Rating Rationale

Brickwork Ratings assigns ‘BWR AA’ Rating for the Bank Loan Facilities aggregating `250 Cr of Reliance Innoventures Pvt Ltd.

Brickwork Ratings (BWR) has assigned ‘BWR AA (Pronounced BWR Double A) (Outlook: Stable) Rating1 for Reliance Innoventures Pvt Ltd.’s (RIPL or the ‘Company’) Bank loan facilities aggregating `250 Cr

Outstanding Ratings

The other outstanding rating of the issuer is as follows Rating Instrument Amount (` Cr) Tenor Rating Assigned Assigned on 600 BWR AA NCD 6.5years Jan 2015 (amount Raised `350 Cr) (Stable)

BWR has essentially relied upon audited standalone financial results upto FY14, publicly available information and information/clarification provided by the Company.

The rating factors, inter alia, Strategic Importance of RIPL being the ultimate holding company of Reliance Anil Group (ADAG), financial flexibility enjoyed by the Company, established operations of the group companies, strong Management and substantial holdings in group’s listed companies through intermediate holding companies. The rating is however constrained by RIPL’s limited revenue stream and dependence on the promoter funding or refinance to meet the debt obligations.

Background Reliance Innoventures Private Limited (RIPL) is the ultimate holding company of Reliance- Anil Dhirubhai Ambani Group (ADAG). It has strategic holdings in various listed operating group companies through intermediate holding companies. The Company undertakes sale of wind power and undertakes EPC contracts for small projects. The Company holds majority of the promoter shareholding in Ltd (Rated BWR AAA), Ltd., Ltd.(BWR AA-) & Limited among other Reliance ADAG Group Companies directly and through subsidiaries.

Ownership & Management RIPL is held by Mr. , Mrs. Kokilaben D Ambani and other family members. Mr. Anil Ambani, Mrs. and Mr. Hasit Shukla are among the board of directors of the Company.

1 Please refer to www.brickworkratings.com for definition of the Ratings

www.brickworkratings.com 1 25 Aug 2015

Financials On a standalone level RIPL has reported total income of `55.89 Cr in FY14 against `55.12 Cr in FY13.The Company has reported net loss of `18.67 Cr in FY14 against loss of `135.88 Cr in FY13. The tangible Networth of the Company stood at `36488.55 Cr in FY14 against `35851.06 Cr in FY13. Total Debt stood at `2440.68 Cr in FY14 against `3169.58 Cr in FY13. (Key financial figures of the Company are given in the annexures)

Key terms of Bank Loan The Company has been sanctioned Term loan of `250 Cr with a tenor up to 6.5 years to be used for refinance of loans availed, meeting capital expenditure in form of wind mill assets, on lending to infrastructure subsidiaries/group companies in the form of ICD/sub debt or refinance promoter loans used for such purpose and others. The loan has bullet repayment on maturity. However, interest on the loan will be payable monthly. The loan is backed by way of exclusive charge on windmill/tangible assets/trade receivables/inventory/loans and advances both present and future of the Borrower, such that a security cover of at least 1x of outstanding amount under loan at all times. Further the loan is secured by pledge (First Charge over equity shares as mentioned below :-

 12,379,001 equity shares of Reliance Communications Limited.  6,364,675 equity shares of Reliance Infrastructure Limited

Other Key Covenants of the Loan

 Promoter /Promoter group to maintain 100% shareholding and management control in the Issuer and share security provider.  Total Debt raised by RIPL Group from third parties which are not part of the Promoter / Promoter Group against pledge of RINFRA, and RPOWER shares to be capped at `3000Cr and against pledge of RCOMM shares to be capped at `4000Cr. For the purpose of computation of such cap the debt raised either jointly or severally, shall be computed in ratio of share cover pledged for the current or any other transaction)  The combined promoter group equity holding at RINFRA, RCOMM and RPOWER to be maintained at: RINFRA-35%, RPOWER- 25%, RCOMM- 35%. For purpose of calculating equity shareholding, RINFRA’s equity shareholding in RPOWER shall not be included.  Issuer to ensure that the Pledged/Listed Shares of the listed Company should continue to be listed on both NSE/BSE, throughout the tenor of the loan.

www.brickworkratings.com 2 25 Aug 2015

Rating Outlook The given Rating majorly captures the status of RIPL as the ultimate holding company of Reliance-Anil Dhirubhai Ambani Group (ADAG) and its strategic holdings in various listed operating group companies through intermediate holding companies though RIPL itself does not have significant operational cash flows. RIPL’s continuance as a holding company of the major companies of the group, performance of the key group companies and the ability of the promoters to timely infuse the required funds or refinance the debts are crucial rating sensitivities.

Analyst Contact Relationship Contact

[email protected] [email protected]

Phone Media Contact

1-860-425-2742 [email protected]

Disclaimer: Brickwork Ratings (BWR) has assigned the rating based on the information obtained from the issuer and other reliable sources, which are deemed to be accurate. BWR has taken considerable steps to avoid any data distortion; however, it does not examine the precision or completeness of the information obtained. And hence, the information in this report is presented “as is” without any express or implied warranty of any kind. BWR does not make any representation in respect to the truth or accuracy of any such information. The rating assigned by BWR should be treated as an opinion rather than a recommendation to buy, sell or hold the rated instrument and BWR shall not be liable for any losses incurred by users from any use of this report or its contents. BWR has the right to change, suspend or withdraw the ratings at any time for any reasons.

www.brickworkratings.com 3 25 Aug 2015