Chairman, Reliance Group
Media Conference Call By Anil Ambani, Chairman, Reliance Group
All about reliance's stock value. Anil Ambani addresses his investors.#Reliance #AnilAmbani #Chairman
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About Anil Ambani
Anil Ambani, chairman of the Reliance Group, has been addressing the company's financial situation and debt reduction efforts. In a February 2020 media conference call, Ambani stated that the Reliance Group had made aggregate debt servicing payments of over ₹35,000 crore in the 14-month period from April 1, 2018 to May 31, 2019, comprising principal repayments of ₹25,000 crore and interest payments of nearly ₹11,000 crore. He said that these payments were made "in the face of insurmountable odds and the most challenging financial environment in the country" and that lenders had provided "zero net additional liquidity or debt to any entity of the Reliance group" during that period. Ambani added that the group was "fully committed to meet all our future debt servicing obligations in a timely manner through further asset monetization plans." Ambani has also commented on the broader telecom sector and the group's defense business. In 2019, he stated that political parties were "misinformed, misdirected and misled by malicious vested interests and corporate rivals" regarding the Rafale fighter jet deal, and said that Reliance's role was limited to offset-related export opportunities for Indian defense manufacturers. In earlier appearances, Ambani discussed the "virtual merger" between Reliance Communications and Reliance Jio through spectrum sharing and trading agreements, and introduced his son Anmol Ambani as a director on the Reliance Capital board, attributing a 40% rise in the company's stock price to an "Anmol effect."
Transcript (12 segments)
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Host0:00
We are here because there is a conference call that's going to be addressed by Mr. Anil Ambani, Chairman of the Reliance Group. I assume he's going to speak about, and I'm sure all of our young and dynamic group...
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Anil Ambani0:15
It is heartening for me personally that over the past twelve months, our strong retail shareholding base across all our companies remains unheard and consistent, cementing my belief of their strong support and good wishes for the Reliance Group. The Reliance Group has made aggregate debt servicing payments of over rupees thirty-five thousand crores in the past 14 months period from April 1, 2018 till May 31, 2019. I'd like to repeat: the Reliance Group has made aggregate debt servicing payments of over rupees thirty-five thousand crores in the 14-month period from April 1, 2018 till May 31, 2019. These comprise principal repayments of a staggering 25 thousand crores and interest payments of nearly 11 thousand crores. This amount includes debt servicing payments by Reliance Capital, Group Lands Power Group, and the Lands Infra Group and their respective affiliates. These payments have been made in the face of insurmountable odds and the most challenging financial environment in the country for much of this period. Lenders from all categories, whether banks, mutual funds, insurance companies, provident funds, or NBFCs, have provided zero net liquidity to any entity of the Reliance Group. I'd like to repeat that during this 14-month period, lenders from all categories have provided zero net liquidity. To compound matters, the regulatory bodies and courts have not passed any final adjudication order on claims aggregating to over rupees 30,000 crores that are due for more than five to ten years to our various group companies, especially Reliance Infrastructure, Reliance Power, and their affiliates. These amounts, staggering to over 30,000 crores of various claims, have been inordinately delayed and repeatedly delayed for one reason or the other. The debt servicing payments of this staggering amount of over 35,000 crores have necessarily had to be made almost entirely from asset monetization, despite a liquidity-stuck environment and operational cash flows in an operating environment beset by procedural and regulatory hurdles. Despite the continuing total apathy and lack of any support whatsoever from the financial system, which ultimately only significantly hurts the interest of lenders themselves as well as all other stakeholders, the Reliance Group has demonstrated its bona fides in no uncertain manner. As stated, we at the Reliance Group are fully committed to meet all our future debt servicing obligations in a timely manner through further asset monetization plans that are already at various stages of implementation. For me, I am personally confident that with the support of all my colleagues in the Reliance Group, the journey that we have undertaken to transform the group to be capital-light, bare minimal debt, and higher return on equity will enhance the value for all our stakeholders. I once again thank you for your time and I look forward to a personal interaction very shortly. Thank you and have a good day.
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Host5:25
Thank you so much. That's an important set of statements coming in. This number is very important: that the group has serviced 35,000, paid 35 thousand crore since April 1, 2018 by way of honoring debt service obligations, and that it remains equally committed to maintaining or repaying all the commitments, and that asset monetization is progressing apace. This is a major reassurance, of course, after many of the companies saw steep falls. Reliance Power has been falling ever since the results in the fourth quarter showed deep losses of over 3,000 crore and asset impairment charges of 4,000 crore. Separately, Reliance Capital has been bedeviled with problems in its subsidiaries, Reliance Home Finance and Reliance Commercial Finance. And there are recent research reports also indicating that perhaps subsidiaries of the Reliance Capital Group were thinly capitalized because the capital put in by Reliance Capital was bought up by the subsidiaries from each other, and therefore Reliance zone equity was lacking but leverage has grown apace. So it's an answer to all this that it will be paid, but we really don't have much more than the old commitment that by September 30th, share commitments will be met and the shares will be de-pledged. Beyond that, we don't have anything concrete in terms of what are the assets getting sold, when, and for how much. For that, we still await more clarity. So at the moment, I don't think any of the stocks have moved much. If in fact, Reliance Infra...
