Mumbai Power Business: Adani deal slashes R-Infra’s debt load

By: |
Mumbai | Published: August 30, 2018 5:45:53 AM

Reliance Infrastructure (R-Infra) on Wednesday said that it has cut its debt to about a third to just Rs 7,500 crore, following the sale of its Mumbai power distribution business to Adani Transmission in a deal valued at Rs 18,800 crore.

Reliance Group chairman Anil Ambani (File photo)

Reliance Infrastructure (R-Infra) on Wednesday said that it has cut its debt to about a third to just Rs 7,500 crore, following the sale of its Mumbai power distribution business to Adani Transmission in a deal valued at Rs 18,800 crore.

The company, which had a gross debt of about Rs 22,000 crore prior to the deal, has reduced its debt by Rs 13,800 crore from the deal proceeds and is now aiming to be debt free in another year, Reliance Group chairman Anil Ambani said. “In addition, we have over Rs 5,000 crore of cash inflows from past regulatory assets which will flow to Reliance Infrastructure and not to Adani. We also have a further cushion of arbitration worth Rs 8,000 crore yet to be decided,” Ambani said. He added that the company’s debt-to-equity ratio after the deal now stands at 0.3. At the end of FY18, the company’s gross debt-to-equity stood at 0.87, according to Bloomberg data.

Ambani added that R-Infra’s annual interest cost will also come down from Rs 2,600 crore to Rs 800 crore. The company reported an 18.7% year-on-year (y-o-y) drop in net profit to Rs 272 crore for the quarter ended June 30, 2018. Total income was only marginally higher y-o-y, at Rs 7,991 crore.
The company’s metro operations, Mumbai Metro One Private Limited (MMOPL) have been a drag on its business as the company reported a loss of Rs 68 crore in the first quarter this fiscal.

However, Ambani said he expects MMOPL to turn to profits in two to three years with an increase in ridership. MMOPL currently has an average daily ridership of 4.6 lakh commuters. The ridership estimated in the master plan is estimated to touch 6.6 lakh by 2021 and 8.8 lakh by 2031.

Ambani also said the company is not looking at selling any more of its assets but would continue to bid for infrastructure projects under the engineering, procurement and construction (EPC) method. He added the company also particularly plans to focus on the defence sector across aerospace, land systems and naval systems and establish multiple partnerships including joint ventures with global defence manufacturing companies. R-Infra already has a joint venture with French aircraft manufacturer Dassault Aviation to manufacture Rafale fighter jets for India.

Get live Stock Prices from BSE and NSE and latest NAV, portfolio of Mutual Funds, calculate your tax by Income Tax Calculator, know market’s Top Gainers, Top Losers & Best Equity Funds. Like us on Facebook and follow us on Twitter.

Next Stories
1Bharti Airtel shareholders approve merger proposal with Tata Teleservices
2NDTV promoter files petition against Sebi’s show cause notice
3Xiaomi is reportedly working on Redmi Note 6 Pro: What gadget lovers must know