After it went net debt free last week, new age businesses of Electric Vehicles (EV) will be the first push of Reliance Infrastructure, the company promoted by Anil Ambani, sources said. Reliance Infra has already roped in a former India executive at China's BYD Co to advise on its EV plans - car maker BYD is known as China's Tesla. EV tie-up may be announced this year itself, the sources said.
By virtue of handling marquee and high-tech projects like Mumbai Metro and Delhi Metro, Reliance Infra has demonstrated potential for similar high tech projects in mobility business, analysts said. It remains to be seen where and with whom Anil Ambani partners in the global arena.
News agency Reuters had reported that Reliance Infra's new tie-ups could be announced shortly. Reliance Infra is conducting a cost feasibility study for building an EV plant with an initial capacity of 250,000 vehicles a year, which could later scale up to 750,000, news reports suggest. Reliance Infra has also formed two new subsidiaries, including Reliance EV Private Ltd, with the objective of manufacturing and dealing in vehicles and components. The company is actively seeking partners, including China's BYD to finalise its EV plans shortly.
India’s EV market makes up less than 2 percent of the 4.2 million cars sold last year. However, the government aims to grow this to 30 percent by 2030, offering over $5 billion in incentives for local manufacturing of EVs and batteries. This market potential, combined with growing interest from major auto players like Tata Motors, Maruti Suzuki, and Hyundai, presents a promising opportunity for Reliance Infrastructure.
Reliance Infra has announced fund infusion to the tune of around Rs 6000 crores, nearly Rs 1200 crores from Anil Ambani himself and more than Rs 1800 crores from fund managers including Mathew Cyriac, the Former Blackstone executive and ace fund manager - the rest Rs 3000 crores will be raised from Qualified Institutional Buyers. Cyriac’s firm Florintree Advisors is likely to become the second largest shareholder in Reliance Infra post the infusion of equity money in the company. Anil Ambani's stake will also rise in the company.
The share price of two of Anil Ambani's flagship companies Reliance Infrastructure and Reliance Power have been on a roll since the last week.
The Maharashtra government had valued Reliance Infra's 74 percent stake in Mumbai Metro at Rs 4000 crores. But that was when Reliance Infra was debt laden and needed cash. It is likely that the company may not sell its stake to Maharashtra government at anywhere closer to the previous valuation and may seek a higher price since the prospects of the company have changed, analysts believe.
Significant Market Capitalisation Gains
Reliance Infra's market capitalization surged by nearly 50 percent, rising from Rs 8,500 crore to ₹12,500 crore. Reliance Power's market capitalization rose by over 25 percent moving from Rs 11,500 crore to Rs 14,600 crore. Reliance Infra has over 7 lakh shareholders of Reliance infra and and there are more than 40 lakh shareholders of Reliance Power.
Strategic Debt Reduction
Reliance Infra announced a significant reduction in its standalone external debt, lowering it from Rs 3,831 crore to just Rs 475 crore. This was achieved by clearing outstanding dues to prominent lenders such as Life Insurance Corporation of India (LIC), Edelweiss ARC, ICICI Bank, and Union Bank. This bold move signals a robust financial recovery and enhances RInfra’s financial flexibility.
Capital Infusion and Strengthening of the Promoter Group
The Reliance Infra board approved a preferential issue to raise Rs 3,014 crore, increasing the stake of Risee Infinity Private Limited, a promoter group entity, along with other investors like Florintree Innovation LLP and Fortune Financial & Equities Services Private Limited. This strategic infusion not only strengthens the promoter group's hold on the company but also brings in fresh capital for future growth.
Approval for QIP to Raise Rs 3,000 Crore
The Board also approved seeking shareholder authorization to raise an additional Rs 3,000 crore via a QIP. This will provide further capital to strengthen the balance sheet and invest in new growth opportunities.
Enhanced Net Worth and Strategic Growth
With these fund infusions, Reliance Infra's net worth is set to rise from over Rs 9,000 crore to more than Rs 12,000 crore. The company is now well-positioned to invest in high-growth sectors, aligning with India's national goals under the ‘Make in India’ and ‘Viksit Bharat’ initiatives.
The stage may be set for a long-term transformation and it now depends on Anil Ambani as to how he steers the company. The group’s renewed focus on core sectors and its participation in government-led initiatives underscore the return of Reliance Group.
On September 18, shares of Reliance Power Ltd. jumped by 5 percent after the company announced it had fully settled a Rs 3,872 crore guarantee for Vidarbha Industries Power (VIPL). This settlement resulted in the release of all corporate guarantees, undertakings, and obligations related to the outstanding debt of Rs 3,872.04 crore. In an official statement, Ramandeep Kaur, the Company Secretary and Compliance Officer, for Reliance Power confirmed: “The entire obligations of the Company as a Guarantor on behalf of VIPL have been fully settled, resulting in the release and discharge of Corporate Guarantee, Undertakings, and all related claims concerning VIPL’s outstanding debt.”
As of FY24, Reliance Power has developed a portfolio of power projects and coal mines where approximately 5,945 megawatts of power projects have been commissioned, with the remaining projects at various stages of development. Additionally, Reliance Power confirmed that it had resolved all disputes with CFM Asset Reconstruction.
VIPL, in which a 100 percent stake had been pledged to CFM, ceased to be a subsidiary of Reliance Power. This ended all of Reliance Power’s obligations as VIPL’s guarantor, as the corporate guarantee was officially released.
The transaction, completed on September 17, 2024, saw Axis Trustee Services invoke a pledge on VIPL’s shares on behalf of CFM Asset Reconstruction and Axis Bank, the primary lenders to VIPL. With this, Reliance Power announced that it is now free of debt owed to banks or financial institutions. The company further clarified that this was not a related-party transaction, as the lenders are not part of Reliance Power’s promoter group, nor was it part of a broader scheme affecting the company’s assets. The company’s consolidated net worth at the end of the first quarter of FY25 stood at Rs 11,155 crore. Furthermore, Reliance Power, along with Rosa Power Supply and VIPL, agreed to drop all legal actions against CFM, with CFM similarly withdrawing its cases against Reliance Power and Rosa Power, including those filed under the Insolvency and Bankruptcy Code.
Reliance Infra has said that Invent Assets Securitisation and Reconstruction Private Limited, a lender to the Company, had novated certain charged securities to recover its dues. As a result, Invent ARC's entire fund-based outstanding amount has been reduced to Zero. The company said its standalone external debt is down to just Rs 475 crores from earlier Rs 3,831 crores. Additionally, Reliance Infra has cleared its funded outstanding dues to Life Insurance Corporation of India, Edelweiss Asset Reconstruction Company Limited, ICICI Bank, Union Bank, and other lenders. The company’s external debt liability is down to Rs 475 crore. Consequently, the net worth of the company will stand at Rs 9,041 crore and will rise to more than Rs 12000 crores post equity infusion, Reliance Infra announced. As of FY24, Reliance Infrastructure’s Engineering and Construction (E&C) Division has an order book valued at Rs.1,974.64 crore (USD 237 million) with major projects in the pipeline. Reliance Infrastructure owns a 23.15 percent stake in Reliance Power as of June 30.
