Global research firm Fitch today reaffirmed its credit ratings on various debt programmes of Reliance Industries (RIL) that has chalked out major investment plans across petrochemicals, gas, telecom and power sectors.
"The affirmations follow RIL's recent announcements of investment plans for the petrochemical, upstream oil and gas, telecom and power sector," Fitch said, while reaffirming its ratings.
The company's long-term foreign currency issuer default rating is at 'BBB-'; long-term local currency IDR at 'BBB' and national long-term rating at 'AAA'. The outlook on these ratings is stable. AAA is the highest credit safety grade Fitch assigns in India and all the other ratings are relative that.
Fitch has also affirmed RIL's national long-term ratings for its Rs 2,000 crore and Rs 13,000 crore non-convertible debenture programs at 'AAA(ind)'.
It said, however, the timing and value of the company's oil and gas organic expansion projects have not yet been finalised. "These include various petrochemical capacity additions, setting up of a coke gasification facility at its refining complex at Jamnagar and accelerating the development of its various upstream discoveries," Fitch said.
RIL has also entered into two separate JVs in the US shale gas industry and the rating agency said the company's investments in oil and gas will strengthen its business profile over the medium-to-long term.
As for telecom, Fitch said RIL's foray into the sector increases RIL's overall business risk by exposing it to the highly competitive domestic telecom industry. RIL plans to invest $4-5 billion in the next three-four years, mainly in the Broadband Wireless Access arena.
Fitch said broadband penetration is extremely low -- less than 1 per cent - and RIL considers broadband to be a huge growth opportunity.
RIL has also announced that it will enter the power sector by making investments in coal-based, hydro, nuclear (when it is opened for the private sector) and solar power. "Given India's strong growth prospects and current power deficit, Fitch believes that an entry into the power sector can be a strategic fit with RIL's broad energy business," it said.
In FY10, RIL's consolidated revenue was over Rs 2 lakh crore with Editda (operating profit) margins of 15 per cent. RIL's liquidity position is strong, with cash equivalents of Rs 21,900 crore at FY10.
