Reliance Industries Chairman Mukesh Ambani is backing his gas and port companies with a massive fund infusion of Rs 8,575 crore.
"Ambani has infused Rs 3,000 crore of equity into the port and terminal company, Reliance Ports & Terminals Ltd (RPTL), and another Rs 1,575 crore of equity in Reliance Gas & Transportation Infrastructure Ltd (RGTIL). The investor companies - owned by Mukesh Ambani - have also lent Rs 4,000 crore to RGTIL as subordinated debt," a source told Business Standard. A mail sent to the Reliance spokesperson yesterday did not elicit any reply.
RGTIL and RPTL are Mukesh Ambani's personal companies and the fund infusion was made in the last financial year as debt and equity. Both companies give critical support to Reliance Industries' operations.
Fund infusion into both the companies had been necessitated after they demerged their investment divisions into separate companies in a complex process undertaken last year. These investment companies were then merged with another unlisted entity owned by Ambani called Reliance Industries Holding Pvt Ltd (RIHPL).
The fund infusion was made as the net worth of the company was eroded after the investment division was demerged to RIHPL. In the merger scheme, now cleared by the Gujarat High Court, net assets of Rs 6,291 crore were transferred by RPTL to RIHPL from December 27 last year.
The net worth of RPTL had declined to Rs 10,377 crore as on December 31, 2011, from Rs 22,566 crore as on June 30, 2011 after the impairment of Rs 12,300 crore. The impairment recognised by RPTL was due to losses in long-term investments in various listed and unlisted shares.
The total impairment of investments by Ambani firms, including RPTL's and Reliance Gas' investment divisions, is a massive Rs 15,800 crore. An insider said the impairment of the investment divisions was due to "notional" losses in various listed and unlisted entities. Ambani never made any statements on the nature of losses suffered by the investment companies.
Ambani had earlier decided to sell off the pipeline company and even appointed bankers to sell the company which operates a 1,386-km pipeline connecting Kakinada in Andhra Pradesh with Bharuch in Gujarat.
The company earns its revenue by transporting gas from RIL's fields off the Andhra coast to customers in the west. But with RIL's gas production decreasing substantially in the past two years, its revenues have come down sharply.
RPTL operates five berths in Jamnagar and its main revenue stream comes from providing port services to RIL for its oil product import and export. RPTL is one of the 12 entities facing insider trading charges named by the Securities and Exchange Board of India in the Reliance Petroleum-RIL merger.