RIL provides Rs 14k-cr interest-free loan to arm

Last Updated: Sat, May 11, 2013 05:04 hrs

Reliance Industries Limited (RIL) has provided a whopping Rs 17,300-crore loan to its subsidiary Reliance Industrial Investments and Holdings to invest in land, retail and other "developing" businesses such as EIH. Of the loan amount, a tranche of Rs 13,944 crore is interest-free.

When contacted, a company official said the funds had been allocated to the subsidiary to invest in businesses that were in the "developmental stage" and required initial capital. These include investments in retail, a Dubai firm with interests in the oil & gas sector, and a company involved in land business.

Reliance Industrial Investments & Holdings had invested in shares of IndiaWin Sports, owner of the Indian Premier League franchise Mumbai Indians and an RIL group company, according to the company's annual report. It had also invested in preferential shares of Reliance Jio Infocomm and Reliance Industries Investments & Holdings.

RIL's loans to its subsidiaries have attracted the attention of its auditors. "The company has given loans to two subsidiaries," the auditors said, adding the highest amount outstanding at any time during the year was Rs 20,316 crore and the year-end balance was Rs 18,226 crore (including an interest-free loan of Rs 13,944 crore).

"In our opinion, and according to the information and explanations given to us, the rate of interest and other terms and conditions of the loans given by the company are not prima facie prejudicial to the interest of the company," the auditors said.

The company's annual report said Reliance Industrial Investments and Holdings' total assets stood at Rs 19,646 crore. It had made an investment of Rs 2,705 crore and the company's total income was Rs 680 crore. It had recorded a loss of Rs 11.98 crore.

In the report, RIL informed its shareholders it had written off Rs 50 crore of investments in the cargo airliner floated by Captain Gopinath, a venture that was later shut.

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