Indian tycoon Anil Ambani plans to raise about Rs. 21,700 crore ($3.2 billion) by selling assets from roads to radio stations in a bid to cut debt.
According to the spokesperson, the breakdown of asset sales would be – Reliance Infrastructure is seeking Rs.9,000 crore from the sale of nine road projects, Reliance Capital aims to raise Rs. 1,200 crore by selling its radio unit, and Rs. 11,500 crore from monetizing its holdings in the financial business.
Anil Ambani, on June 11, said that his Reliance Group repaid Rs. 35,000 crore in the past 14 months through asset disposals. But a large pile remains. The four biggest group companies still have about Rs. 93,900 crore of debt. And that excludes Reliance Communications, Ambani’s former flagship firm, that recently slipped into insolvency.
Further asset sales would help Ambani bolster the financial health of his groups companies after a string of setbacks that included an auditor resigning at one of the firms and plunging stock prices at others. Rating cuts have also flagged credit market concerns.
Quick closure of the planned asset sales is key. CARE Ratings had pointed to delays in divestments at Reliance Capital in an April statement while cutting the financiers rating. Reliance Communications signed a deal in 2017 to sell its telecom assets to Reliance Jio Infocomm Ltd., owned by Anil’s elder brother Mukesh Ambani, but was scrapped earlier this year.
The lack of timely realizations in the asset sales is sounding alarms for most of the Anil Ambani-led companies, said Mathew Antony, managing partner at Aditya Consulting that advises bankrupt firms on fund raising.
Reliance Infrastructure is in advanced talks to sell its nine road projects, its spokesman said. The Mumbai Metro rail operator aims to be debt-free by March 2020. It pared its consolidated debt by 45 percent over a year to ₹17,770 croreas of end-March, the spokesman said.
On the block
Proceeds from these transactions would help trim debt across companies and could aid in resurrecting credit ratings, according to Reliance.
Brickwork Ratings, the latest to downgrade Reliance Capital, cut its score one notch last month. PriceWaterhouseCoopers, one of its statutory auditors, resigned in June saying that it didn’t receive satisfactory response to certain observations and transactions — a claim the company has refuted.
Reliance Capital had duly responded to the various queries and letters of PWC and convened a meeting of its audit committee on June 12 to further respond to PWCs May 14 letter, the company said. PWCs observations were completely baseless and unjustified and the auditor acted prematurely without statutory discussions with the company’s audit committee, it said.
Reliance Power was cut six steps in June by ICRA, which cited deteriorating finances and liquidity. Reliance Infrastructure, whose rating was dropped to D at Care Ratings last month, reported a consolidated net loss of 33.01 billion rupees for the quarter ended March. Reliance Group is committed to meeting all future debt obligations, Ambani said in a rare conference call last month, and becoming capital light, with bare minimal debt.―The Hindu Business Line