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REL sitting on Rs 10,000 cr cash chest

It is planning a 4,000 MW power plant in Maharashtra and the Dadri project in UP, reports Suman Layak.

business Updated: Jul 02, 2007 04:13 IST
Suman Layak
Suman Layak
Hindustan Times
Hindustantimes

The Anil Dhirubhai Ambani Group’s (ADAG) Reliance Energy Ltd is sitting on a cash pile of more than Rs 10,000 crore that it intends to use for fuelling its growth.

Apart from its existing projects, the company is planning a few other ambitious projects including a 4,000-megawatt power plant at Shahpur in Maharashtra and the Dadri project in Uttar Pradesh, which between them can gobble up a lot of cash.

In his statement in the annual report for 2006-07, chairman Anil Ambani has said that a strong cash position along with a conservative capital structure that has no net debt will provide the company with a platform for growth.

Inter-corporate deposits, which are listed under current assets, have grown by more than Rs 5,700 crore in 2006-07 from Rs 2,026 crore in 2005-06.

The company had cash in hand and in the bank in 2005-06 at Rs 5,652 crore. In 2006-07, this has come down to Rs 2,175 crore and a large portion of the free cash has been invested in mutual funds and inter-corporate deposits during 2006-07.

Reliance Energy had also raised $150 million through external commercial borrowings during the year.

Reliance Energy has invested more than Rs 1,000 crore in mutual funds listed under its long-term investments. In fact, more than Rs 1,000 crore has been invested in different funds in the Reliance Fixed Horizon Fund series of the Reliance Mutual Fund, which is also part of the Anil Ambani stable. It also invested in HSBC and Kotak funds in the year.

The company reduced its investments in mutual funds under current investments by around Rs 542 crore from Rs 767 crore in 2005-06 to Rs 225 crore in 2006-07. A major part of this investment is in Reliance Liquid Fund – Cash Plan. However, this amount seems to have moved into another kind of investment. The company has invested Rs 521 crore in foreign currency, unquoted, yield management certificates.