Debt reduction programme: Anil Ambani’s group of companies on the right track

[Thakur]

The acquisition of Jaypee’s hydropower assetssimilarly will bring in cash flows of Rs 800-900 crore immediately.Old coins normally find pride of place in museums and decrepit curio shops. In swank corporate offices, they can be a pleasant surprise. Anil Ambani's corporate headquarters by Mumbai's Ballard Pier has dozens of old heritage coins on display, from pre-British Indian kingdoms and more recent ones.While the coins are displayed in the lobbies on the higher floors of Reliance Centre, they are complemented by works of art — paintings and sculpture inevery room. The heritage bit — not just the coins but the building itself — may liein south Mumbai but the nerve centre of the group is set to move up north to Mumbai's Santacruz soon.The new headquarters of Ambani's group of companies is coming up where the old BSES office used to be, in suburban Mumbai. While filling up the new building with art will take time, the office will surely be full of people.Apart from the staff of Reliance Infra (current avatar of BSES), who operate from various buildings, the entire team from the group's telecom company, Reliance Communications (RComm), which sits on Mumbai's outskirts at the Dhirubhai Ambani Knowledge City (DAKC), will move to Santacruz.The DAKC buildings (on 135 acres of land) will be razed, the lake inside will probably be filled. Offices, residences and other buildings will come up in places where there are huge landscapedgardens today. This is part of the plan to de-leverage RComm, which is hoping to realize at least Rs 5,000-6,000 crore out of DAKC; along with another Rs 800 croreby selling its five-acre property at Ranjit Hotel in Delhi's Connaught Place.Debt, Be Not ProudA senior group spokesperson told ET Magazine that RComm is the only company that the group feels needs to de-leverage. He said much of the debt with other group companies was not onlyconventional but also well backed by assets and cash flows. All infrastructure projects have been financed in the 70:30debt to equity ratio, which is the norm in this sector.RComm had a Rs 40,000-crore debt book(now reduced to Rs 35,000 crore) with earnings before interest, tax, depreciation and amortization (Ebitda) ofRs 7,000 crore for the year ended March 31, 2014. It has since raised Rs 6,000 crore through an equity sale. The real estate hive-off (DAKC mainly) is likely to be concluded in 6-9 months. Even beforethat, in another 90 days, more cash is expected from the disposal of the undersea cables and DTH businesses."We would like RComm's debt to go down to Rs 20,000 crore. We will definitely get it down to Rs 25,000 crore,"the spokesperson said. He is at pains to point out that debt has to be seen in the context of the cash flows and the ability to repay, the assets created, and the market capitalization of the group. The group's market capitalization is now at Rs 95,000 crore and net worth at around Rs 90,000 crore.The group's market cap touched Rs 1 lakh crore a few weeks back. Also, the equity sale by RComm was the first successful equity issue by the group since 2008 when the Reliance Power issue backfired. Between a successful IPO and the listing of the shares in January-February 2008, the housing bubble burst in the US and the Reliance Power scrip sank after listing, nudging the company to issue extra shares to subscribers. http://m.economictimes.com/news/news-by-company/corporate-trends/debt-reduction-programme-anil-ambanis-group-of-companies-on-the-right-track/articleshow/39497584.cms