Reliance Infrastructure, a part of Anil Ambani-led Reliance Group, is relying on arbitration award payouts to fully pay off its ₹7,500-crore by 2019, but government entities are “dragging their feet” on the payouts, said the company chairman..
Addressing shareholders at the company’s 89th Annual General Meeting in Mumbai on Tuesday, Anil Ambani said Reliance Infrastructure has reduced its debt by 65 per cent to ₹7,500 crore from about ₹22,000 crore by selling its Integrated Mumbai Power Business to the Adani Group.
Pending payments
It hopes to be a zero-debt entity by next year. “Our optimism is based on clear visibility,” Ambani said. The “clear visibility” amounts to around ₹19,000 crore arbitration payment claimed by the company. Some of them have been already awarded.
RInfra has won arbitration awards of around ₹6,300 crore against Delhi Metro Rail Corporation (DMRC), National Highways Authority of India and the Goa government, which are yet to be paid. Another ₹5,000 crore of regulatory assets under approval related to the Mumbai Power Business which was a part of the deal with the Adani Group and will flow into RInfra, as per an agreement between the two companies.
“In addition, there are further arbitrations of ₹8,000 crore under advanced stages of approval, comprising ₹5,300 crore in the EPC sector, ₹1,700 crore for Mumbai Metro and ₹1,000 crore in the road sector,” Ambani said.
“It is an unfortunate fact of doing business in India that despite amendments to the Arbitration Act by the Central government and clarity from the Supreme Court in multiple judgements, many government entities continue to drag their feet on arbitration award payouts to the detriment of shareholder interest,” he added.
Citing Reliance Infrastructure’s subsidiary DAMEPL winning an arbitration award from DMRC He said: “It has been five and a half years since we went into arbitration and almost a year and a half since we won the arbitration award but the arbitral payout is nowhere to be seen.”
The road ahead
For Reliance Infrastructure, EPC business — where the company is targeting opportunities worth ₹3 lakh crore per annum to achieve an order book target of ₹50,000 crore by FY20 — will remain the key focus, he said.