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 per cent 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. —FE