Reliance Naval and Engineering Ltd, controlled by Anil Ambani, said that it is facing an acute cash-flow crunch after orders dried up, amid efforts to restructure a pile of debt.

The disclosure in the company’s annual report comes just ahead of a court hearing whether to put the debt-laden company under insolvency proceedings, potentially dealing another blow to the former billionaire’s shrinking empire.

His wireless carrier slipped into bankruptcy earlier this year.

Impact on projects

“There is an acute cash-flow crunch as the expected debt resolution is yet to be actualised,” said Debashis Bir, Chief Executive Officer, Reliance Navals, in the report. This is impacting the progress of the existing projects, leading to extended timelines and eroding the confidence amongst clients.

The revival of the shipyard is crucial for Ambani, who’s counting on potential government defence contracts to turn the company’s fortunes around, as Prime Minister Narendra Modi steps up spending on national security.

The government has invited bids for $2.2 billion of warships and support vessels, part of Modi’s $250-billion military modernisation plan.

“Policy changes brought in by the government has not led to increased shipbuilding contracts for private companies,” said Bir.

Reliance Naval is facing the prospect of bankruptcy after lenders rejected its debt repayment plan, Bloomberg News reported on Tuesday. The firm has defaulted on a debt of over ₹64.6 billion as of March 31, to lenders including the Union Bank of India, IDBI Bank and the Central Bank of India, according to its auditors report.

Anil Ambani’s wider conglomerate is planning to dispose of assets spanning roads to radio stations, aiming to raise about $3 billion to help pare debt that has ballooned to about ₹939 billion at four of its biggest units — excluding the telecom business Reliance Communications Ltd.

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