Reliance Industries' decision to exit from the engineering major is perhaps a logical outcome of developing its own in-house capabilities in engineering, procurement and construction. It has already set up an independent company to do EPC work in the telecom, oil, infrastructure and other sectors.
A Reliance release said the company had made its investments in L&T, the EPC major, when it was itself setting up large projects. Since then, it has set up large and complex projects with a large capital outlay, and has now "itself developed significant project management capabilities".
However, Reliance executives said they were confident of making the new EPC firm a major competitor to L&T's engineering division.
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Reliance is planning to utilise the Rs 766.5 crore sale proceeds for investing in its infocom, oil and gas businesses.
It will also deploy a part of the funds to reduce its huge debt.
At present, Reliance has a debt of around Rs 9,000 crore. "Our main investment will be in the already announced projects," top RIL executives told Business Standard.
Since Reliance Petroleum's global depositary receipts issue has been on hold for the time being, the cash generated from the deal will help the group bring in required funds for its new projects. Reliance is investing close to Rs 25,000 crore in its infocom project over a period of 5-7 years. RIL has already pumped in funds to the tune of Rs 2,600 crore in the project, analysts said.
RIL was earlier pinning its hopes on utilising a part of the GDR proceeds for investing in its new projects. Recently, RIL managing director Anil Ambani announced that the company would review the GDR float decision in the wake of the recent developments in the US.