No concrete debt mitigation plan from Anil Ambani's AGMs

Anil Ambani made a number of important announcements at his trademark marathon shareholders' session on Tuesday evening (August 27), when he consecutively addressed investors in four of his companies - Reliance Communications, Reliance Power, Reliance Capital and Reliance Infrastructure. But he failed to outline any well-defined roadmap towards reducing the astronomical debt of these companies.

A large number of shareholders kept demanding handsome dividend payouts. On this subject too, Ambani reserved his comments.

The most well-received of Ambani's remarks related to the Anil Ambani Dhirubhai Group's (ADAG) proposed bank - it has applied to the Reserve Bank of India for a licence. The proposed bank will help reduce Reliance Capital's debt burden by Rs 15,000 crore, Ambani told shareholders. The company's current debt is about Rs 20,000 crore.

Ambani added that he will list the bank within three years, which is a mandatory provision in the guidelines of application for new banks. But there is still no clarity as to whom the government will finally choose to award banking licences too. There is no guarantee ADAG will get one.

Anil also dwelt on the increasing proximity of Reliance Communications (RCom) with once-estranged big brother Mukesh Ambani's Reliance Jio, the telecommunications venture that aims to change the face of the country's broadband network, promising that there would be more tie-ups.

Two agreements between the companies relating to inter-city cable networks and use of telecom towers have already been signed. "The deals will earn RCom Rs 14,000 crore through their lifetime," Anil, RCom Chairman said, answering a shareholder's question.

Meanwhile, Reliance Power has commissioned the first phase of its Sasan Ultra Mega Power Project (UMPP), which will generate 660 MW, its CEO J.P. Chalasani told shareholders on Tuesday. Anil, however, added that the company continues to suffer due to financial ill-health of its clients, many of them state owned power distribution companies.

However, there was reassuring news for Reliance Power from New Delhi. Finance minister P. Chidambaram was reported to have said on Tuesday that the Sasan UMPP, which will supply power to seven states including Delhi, will get priority in the government's infrastructural thrust.

"In the Sasan project, Stage-I clearance or preliminary approvals have been given. When this is verified by the state of Madhya Pradesh and the promoter (Reliance Power) deposits the money, further clearances will be given," Chidambaram said.

Even so, most of the projects under Reliance Power and Reliance Infrastructure are at a relatively early stage of development. In Tilaiya, Jharkhand, where the company plans another UMPP, it is still awaiting clearances from the forest department to mine the coal it needs.

No doubt, by and large, Reliance Power does seem to have all its coal linkages in place. Anil Ambani did say that all his power projects will use domestic coal. He will also invest Rs 100 crore in his wind power venture. He expects the cost of generating alternative power to fall to that of conventional power within three to four years.

The total debt of all ADAG companies has ballooned to Rs 113,543.9 crore from Rs 91,496.7 crore last financial year according to a Credit Suisse report published in August.

Overall, it still does not appear that the younger Ambani's business-related headaches are over. There was little talk of strong revenue flows, and the shareholder mood at the AGMs seemed to be as belligerent as ever.