The annual report of Reliance Industries submitted by the company on August 7 to the stock exchanges had a surprising detail that has fuelled buzz of the conglomerate likely preparing investors for the eventual listing of its subsidiaries Jio Platforms and Reliance Retail in the public market.
The 488-page annual report contained granular details of the various transactions undertaken by the company between its subsidiaries. Investors were likely impressed by the granularity of the details given by RIL, which were not seen in previous annual reports of the company, analysts pointed out.
While the local regulations mandate that companies disclose the related-party transactions entered by them with their material subsidiaries, the extent of disclosures is at the discretion of the companies.
“The Company has a well-defined governance process for the related party transactions undertaken by it. These transactions are independently reviewed by one of the Big 4 accounting firms/Independent accounting firms for arm’s length consideration,” RIL said in its annual report for 2021-22.
Brokerage firm JP Morgan India said that the key details on related-party transactions between the various subsidiaries of RIL (Jio, Retail, Reliance Property & Management Services) is positive.
“While it is too early to say if the increased disclosures on the large transactions between the subsidiaries are a step on the road to the listing of these businesses, it would be seen as a positive,” JP Morgan India said in a note.
Media reports over the past few months have speculated that Reliance Industries is in the process of listing its two major subsidiaries – Jio Platforms and Reliance Retail – with some suggesting that an announcement could come as soon as the company’s upcoming annual general meeting later this month.
RIL in 2020 had sold a significant minority stake in both Jio Platforms and Reliance Retail to a clutch of private equity investors, Facebook and Google as it looked to raise capital to complete its objective of becoming a net debt-free company.
The stake sale to external investors had fuelled hopes that RIL will eventually list both the subsidiaries on the bourses, said, dealers.
“In our view, if they are going to be eventually listed, investors would like clarity on the transactions between the entities, which now RIL has started to report,” JP Morgan India said.
The annual report of the company also contained more details of the company’s green energy ambitions with Chairman and Managing Director Mukesh Ambani suggesting that the company wants to be the preferred provider of all mobility solutions in India.
“Jio-bp is working on the twin targets of becoming a leading EV charging infrastructure provider and building a CNG network in the country,” Chairman and Managing Director Mukesh Ambani said.
Much in the way that Ambani had suggested that the consumer-facing businesses of RIL will become the leading growth engines of the company more than half a decade ago, Ambani claimed that green energy could achieve the same feat in this decade.
“Over the next 12 months, our investments across the green energy value chain will gradually start going live, scaling up over the next couple of years. This new growth engine holds great promise to outshine all our existing growth engines in just 5-7 years,” Ambani said.
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