Anil Ambani hopes to raise Rs 21,700 crore from asset sales of his group companies to bring down the debt burden that had almost landed him in jail, forcing elder sibling Mukesh Ambani to come to his rescue.
Anil Ambani said a month ago that companies of the Anil Dhirubhai Ambani Group had repaid loans amounting to Rs 35,000 crore, over 14 months, to bring down the debt burden.
Anil Ambani plans to raise Rs 21,700 crore ($3.2 billion) by selling assets from roads to radio stations in a bid to cut debt, a Bloomberg report said. Citing a spokesperson of the group, the report gives a break up of the asset sales.
Reliance Infrastructure Ltd is seeking to raise Rs 9,000 crore from the sale of nine road projects. Reliance Capital Ltd hopes to raise Rs 1,200 crore by selling its radio unit, and Rs 11,500 crore from monetizing its holdings in the financial business.
The four big group companies still have about Rs 93,900 crore of debt, said the report. Anil Ambani aims to reduce this burden by the current bout of asset sales. This amount excludes the debt incurred by Reliance Communications Ltd, Ambani's former flagship firm, that is currently facing insolvency proceedings.
Ambani hopes to clean up the books of his group companies through asset sales. Financial experts say, time is the essence for the success if, the asset sales were to meet its purpose. The group is probably aiming for quick closure. CARE Ratings recently pointed to delays in divestments at Reliance Capital in an April statement while cutting the financier's rating.
Reliance Communications' 2017 deal to sell its telecom assets to Reliance Jio Infocomm Ltd of brother Mukesh Ambani-led Reliance Industries Limited (RIL) was scrapped earlier this year, following objections from the Department of Telecom (DoT) which wanted the buyer to guarantee payment of the past dues.
"The lack of timely realizations in the asset sales is sounding alarms for most of the Anil Ambani-led companies," the report quotes the managing partner at Aditya Consulting, Mathew Antony, as saying.
Swiss telecom equipment supplier Ericsson dragged Reliance Communications to court after it defaulted twice on payments. When the company failed to raise enough funds to clear the dues by the Supreme Court, contempt proceedings were launched against the tycoon. The court ordered Anil Ambani's personal appearance and set a payment deadline before he would be sent to jail. Mukesh Ambani chipped in to clear the dues to save his younger sibling jail time.
Reliance Infrastructure, according to the report, was in advanced talks to sell its nine road projects. The Mumbai Metro rail operator aimed at becoming debt-free by March 2020 after paring its consolidated debt by 45 percent in a year to Rs 17,770 crore as of March-end, the spokesman said. Proceeds from these transactions would help trim debt across companies and could aid in resurrecting credit ratings.