Reliance Petro to raise Rs 10,000 cr more

Mukesh Ambani-controlled Reliance Petroleum, which is coming out with an initial public offer to raise about Rs 6,000 crores (Rs 60 billion), plans to borrow another Rs 10,000 crore (Rs 100 billion) to finance its mega refinery project, which when completed in December 2008 would be the sixth largest refinery globally.

RPL, a wholly-owned subsidiary of Reliance Industries, is building a greenfield Rs 27,000 crore (Rs 270 billion) refinery at Jamnagar in Gujarat and has filed a draft prospectus with market regulator Securities and Exchange Board of India for the public offer.

Of the total, the company would pump in Rs 11,250 crore (Rs 112.5 billion) as equity, including about Rs 5,500-6,000 crore (Rs 55-60 billion) that it would garner from the IPO. The company had also recently mobilised Rs 6,750 crore (Rs 67.5 billion) through a syndicated loan deal.

Besides, RPL plans to seek additional funds through export credit agencies for about Rs 4,500-6,750 crore (RS 45-67.5 billion). It also plans to raise further debt funding of about Rs 2,250-3,375 crore (Rs 22.5-33.75 billion), according to the draft prospectus.

The project would include a refinery with a capacity to process 5,80,000 barrels per day of crude and a 9,00,000 tonne per annum polypropylene plant in Jamnagar. The project is planned to be completed by December 2008, RPL said.

The proposed issue would be the largest public offer so far in 2006 and will see RIL's holding in the company come down to 80 per cent. The total issue comprises of 180 crore (1.8 billion) shares of face value Rs 10 each. Of this, RIL would subscribe to 90 crore (900 million) shares and the remaining would be given to the public.

In its prospectus, RPL has cited its inability to raise this substantial amount of money as one of the risk factors.

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