Mukesh Ambani-led Reliance Industries is coming up with a public-funded rights issue after almost 30 years on Thursday. Before this, RIL had released rights offer in 1991 when it issued convertible debentures. A company releases a rights issue to its existing shareholders to buy additional new shares of a company, thereby giving them right but not obligation to buy the company's shares.
RIL will also declare its results for the fourth quarter and fiscal year ended March 31, on April 30. "The meeting of the board of directors of the company is scheduled on April 30, to consider and approve the standalone and consolidated audited financial results of the Company for the quarter/year ended March 31, 2020," RIL said in a filing to the Bombay Stock Exchange on Monday.
"The board will recommend dividend on equity shares of the company; and consider a proposal to issue equity shares to existing shareholders on rights basis, as may be permitted under applicable law, subject to such regulatory/statutory approvals, as may be required," it added.
The board meeting led by RIL Chairman Mukesh Ambani will consider the proposal of issuing new shares to its 23 lakh stakeholders. Notably, the Ambanis hold 50 per cent stake in India's biggest conglomerate, which has market cap of Rs 9.1 lakh crore.
Analysts said that the RIL could raise just over Rs 40,000 crore on the basis of Monday's closing price of shares if it goes for 5 per cent equity dilution. It may also help RIL meet its target to become a 'zero-net debt' company before March 2021, the analysts also said.
RIL is also expected to report fall in profit for March quarter due to inventory losses in the wake of a slump in crude oil prices in the international market. The RIL's announcement comes days after its subsidiary Jio Platforms Ltd inked a deal with social media giant Facebook Inc.
Facebook bought 9.99 per cent stake in the company for Rs 43,574 crore on April 22, making it the largest minority shareholder in Jio Platforms Limited. Facebook has said it will focus on collaborating its messaging platform WhatsApp with Reliance Jio's e-commerce venture JioMart and help people connect with small businesses. Reliance Industries Chairman Mukesh Ambani said the RIL-Facebook deal would be a milestone for the government's 'Digital India' initiative.
Share price of Reliance Industries dropped 2.68% intraday to the day's low of Rs 1,391.95 in early trade on Tuesday. Later, RIL shares closed 0.02% lower at Rs 1,429 on BSE, and 0.02% higher at Rs 1,430 on the NSE.