Of all the different verticals of Reliance that is under Anil Ambani’s control, Reliance Capital has been the only business that was saved from entering the fray. It had almost doubled its business over the last 5 years and had been standing on its own two feet. However, the latest news is the Reliance Capital is trying to raise $2 Billion in assets as it has seen a significant drop in its capital. According to CARE ratings, their capital has come down to ₹11 Crore. Reliance Capital is now trying to raise the money by selling off assets that are worth that amount.
Reliance Capital is facing a debt of close to $ 252 million and a unit belonging to Moody Investors Service, along with a few other companies, have slashed the company’s ratings due to this. There are many reasons why they have done this, and some of them include the fact that Reliance Capital has decreasing liquidity, various holdups in their asset sales, and even risks on loans to their unprofitable affiliates.
Image Source – Economic Times
According to Aditya Consulting, asset disposal is a very important thing that Reliance Capital must undertake in order to survive. Matthew Antony, who is a managing partner at the same firm, has commented on this issue. He has said “Unless some strategic infusion of long-term equity comes into the company, the day when Reliance Capital falls into a liquidity crisis isn’t too far,”
Reliance Capital did inform exchanges about their short term debt of ₹ 950 crores. Their credit rating dropped with this from A+ to ‘credit watch’. The following are some of the asset disposal delays that the company has been saving for a while now:
|Asset||Expected Proceeds (in billion rupees)||Sale Timeline|
|Radio business||17||Announced in November 2016, delayed and
expected by June 2019
|Reliance General Insurance’s IPO||30||Rescheduled from December 2018 to June 2019|
|Reliance Nippon Life Asset Management||70||Selling 42.9 percent stake was planned for
May 2019 but likely by June
|Prime Focus stake||undisclosed||Expected by May 2019 instead of April|
|Mahindra First Choice||undisclosed||Expected by June 2019 instead of April|
|Media properties||undisclosed||No indication|
Anil Ambani has been facing quite a few issues and was recently bailed out by his brother due to unpaid debt.