Amidst debt worries, Anil Ambani-led Reliance Group is in an exit spree - 2G, tower, spectrum, real estate, Mumbai power distribution, DTH among others. But exits are not the only activities. It tied up with a slew of defence global majors for starting production in India and, recently, commenced construction of a manufacturing facility of Dassault Reliance Aerospace (DRAL) in Nagpur. How are all these changing the group? Biggest change is that its flagship business Reliance Communications (RCom) shrinks its size and scale and its management control goes to lenders. The latest development is that the company offered its 51 per cent stake to its lenders for the debt they hold. The company will repay over Rs 27,000 crore debt - raising Rs 17,000 crore through asset monetisation of spectrum, towers, fibre network, and media convergence nodes; another Rs 10,000 crore through sale of real estate assets across eight metro cities. Post repayments and debt to equity conversion, the company's debt will come down to Rs 6000 crore from Rs 44000 crore.
The market valuation of Reliance Naval & Engineering (RNE), erstwhile Pipavav Shipyard which was acquired by Reliance Infrastructure in 2015, is close to that of RCom today. The telecom company had a peak market value of Rs 1.69 lakh crore on January 9, 2008, and it fell to Rs 3,907 crore now. Compared to the January 2016 market value, the RNE valuation has fallen 42 per cent now. Another Anil Ambani firm, Reliance Power, which is remembered for its Rs 11,700 crore record IPO in 2008, is valued lesser than the capital raised from IPO, at Rs 11,472 crore. The peak valuation of RPower was over a lakh crore in February 2008. The IPO power of Anil Ambani's group hasn't faded yet as the Rs 1,540-crore IPO of Reliance Nippon Life Asset Management (RNAM) got overall subscribed 81.49 times at the end of last week.
Reliance Capital is the largest company in the group considering the valuation in the market, though the company's value is one fifth of its peak. The engineering, procurement and construction (EPC) firm, Reliance Infrastructure is the second largest in the group according to the market capitalisation.
The total market value of the Anil Ambani's Reliance Group companies comes to less than Rs 50,000 crore now, compared to aggregate peak values of over Rs 4 lakh crore. For a comparison, his elder brother Mukesh Ambani's Reliance Industries is valued Rs 5.95 lakh crore in the market. With the exit of 2G, Mumbai power distribution and DTH businesses, Reliance Group's B2C size will be drastically reduced. In parallel, the defence and infrastructure businesses will demand for a larger consolidation - especially the consolidation of engineering and manufacturing activities. The group may look like a mini L&T, except a few businesses outside, say some industry experts.