Reliance Group Chairman Anil Ambani on Tuesday emphatically said the group is servicing its debt payments and will continue to reduce its arrears.
In a suddenly announced conference call, Ambani said “unwarranted” rumours and “bear hammering” have damaged the value of the group’s stocks.
These observations come in the backdrop of ratings agencies such as CARE and Brickwork Ratings downgrading almost all of the companies of group.
Industry watchers estimate that the overall debt position of Reliance Group companies — including Reliance Communicaitons — is around ₹1 lakh-crore.
Reassuring investors, Ambani said the group has serviced debt payments of over ₹35,000 crore in the last 14 months. This included principal payments of ₹25,000 crore and interest payments of ₹11,000 crore.
He added that during the 14-month period, lenders from all categories, such as banks, mutual funds, insurance companies, Provident Fund and NBFCs, have not provided any additional liquidity to any of the group’s entities. “These payments have been made in the face of insurmountable odds and the most challenging financial environment in the country in decades,” he said.
Ambani was also particularly irate that the regulatory bodies and courts have not passed any final adjudication order on claims aggregating over ₹30,000 crore that are due for 5-10 years to various Reliance Group companies, especially Reliance Infrastructure, Reliance Power and their affiliates.
Apathy, lack of support
He also blamed the financial system, which he said has shown total apathy and lack of any support, significantly hurting the interests of lenders as well as all other stakeholders. “Despite the lack of support, the group is committed to paying off all of its debts,” he said.
These developments also come at a time when non-finance businesses such as Reliance Power posting its biggest ever quarterly loss in the January to March quarter and Reliance Infrastructure deferring its quarterly results for the second time. CARE said that Reliance Capital has ‘sizeable exposure to group companies’ in the non-financial business segments. Further, these firms have weak financial profiles and require continued support from Reliance Capital, the report said.
Reliance Capital is in the process of monetizing its entire 42.88 per cent stake in Reliance Nippon Life Asset Management, announced plans to monetize a 49 per cent stake in Reliance General Insurance and is in advanced stages of monetization of several of its non-core investments. “I’m personally confident that the journey we have undertaken to be capital light, bare minimal debt and high Return on Equity will enhance all shareholders,” said Ambani.
CARE Ratings downgraded long-term bank facilities worth ₹12,700 crore of Reliance Commercial Finance from BBB+ to ‘D’. A rating of ‘D’ means either default or expected to soon be in default. This downgrade impacts investors, notably many debt-oriented mutual-fund schemes which have exposure to the Reliance ADAG group.
Similarly, ICRA, another ratings agency, revised its ratings for Reliance Capital and its subsidiaries from A2 to A4, which is a negative for Reliance ADAG group. ICRA also said the liquidity of key operating subsidiaries -- Reliance Commercial Finance and Reliance Home Finance -- remained stretched as debt repayments in the next six months will allegedly be higher than scheduled inflows.
This was followed by Brickwork Ratings which downgraded Reliance Capital debt worth ₹14,100 crore from from AA to A+. The company cited “deterioration in liquidity profile of the group due to challenges faced by Reliance Capital.