Many of India’s infrastructure sectors are in a critical condition which was increasing losses of companies and deterring investment flows. In an interview with Bloomberg TV, Reliance Infra Director Lalit Jalan says the group was looking to monetise cement and road assets to reduce the company’s debt. The focus is now on defence sector.

What is the timeline that you have set for monetising the road and cement businesses?

The Board reviewed the entire portfolio yesterday and they looked at the tremendous opportunities that we are seeing in front in the defence business, which is part of the new initiative by Prime Minister Narendra Modi on making India self-sufficient on defence. That is ₹20 lakh crore opportunity in the next 10 years. We looked at our existing portfolios of cement and roads. So, the Board has decided that we should keep reducing the leverage and reducing the debt amount. Keeping our investments in defence in mind, we have decided to monetise our cement and roads.

As you said you will be using this to pare down your debt. What’s the current debt level and the debt equity ratio?

The total consolidated debt of Reliance Infrastructure is in the range of ₹26,000 crore and the debt:equity is little below 1 – it’s in the 0.97 range. On the cement side, we have an operating capacity of 5.6 million tonnes besides several other development assets that are part of the portfolio.

The 5.6 mt plant is an absolutely modern one which started its operations last year. We expect to get very good valuation for our cement portfolio. We have launched the process and had 15 people showing interest out of which we have shortlisted seven. These seven players are now in the final stage of due diligence and we expect to close the bids and come to a conclusion in this calendar year.

How many road assets are you looking to monetise?

We have 11 road projects. These are all BOT projects and these are in the high urban-centric, high growth area centres, typically on the Golden Quadrilateral or the East-West Corridor. We are looking to divest our entire 100 per cent holding in all the 11 road projects. The idea is to sell it to one buyer – either it could be a foreign strategic or private equity. The total amount of money that we have already invested in these projects is ₹8,800 crore. If you look at our portfolio, 10 road projects are already operational and the last road is becoming operational tomorrow. Just the tail-end capital expenditure is required to complete the 6-laning road projects need to be done.

You picked up stake in Pipavav Defence. What more can they expect from the group?

The company announced the acquisition of Pipavav and that process is underway. We expect to close the transaction during this financial year. Pipavav will be a naval centre and maritime centre of excellence. It has excellent facilities in terms of the second largest dry dock in the world, a kind of facility which is unparalleled in India. Given India’s focus on becoming self-reliant and looking at Indian vendors to compete large naval orders, Pipavav becomes a very attractive asset. We are in discussion with major international players for tying up on technology across all the three verticals namely navy, aero space as well as land systems.

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