By now we all know that embattled business tycoon Anil Ambani is probably going through the worst phase in his career. Losses, liabilities, write offs, impairments, insolvency proceedings, asset sales; these are the only words one hears in connection with the Anil Dhirubhai Ambani Group (ADAG Group) companies.
Just to give you some context; the ADAG Group of companies has a mix of listed and unlisted entities under its umbrella. At the height of its success the combined market capitalization of these listed companies was over ₹ 4 lakh crore, roughly a decade ago. However, fast forward to present date and its flagship entity, RCom, is undergoing insolvency proceedings; and the remaining listed companies have been reduced to a combined total market cap of an embarrassing ₹ 20,500 crore. The chief reason for all his trouble can be sourced back to one word “Debt” – massive amounts of it.
Reliance Power, just a couple days ago, reported its biggest ever quarterly loss of ₹ 3,560 crore in the quarter ended March 2019; this compared with a profit of ₹ 188 crores in the year earlier period, according to exchange filings. This was on account of one time impairment loss of ₹ 4,170 crore during the quarter because of lack of gas, which affected the quality of its generation plant and unviable solar assets. The Power unit’s revenue dropped 32% year on year and its debt has tripled in the previous financial year. Let us also recall that Reliance Power sold its Mumbai power business to the Adani group last financial year.
The telecom unit of the group, Reliance Communications, voluntarily approached the insolvency court after failing to sell assets to repay lenders. It owes in excess of ₹ 50,000 crore to banks.
Reliance Infrastructure, whose quarterly results were supposed to have been disclosed by now, has again deferred its results for a second time until June 14th.
Reliance Capital was recently at the receiving end of ratings downgrades for its short-term instruments from Moody’s and two other firms and is in the process of selling assets to bolster its finances. Also, this financial services arm of the ADAG Group has signed a definitive agreement to sell its 42.88% holding in Reliance Nippon Life Asset Management Ltd. to its Japanese joint venture partner in order to pare its debt.
It is against this backdrop and among these testing times that the group’s chairman, Anil Ambani, via a media conference call just this morning, tried to assuage the rattled nerves of investors. He stated that the ADAG Group has serviced debt payments of over ₹ 35,000 crore to its various lenders over the last 14 months. This includes ₹ 24,800 crores principal repayment and ₹ 10,600 crores in interest. He made it a point to state that this repayment was made without any help from Banks, NBFCs, Pension Funds, Mutual Funds, Insurance Funds etc. and went on to say that he regrets the apathy and lack of any support whatsoever from the financial system claiming that “these payments were made in the face of insurmountable odds and the most challenging financial environment in the country in decades”. He also went on to say that the servicing of this debt was made through asset monetisation of Reliance Capital, Reliance Infrastructure and Reliance Power. He further assured that his group was committed to meeting all its debt obligations in a timely manner