new delhi international rating agency moodys has downgraded the outlook for reliance industries from stable to negative citing the corporates recent aggressive internal and external expansionthe rating action reflects concerns relating to the aggressive internal and external expansion by the reliance group and the growing business and financial risk associated with the rapid expansion moodys said in a statement herewhile moodys investor services affirmed the ba2 rating to the unsecured debt securities of ril it said the outlook for the rating has been changed from stable to negative observing that reliances recent expansion was significantly outside its well protected strong margin petrochemical business it said moodys believes that this rapid expansion into liberalising and more competitive markets will lead to weaker profitability and operating cash flow marginsit cited refining and telecom operations in particular as reasons for weaker operating cash flow margins and said that expansion at the same time would increase the investment levelsit is unclear at this stage how much of the financing for these various investments will be taken on reliance industries balance sheet the statement said while clarifying that groups telecommunication companies reliance infocomm and reliance telecom are only treated as nonconsolidated associate investmentsit also wondered as to how much would be debtfinanced via reliance industries associate companies and how much would be provided by strategic or financial partnersril has generated a consolidated turnover of rs 5710 crore moodys ba2 ratings however continue to reflect the reliance groups entrenched domestic positions in its petrochemcial activites including very strong market shares its world class production facilities with strong economies of scale the statement saidit also cited groups strong margin performance and good cash flow generation in petrochemcials and derivatives even during periods of cyclical weakness for ba2 ratingfor its rating action moodys took into account the recent expansion including acquisition of minority position in indian petrochemicals for a little over 500 millionthe statement said the expansion has included ril merging with its sister company reliance petroleum launching of its new low cost telecom services across india announcement to build a nationwide petrol retailing network increased stake in power generation and transmission company bses and a major gas discovery in southwestern coast of india