Mumbai: Embattled Indian tycoon Anil Ambani pledged to reduce debt at his infrastructure-to-finance conglomerate to a “bare” minimum, seeking to bolster investor confidence in an empire that’s grappling with high leverage and delayed asset sales.
The Reliance Anil Dhirubhai Ambani Group has repaid 350 billion rupees ($5 billion) in the past 14 months, an amount entirely raised through disposal of assets, Ambani, 60, told reporters in a rare conference call Tuesday without elaborating. His businesses have been straining since a government crackdown on bad loans, while his telecommunications unit is facing insolvency.
“Reliance Group is committed to meeting all future debt obligations” and becoming “capital light, with bare minimal debt,” Ambani said. He didn’t take questions from reporters.
The younger brother of Asia’s richest man — after carving out parts of an empire his father left behind more than a decade ago as part of a settlement in a succession feud — has been paring his businesses after years of debt-fueled expansion. Last month, his group announced the disposal of a radio station and the mutual fund business to repay creditors. Reliance Capital Ltd. was also in talks to sell its general insurance unit, people familiar with the matter said.
In the conference call, Ambani didn’t directly address recent allegations of fund diversion against his non-banking financing arm.
A June 7 report by Risk Event-Driven and Distressed Intelligence said it found “some unusual lending arrangements within the Reliance Capital Group” that employed “box companies” to allow Ambani’s group firms to receive funds from the financier, without triggering regulatory disclosures. The “alarming” rise in such loans could snowball into another liquidity crisis in the struggling shadow banking sector, the report said.
“Unwarranted rumor mongering, speculation and bear hammering of all Reliance Group companies shares over the last few weeks, has caused grave damage to all our stakeholders,” Ambani said.
An email over the weekend seeking comments from Reliance Capital spokesman on the REDD report wasn’t answered.
Shares of Reliance Capital have tumbled 61% this year, compared with an 11% gain in the benchmark S&P BSE Sensex index. Reliance Power Ltd. and Reliance Infrastructure Ltd. have plunged about 80% in the same period, while Reliance Communications Ltd. slid 88%.
The tycoon’s woes came to the fore in March when his elder brother Mukesh Ambani stepped just in time to settle an overdue payment and save him the embarrassment of a stint in jail. The value of Anil’s holdings in companies has plunged to less than $200 million in early May from a net worth of at least $31 billion in 2008, according to data compiled by Bloomberg. –Bloomberg.