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Co-Panelist7:12
Well, yes, actually a lot of these stocks have recovered intraday when we got to know that there's a con call. And the street was expecting a lot more. Perhaps we have got the assurance that they have made the payment obligations of 35,000 crores over the last 14 months, and Mr. Anil Ambani talked about how they're confident of meeting all the payment obligations in a timely manner. But the street perhaps was expecting a bit more, because all of these group companies are coming off from the top. Whether it is Reliance Capital or Reliance Power, they've seen a bit of knock from the top. So let's see what comes out of it. As of now, these stocks have actually moved into the red as we speak. So clearly the street was expecting a bit more. Now there are two sets of companies that have been knocked around in the last five years. First four years it was the infrastructure companies, as Anil Ambani said, so many of their claims are pending, thirty thousand crores pending either with DISCOMs or with the NHAI or with various state governments, claims not being paid by various authorities. So that was the infrastructure set, power and roads. And then came the NBFCs which had lent and which are not getting refinanced by the banks out of fear that their borrowers, the NBFCs' borrowers, may not be able to repay, especially if they are real estate borrowers or if they are, you know, loans against shares, loans given to highly leveraged groups. Now the unfortunate part of the Anil Ambani group is that they're in both infrastructure and in NBFC, you know, and therefore the pain is even more severe. We'll try and see if we can get more analyst opinion on whether people are feeling any better after this reassurance. The shares are not indicating so much of investor confidence, but we'll try and touch base with some market experts to check how they're interpreting the statement that came from the chairman of the Reliance Group. He also talked about how there was a lack of apathy from the other financial lenders and how they're not being able to raise any fresh liquidity. He talked about how all the payment that has been made has only been made internally by asset monetization, etc. So do you think that is also another worry in terms of not getting the required liquidity from the lenders, etc.?
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Analyst9:16
Oh, absolutely. I mean, that is how you have money, are you going to lend that money to any of the stranded housing finance companies or stranded NBFCs or stranded infrastructure companies? I mean, the problem for bankers is not just that, you know, these are stranded and they're already exposed to them, but more importantly, their body will be five years down the line after I retire, I'll be dragged to a CVC, right, asking why did you... you know, you can't tell him in the National Service I tried to unclog the liquidity problem. You have to tell him that I gave for commercial reasons. They mean, it's a sea of chaos.
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Host9:52
Roxy has joined us on the phone line. Roxy, did you hear Anil Ambani's statement? Your reaction?
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Roxy9:58
Yeah, good morning. Well, I'm going through them and probably what I find is there's nothing but assurance is coming from his side, so that at least, at least I think the lenders don't pay for the company through the negative sentiments. And that is what I think is good at this part of time in building the confidence. At the same time, I think the group is extending all possible action, selling of some of the assets and realizing the money, so which is again, I think, giving the actual action to the commitment that we, you know, money as we going from that perspective. Yes, I think this particular exercise is both to build the confidence into the, in the minds of the financial markets and the players. I think that is how I read it.
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Host10:41
So this is in order to make confidence in terms of in the minds of the financial investors, etc. But do you think it is enough for the investors? Because the stock have been losing steam after we saw Anil Ambani talk. Do you think that the investors are looking for a lot more assurance, or do you think they should take heart from the fact that he had come ahead and talked about how they're very committed to meet all the repayment obligations? Are you reassured, even if you were a lender to any of the groups? I mean, suppose you were holding the debentures or bonds, are you feeling reassured?
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Roxy11:12
Well, I think the collateral valuation has to be seen. Definitely, if I'm a lender, I think I will keep checking my collateral valuation. If the stock prices and the other collateral prices are falling down, definitely I think as a lender I will have concerns. And how do I address that concern? I don't have a clue at this point of time. But I guess I think the words are giving enough amount of confidence to somebody that yes, I think there is an action following those words. So obviously, I think we'll have to wait and see. But yes, I think the fall in the value of the collateral would be a concern, I must say.
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Host11:44
Okay, would it have been a little better if we had got some data in terms of which assets are getting monetized and what is the likely monetization schedule? Will that have helped?
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Roxy11:56
It is always desired, but I think it's equally tricky because I think when you are in talks, you are not in a position to reveal date and you are not in a position to reveal what the value. So I think it is desired that I think that be given, but I guess I think that's the limitation of this kind of situation, right?
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Host12:14
Are you moving to buying any of the stocks? Okay, all right, if we leave it at that, thank you very much, Roxy, for joining us. Yeah, so it's more a qualitative reassurance, as Roxy says, that they are committed to repaying all the money. But you know, we will have to see the asset monetization, and that will perhaps pull up share prices much better than any words can. We will take a break on that note. We are coming back. We will have more from the Morgan Stanley conference as well. We will be joined by our technical experts again.