Anil Ambani's reported decision to take the headquarters of his group companies back to the Ballard Pier office, which the group quit a few years back, and monetise the swanky Reliance Center in Santa Cruz is part of the overall strategy to cut the group's debt into half.
Reports say the younger Ambani sibling, whose companies are facing a huge debt burden with some facing bankruptcy proceedings, is in talks with some private equity firms to raise about Rs 3,000 crore from the sale or long-term lease of the Reliance Center in Santa Cruz. The 7 lakh square feet property has a leasable area of 6 lakh square feet and some sources estimate the value at Rs 1,500 crore to Rs 2,000 crore.
The group companies, Reliance Capital Ltd, Reliance Infrastructure Ltd, and Reliance Power Ltd, are struggling under heavy debt and their shares have plummeted in the Bombay Stock Exchange (BSE) and the National Stock Exchange. The group's defunct telco Reliance Communications is facing bankruptcy proceedings under the Insolvency and Bankruptcy Code after creditors and lenders took it to the National Company Law Tribunal (NCLT).
Reliance Communications' bid to reduce its debt by transferring its broadband spectrum to the elder Ambani sibling's Reliance Jio hit a hurdle after the Department of Telecommunication (DoT) raised objections over unpaid spectrum dues. The deal fell through after Mukesh Ambani's company refused to give DoT a guarantee for the past dues.
Reliance Capital, which has Rs 18,000 crore debt, is following the "death of debt" mantra, a recent report in the Economic Times quoted Anil Ambani as saying. The group plans to reduce debt by 50 per cent this financial year through stake sales. The office property monetization is seen as a major step towards debt reduction. "While an outright sale will generate windfall cash, a long-term lease should help the group to raise money quickly through multiple lease agreements," a report in the Economic Times said quoting an unidentified source."Plans are afoot to make the group debt free in the next one year."
However, market observers say it may not be easy for Anil Ambani to monetise Reliance Centre as the property owned by Reliance Infrastructure (R-Infra) is the subject of a court case involving the Maharashtra Electricity Regulatory Commission (MERC). A group of consumers had also approached the Appellate Tribunal for Electricity (Aptel) with the argument that the property needs to be transferred to Adani Transmission Ltd, which bought Reliance Infra's retail power distribution business in 2017 or users should get a concession on their bills equivalent to the proceeds of the sale of about Rs 2,000 crore. The case is pending before Aptel.