RIL''s credit quality might weaken: S&P

21 June 2005

New Delhi: Global rating agency Standard and Poor's has cautioned that the credit quality of the Mukesh Ambani-controlled Reliance group flagship, Reliance Industries Ltd might "weaken" if significant cash outflows were part of the settlement between him and younger brother Anil.

Though financial details are still "unclear", S&P said, "specifically, significant cash outflows, possibly resulting from share repurchases, division and distribution of liabilities and / or the contingent obligations on RIL, could materially affect the company's financial profile, which might weaken its credit quality."

However, S&P noted that the de-merger and eventual exit of RIL from the group's capital-intensive telecommunications and power business should not have a negative impact on its business risk profile and may even have a positive impact.