New Delhi: Reliance Industries may invest more than Rs 1,00,000 crore in various businesses in next few years, but concerns still remain about use of cash flow by the Billionaire Mukesh Ambani-led conglomerate, a report has said.

The mega investment plan has been outlined in an equity research report by global investment banking major Morgan Stanley, which incidentally happens to be financial advisor in international energy giant BP's proposed partnership with RIL.

The investments would be mostly in E&P (exploration and production), petrochemicals and shale gas by RIL, which as per Morgan Stanley, has already announced investments totaling USD 7.2 billion (over Rs 30,000 crore) since January 2010.

The large investment pipeline notwithstanding, Morgan Stanley said that it was concerned over limited clarity on the use of cash flow by RIL.

Noting that cash flows being bigger than capex (capital expenditure) size was leading to an uncertainty, Morgan Stanley said that its conerns mainly stem from three issues -- Lack of clarity of deploying cash flows, E&P remaining a dampener and lower petrochemical net backs.

The netback is calculated by deducting from the total revenue the entire costs incurred in taking the product to the market. These costs include those associated with import, transportation, production, refining and royalty etc.

Morgan Stanley detailed RIL's investment plans and concerns over the mismatch with cash-flows, along with a disclaimer that it was an advisor to BP on RIL deal.

RIL plans to spend USD 10-12 billion (Rs 45,000-54,000 crore) in petrochemicals business over 5 years and a similar amount in its E&P business, Morgan Stanley said.

The report dated July 8 further said that RIL was estimated to invest a total of close to USD 11 billion (about Rs 50,000 crore) over the life of its three shale gas joint ventures in the US, including the acquisition costs.

In the five years alone, RIL was estimated to invest USD 4-6 billion (Rs 18,000-27,000 crore) in its three investments in shale gas, it added.

Earlier at an investor conference in February, RIL had projected investment totaling USD 25-30 billion (Rs 1, 10,000-1,35,000 crore) for the next five years in its various businesses, including energy and telecom sectors.

RIL also said in an investor presentation in April that it would pursue both organic and inorganic growth opportunities and disclosed an "investment programme of over USD 10 billion to cater to domestic market" in petrochemicals.

The Morgan Stanley report said RIL could see an annual capex of USD 3-4 billion in E&P and petrochemicals businesses, as against an incremental cash flow of USD 7-8 billion a year.

The expected receipt of USD 7 billion from BP deal could further increase the cash flow in the current fiscal and lower the E&P spending, the report said. But, investments in telecom and retail businesses could fill that gap, it added.

"However, these would be longer gestation projects, and the industry landscape is highly competitive," Morgan Stanley said about retail and telecom sector plans of RIL.

It noted that RIL ventured into retail in 2006 and it was estimated to have spent USD 2.5-3 billion so far in setting up over 1,000 stores. Besides, RIL has already invested USD 2.8 billion in telecom towards acquisition of spectrum.

(Agencies)