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Anil Ambani wants Reliance Infrastructure to turn debt-free by 2017

Date 30-Nov-2015
Subject Anil Ambani wants Reliance Infrastructure to turn debt-free by 2017

MUMBAI: Anil Ambani wants Reliance Group's flagship infrastructure company Reliance Infrastructure to turn debt-free on a standalone basis by 2017 and the company's management is actively pursuing divestment goals to achieve his target. 

The company , which was founded as an electricity company when the undivided Reliance IndustriesBSE -0.86 % acquired the state-run Mumbai electricity distribution company and then expanded into infrastructure development, is changing its profile to focus on defence and exiting other businesses such as cement manufacturing and road development. 

"The proposed monetisation will be huge value accretive to Re liance Infrastructure's shareholders and will be earnings per share accretive. This will enable the company to become a debtfree company in FY17, from the current level of more than Rs 16,000 crore on a standalone basis," Lalit Jalan, group's director, told ET. 

The company's consolidated debt Rs 26,630 crore at the end of stood at June, according to the firm's site. 

He said that the company is undergoing a "major transformation" after which it hopes to become a defence major while continuing its strong interest in power distribution and engineering, procurement and construction (EPC) business. 

Talking of the opportunity in the sector, Jalan said, "The defence purchases over the next 10 years are expected to be in excess of Rs 20 lakh crore. Under the `Make in India' initiative, the government is committed to bring its imports down to 30% or less, which opens up an addressable market of Rs 1,00,000 crore over the next 10 years." 

The huge opportunity in defence is being eyed by several private sector companies such as the Mahindra Group, Bharat Forge, Larsen & Toubro, Reliance Industries, and Tata Group. Recently , Reliance and Adani Groups have also entered the space. 

Reliance Infrastructure ventured into defence with the acquisition of Pipavav Defence & Offshore Engineering Co and plans to make the company exit corporate debt restructuring after completion of the open offer. 

"We will continue our strong interest in EPC and are actively pursuing opportunities with external customers in the entire power chain, smart cities, roads and metro rail. EPC continues to be our mainstay and all employees will remain with the company," Jalan explained. 

The company has already signed a pact to sell a 49% stake in its Mumbai electricity business to the Public Sector Pension Investment Board (PSP Investments) of Canada, in a first of its kind deal that pegs the enterprise value of the division at Rs 15,000 crore. 

It is also in advanced talks to sell its fledgling loss-making cement manufacturing business. 

Source : economictimes.indiatimes.com

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