In a significant financial maneuver, Anil Ambani's Reliance Infrastructure Ltd and Reliance Power Ltd have collectively reduced their debt by ₹7,220 crore. This move marks a substantial step in improving the financial stability of both companies.
Reliance Infrastructure's Debt Reduction
Reliance Infrastructure has successfully slashed its external debt from ₹3,831 crore to ₹475 crore. This achievement was facilitated by Invent Assets Securitisation and Reconstruction Pvt. Ltd, which novated certain charged securities. The company also settled dues with several key lenders, including:
- Life Insurance Corporation of India (LIC): Settled all outstanding dues by paying ₹600 crore.
- Edelweiss Asset Reconstruction Company Ltd: Reached a one-time settlement for ₹385 crore related to non-convertible debentures, to be completed before September 30, 2024. Additionally, settled another liability of ₹235 crore.
- ICICI Bank, Union Bank, and other lenders: Cleared all funded outstanding dues.
Impact on Reliance Infrastructure
Following these settlements, Reliance Infrastructure's net worth now stands at approximately ₹9,041 crore. The company's market valuation soared, with shares increasing by 20% and settling at ₹282.73 on the NSE. This rise added ₹1,865.78 crore to its market cap, bringing the total to ₹11,200.61 crore.
Reliance Power's Debt Clearance
Reliance Power also made significant strides by settling a ₹3,872.04 crore obligation linked to Vidarbha Industries Power Ltd (VIPL). This move resulted in zero debt with banks and financial institutions for the company.
The settlement involved a comprehensive agreement among Reliance Power, its subsidiaries (Rosa Power Supply Company and VIPL), and CFM Asset Reconstruction Private Ltd. The release deed executed will see all parties withdraw any ongoing legal proceedings against each other.
Market Reaction
Reliance Power shares followed a similar positive trajectory, settling at ₹32.97, which was its upper price limit on the NSE. This bullish trend reflects investor confidence in the company's improved financial health.
Agreements and Withdrawals
In addition to debt settlements, Reliance Infrastructure and Adani Electricity Mumbai Ltd (AEML) reached an agreement to withdraw arbitration claims against each other. This development further underscores the company's commitment to resolving financial disputes and enhancing operational efficiency.
Conclusion
The significant debt reduction by Reliance Infrastructure and Reliance Power demonstrates a robust approach to financial management. These steps not only enhance the companies' balance sheets but also restore investor confidence, paving the way for future growth and stability.