Reliance Power Aims for Debt-Free Status by March 2024

Reliance Power, led by Anil Ambani, settled the debts owed to three banks: Axis Bank, DBS Bank, and ICICI Bank. Reports suggest that the settlement happened in the last week while its parent, Reliance Infrastructure, is working towards settling dues of ₹2,100 crore to JC Flowers Asset Reconstruction Company.

Reliance Power strives to be a debt-free company by the end of this fiscal year, i.e., March 2024. The only debt on the company’s books will be the working capital loan from IDBI Bank. The three lenders jointly had about ₹400 crore and have recovered close to 30-35% of their principal loans.

On the other hand, as per the notice issued to the exchanges on January 7, 2024, Reliance Infrastructure and JC Flowers ARC had entered into a standstill agreement. Initially, the standstill was until March 20, 2024, according to a separate stock exchange disclosure. A spokesperson of Reliance Infrastructure stated that the agreement was recently extended to March 31, 2024.

According to the standstill agreement, JC Flowers ARC will not take legal action against Reliance Infrastructure until March 31, 2024, which gives the company time to arrange funds.

A stock exchange disclosure indicated that on March 13, 2024, Reliance Power raised ₹240 crore equity from VFSI Holdings. One of the bankers cited above said that the proceeds were probably used to settle the bank’s dues. VFSI Holdings is a subsidiary of Varde Partners, a global asset manager.

Yes Bank, the original lender, has transferred its ₹48,000-crore distressed loan book to JC Flowers ARC, which includes loans provided to Reliance Infrastructure and Reliance Power.

As of December 31, 2023, as disclosed to stock exchanges, Reliance Power’s total financial indebtedness stood at ₹765 crore. Individually, Reliance Infrastructure stated its total financial indebtedness was ₹4,233 crore for the same period. As per the exchange disclosures, in April 2023, Reliance Power settled loans with two lenders, Canara Bank and JC Flowers ARC.

About Reliance Power

Reliance Power is involved in the development, construction, and operation of power projects both in India and internationally.

On Wednesday, March 20, 2024, the share price of Reliance Power opened at ₹23.40, touching the day’s high at ₹23.90, as of 11:06 AM on the NSE.

About Reliance Infrastructure

Reliance Infrastructure Ltd is involved in the development of infrastructure projects via various Special Purpose Vehicles (SPVs) in various sectors, such as roads, power, airports, metro rail and more.

On Wednesday, March 20, 2024, the share price of Reliance Infrastructure opened at ₹242.00, touching the day’s high at ₹248.00, as of 11:09 AM on the NSE.

Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. It is based on several secondary sources on the internet and is subject to changes. Please consult an expert before making related decisions.