Global rating agency Standard and Poor's (S&P) today cautioned that the credit quality of the Mukesh Ambani-controlled Reliance Industries (RIL) might "weaken" if significant cash outflows were part of the settlement between him and younger brother Anil.Though the financial details are still "unclear," S&P said: "Significant cash outflows, possibly resulting from share repurchases, division and distribution of liabilities and/or the contingent obligations on RIL could materially affect the company's financial profile, which might weaken its credit quality."The details and modalities of demerger are yet to be worked out even as Anil Ambani, who got Reliance Energy, Reliance Capital and Reliance Infocomm as part of the deal, yesterday parried queries as to what cash compensation he got from his elder brother in the settlement announced on Saturday.S&P, however, noted that the de-merger and eventual exit of RIL from the group's capital-intensive telecommunications and power busines should not have a negative impact on its business risk profile, and may even have a positive impact.S&P said the ratings on RIL and their stable outlook remain supported by the company's adequate financial profile, a dominant presence in its core oil refining and petrochemical businesses and the current upswing in the businesses.Reliance reported a 30% year-on-year jump in revenues at $16.7 billion and a 47% rise in net profit at $1.7 billion in fiscal 2005, reflecting its "superior" business position in refining and petrochemicals businesses,the rating agency observed.Its debt servicing ability was adequate, while its debt to capitalisation was below 40% for fiscal 2005, S&P had noted in an earlier rating on June 10."RIL's liquidity has improved from the previous year with cash and liquid investments for fiscal 2005 adequately covering the debt falling due over the next one year," the rating agency had said.
