Ambani's words, Facebook is the "premier strategic partner". He said that JPL will work with other investors, Intel and Qualcomm, who have shaped the semi-conductor industry, to develop new products for India and Indians.
The technology and financial investors like Silver Lake, Vista Equity Partners, General Atlantic, KKR, TPG and LCatterton have a long history of successfully investing in the best of technology and growth enterprises in the world, he said. According to him, ADIA and Mubadala of the UAE, and PIF of Saudi Arabia are valued partners.
Ambani said at the AGM that India's most profitable company has raised a total of Rs 212,809 crore. However, the biggest deal announced by Ambani in the 2019 AGM with Saudi Aramco has failed to materialise. Aramco had agreed to pick up 20 per cent stake in RIL's oil to chemicals business for Rs 1.14 lakh crore.