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Reliance Infrastructure, a part of debt-ridden Reliance Group led by Anil Ambani, is looking to becoming debt free and cash surplus in 2019 calendar year after closing the Rs 18,800-crore deal with the Adani Group for Mumbai transmission business, Lalit Jalan, CEO, Reliance Infrastructure, told in an interview to BusinessLine.
“Our debt has been pared down by a whopping 65 per cent with just the sale of integrated Mumbai power business as the entire proceeds - Rs 13,800 crore - has been utilised for debt liability payoffs,” Jalan said.
On top of that, he added that the company has a bucket of regulatory assets worth Rs 5,000 crore from Mumbai distribution business till the date of closure of the deal. This is expected to flow to the company over the next two years as part of the deal with Adani.
According to Jalan, the company expects to receive arbitration awards worth another Rs. 6,000 crore from Delhi Metro Rail Corporation, Goa Power and the National Highways Authority of India.
“The arbitration awards have been challenged, and we have already won in the single High Court Bench in case of DMRC,” he said. “We are confident of winning the appeals from the Division Bench of Delhi High Court and will be utilising the capital for debt liabilities payoffs.”
Jalan noted that post-completion of the deal, Reliance Infrastructure has the strongest balance sheet in the sector. “Our debt-to-equity ratio is barely 0.33: 1 whereas the median ratio for the sector is 4:1, often as high as 6 or 8:1. We are looking at being cash surplus in 2019 calendar year,” he said, adding there are no further asset monetisation plan on the table at the moment.
Construction focus
Going forward, Reliance Infrastructure sees its engineering and construction business as “the propeller for the growth of the company”. He added that the company has scaled the order book by a factor of over 9 in the last three years to Rs 28,500 crore currently.
“This added order book will now translate to topline for the company. With our Mumbai power business, the turnover will be impacted, but the interest outgo will also correspondingly reduce due to paying off of our debts. Thus our profitability will remain the same,” the CEO said.
In the current fiscal, Reliance Infrastructure will target project opportunities worth around Rs. 2 lakh crore to increase its EPC order book to Rs. 50,000 crore, he added.
Delhi power distribution business, which is two-and-a-half times the size of the Mumbai business, according to Jalan, will continue driving the company’s revenue flow. “There’s still a good 15 years to go for licence in Delhi, while the business is organically witnessing impressive growth,” he said.
Reliance Infrastructure’s road portfolio comprising 11 assets with 15-30 years annuities is another key business for the company growing by 13 per cent annually. “In fact, with almost 200 stressed assets in the sector, we would be looking at some of these assets for takeover when we turn cash-surplus in calendar year 2019,” Jalan added.
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