After years of capital expenditure and business expansion, oil-to-telecom conglomerate Reliance Industries is on its path to becoming net debt-free. The Mukesh Ambani-led firm may be free of all its financial obligations once its solar energy project is completed by the end of the next financial year, 2025-26 (FY26), reported Fortune India, citing company officials.
In March 2021, Reliance had turned into a zero net debt company thanks to the stake sale in Jio Platforms and Reliance Retail Ventures. However, investments to acquire the 5G spectrum and aggressive store expansion of the retail arm piled up on the company's finances. Additionally, Mukesh Ambani forayed the group into the renewable energy sector with plans to build five gigafactories for solar infrastructure.
Reliance Industries has a gross debt of Rs 3,50,453 crore as of December 2024, excluding the spectrum payment to the government. However, the net debt stands at just Rs 1.15 lakh crore since the conglomerate has maintained high cash reserves on its books, worth Rs 2,34,988 crore in cash and cash equivalents. These are kept in the form of fixed deposits, certificates of deposit with banks, and government securities and bonds.
However, as per the Fortune India report, the 5G investment is almost over, and retail expansion doesn't require much debt. The conglomerate is only spending about Rs 30,000 crore every quarter to complete the Giga factories. The net debt will start shrinking once the heavy solar investments are over by FY26, executives told the outlet.
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The Solar Energy Project
Reliance is constructing a Giga Complex in Ambani's family town, Jamnagar, Gujarat, with five gigafactories for photovoltaic panels, fuel cell systems, green hydrogen, energy storage, and power electronics, with an investment of Rs 60,000 crore. The company will likely begin the first phase of a 20GW solar photovoltaic (PV) manufacturing facility in the coming months.
"By 2025, Jamnagar will also become the cradle of our new energy business. The Dhirubhai Ambani Green Energy Giga Manufacturing Complex will be the world's largest, most modern, modular, and integrated ecosystem at a single location," Mukesh Ambani said at the company's 47th AGM on Thursday.
Reliance plans to develop the business based on 100 GW of renewable power capacity by 2030. Once the new energy business starts, the firm will get an additional source of cash flow, as the EBITDA margin from other units has also improved, with retail business at 8.4%, oil-to-chemical business at 8.6%, and Jio platform at 50%.
