Monday, June 20 2005 17:06 Hrs (IST) - World Time -

New Delhi: Global rating agency Standard and Poor's (S&Ps) today (Jun 20, 2005) cautioned that the credit quality of Mukesh Ambani controlled Reliance group's flagship company RIL 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."

The details and modalities of demerger are yet to be worked out even as Anil Ambani, who got Reliance Energy, Capital and Infocomm companies as part of deal, yesterday (Jun 19, 2005) parried queries as to what cash compensation he got from the elder brother in the settlement announced on Saturday.

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.