RIL rejigs investment portfolio; focuses on bonds, deposits

Corporate bonds and government securities seem to finding favours with cash-rich top business house Reliance Industries Ltd, whose investment portfolio happens to be one of the biggest among all Indian companies.

Mukesh Ambani-led RIL, which had a cash chest and marketable securities worth over Rs 90,000 crore (Rs 900 billion) at the end of the last fiscal, is known for very effectively managing its financial resources by placing them in liquid instruments and highly rated securities.

An analysis of long-term and current investment portfolios disclosed by RIL in its latest annual report shows that the company parked its funds during 2013-14 in various products, including shares, debentures, mutual funds, bank fixed deposits, certificate of deposits, government securities and corporate bonds.

However, the company has increased its exposure to the government securities and corporate bonds, especially in its long-term investment portfolio, whose total size nearly doubled to over Rs 26,000 crore (Rs 260 billion) during the last fiscal. RIL's long-term investments in government securities rose to Rs 5,357 crore (Rs 53.57 billion) as on March 31, 2014, from just from Rs 650 crore (Rs 6.5 billion) a year earlier, shows the company's 2013-14 report.

In the same period, long-term investment in corporate bonds or debentures rose from Rs 347 crore (Rs 3.47 billion) to Rs 7,414 crore (Rs 74.14 billion).

The bonds where RIL has made investments include those from Tata Sons Ltd, HDFC, LIC Housing Finance, Tata Steel, Power Finance Corp, IDFC, NABARD and NHAI.

Within the company's current investment portfolio also, the exposure to government securities rose considerably from Rs 575 crore (Rs 5.75 billion) to Rs 1,379 crore (Rs 13.79 billion) during 2013-14.

These securities include those issued by the central government, as also by some states.

However, the current investments in corporate bonds declined to Rs 520 crore (Rs 5.2 billion) as on March 31, 2014, from Rs 8,179 crore (Rs 81.79 billion) a year earlier.

At the same time, the exposure to commercial papers and certificates of deposit of various financial institutions rose to Rs 1,799 crore (Rs 17.99 billion) from nil earlier.

During the last fiscal, RIL also expanded its exposure to fixed maturity plans of mutual funds for its current investments, while investments in equity shares also saw an upward trend.

RIL's total current investments rose by over Rs 5,500 crore (Rs 55 billion) to Rs 34,500 crore (Rs 345 billion) during the year, while its equity portfolio included shares of NTPC, ONGC, CIL, Infosys, ITC, L&T, Maruti, SBI, Sun Pharma, TCS, Tata Motors, Axis Bank, Tata Steel, HUL, United Phosphorous, M&M and IndusInd Bank.

The equities held by RIL in its long-term investment portfolio included shares of EIH Ltd, HFCL, NMDC, NTPC, Oil India, ONGC, SBI, HDFC and Den Networks, as also that of the unlisted National Stock Exchange.

Interestingly, ICICI Bank exited from RIL's long-term investment portfolio and HDFC Bank made an entry during the last fiscal.

Image: Reliance Industries chairman Mukesh Ambani; Photograph: Reuters