Reliance Industries May Transform Into Holding Company Says CreditSights Of Fitch Ratings | Reliance Industries may turn into a holding company under succession plan

Reliance Industries: Reliance Industries Limited, associated with various businesses, may eventually become a holding company. Under this, it will have majority stake in independently working units handling major businesses. Fitch Group’s unit Credit Sites said this in its report on Monday.

It said that with better conditions on the debt front, the earnings outlook for its telecom and retail sectors is expected to be better. These factors offset the weak outlook for Reliance’s refining and distribution sector amid higher crude oil prices and its increased capital expenditure requirements.

Reliance Industries has recently taken forward the succession plan of the group. Under this, group head Mukesh Ambani announced that his three children – Akash, Isha and Anant Ambani will be included in the company’s board of directors. Ambani said that he will continue to discharge his duties as Chairman and Chief Executive Officer (CEO) for the next five years.

In a report titled Mukesh Ambani’s succession plan at Reliance Industries, Credit Sites said, “We believe that Ambani’s succession plan will go ahead. This is because the risks associated with having a single actor have been a matter of concern for many investors. Is.”

It said, “All three of Ambani’s children have been given leadership positions in each of RIL’s major units (telecom, retail and new energy). Given this, we believe that such a clear separation will harm the siblings.” Any future dispute between the two can be avoided.”

According to the report, the succession plan that has been made does not mean that Ambani will suddenly leave the group. If this were to happen, operations and company performance would be disrupted. Rather, it involves preparing and guiding the next generation.

“We believe RIL could eventually be completely converted into a holding company (Holdco), under which it would have majority stakes in independent entities that operate core businesses,” the credit sites said.

“Such a segmentation would clarify the differences between the assets and cash flows of each entity, enable full capacity utilization, provide more financing options and enable better capital allocation and monitoring,” it said. Each listed entity will have its own shareholders and possibly a board of directors.

According to the report, “We believe that RIL will remain a family-owned company after Ambani hands over the reins of his personal business to his children. One possible arrangement could be the creation of a trust. The ownership and control of this trust would be “This will be jointly managed by Ambani, the three siblings and their family members, while RIL will continue to be managed by a professional management team.”

Ambani made his succession plan public for the first time in 2022. He had announced that each of his three children would head different divisions of the company. Under this, it was announced that Akash will be made the head of the telecom unit, Isha will be made the head of the retail business and Anant will be made the head of new energy.

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