High on debt troubled billionaire Anil Ambani blames everyone but himself

  • The group has paid back as much as ₹350 billion in the last 14 months
  • Payments were made almost entirely from asset monetization and operational cash flows
  • The group is yet to recover as much as ₹ 300 billion which are stuck with regulators for 5-10 years

Billionaire Anil Ambani who was recently ordered by the Supreme Court to pay up a vendor or face possible jail -- has promised to meet all his debt obligations.

His group of companies under the Anil Dhirubhai Ambani Group banner---Reliance Communications, Reliance Capital, Reliance Power and Reliance Infrastructure—are known to have a total outstanding debt of over ₹1 trillion.


Against the odds

In a conference call on June 11, Anil Ambani demonstrated that he walked the talk, saying that the group has already paid back as much as ₹350 billion in the last 14 months. These comprised of principal repayments of ₹248 billion and interest payments of ₹106 billion. He however did not provide a breakup of which of his companies took part in the repayment.


“These payments have been made in the face of insurmountable odds and the most challenging financial environment witnessed in the country in decades. During this entire period, lenders from all categories - whether banks, mutual funds, insurance companies, provident funds or NBFCs - have provided ‘zero’ net additional liquidity or debt to any entity of the Reliance Group,” Anil said.


The debt-heavy group has undertaken a much-delayed journey to transform into a capital-light, bare minimal debt, which can provide higher return on equity, he said.


“The debt servicing payments have necessarily had to be made almost entirely from asset monetisation (despite a liquidity starved environment), and operational cash flows in an operating environment beset by procedural and regulatory hurdles,” Anil said explaining his new philosophy.


Facing bankruptcy


His most troublesome company is Reliance Communications, which currently started bankruptcy proceedings at NCLT. One of its creditors Ericsson had dragged it to court, leading to an order to pay up ₹459 million, failing which Ambani was threatened with jail. Luck shined as Anil’s more successful brother Mukesh Ambani, the owner of Reliance Industries, bailed him out a day before the deadline ended.


Since then, Anil’s group had many tiny but formidable steps towards lowering its debt by selling off assets. His company Reliance Cap closed a deal with Nippon Life Asset Management by selling its mutual fund business.


After the deal was closed, Ambani has started speaking up against the financial system. “The continuing total apathy and lack of any support whatsoever from the financial system, which will ultimately only significantly hurt the interests of lenders themselves as well as all other stakeholders,” he said.


Personal anguish


In the last few weeks, the stocks of all group companies were being hammered and he is personally anguished about the state of affairs. “Unwarranted rumour mongering, speculation, and bear hammering of all Reliance Group companies shares over the last few weeks has caused grave damage to all our stakeholders,”


“I am deeply concerned for the group’s over 7 million strong retail shareholders base, perhaps the largest in the world. Their unstinted support is the bedrock of the young and dynamic group,” he said.


While speaking of his debt, he also spoke of the money his companies have to receive. “Regulatory bodies and courts have not passed any final adjudication orders on claims aggregating to over ₹ 300 billion that are due for over 5 - 10 years to various Group companies, especially Reliance Infrastructure and Reliance Power and affiliates. The final decisions have been inordinately and repeatedly delayed for one reason or the other,” Anil lamented.


It is common for state electricity boards to delay passing tariff orders, which leave many public as well as private power producers and distributors in debt.

SEE ALSO:
Anil Ambani wants RBI to play Big Brother to ‘gasping’ NBFCs
The Ambanis had a 3 Cs mantra — and it has changed over a generation

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