Mumbai: Reliance Infrastructure Ltd (R-Infra), an arm of the Anil Ambani-controlled Reliance Group, expects to raise around Rs8,000 crore of debt in a month, after which it would have tied up all the funds needed to execute the 25 projects it has planned, chief executive Lalit Jalan said.
On 14 January, stock market regulator Securities and Exchange Board of India (Sebi) passed a consent order to settle a case of alleged routing of overseas money into the Indian stock market against R-Infra and five of its directors, including Jalan and Ambani. Under the order, R-Infra paid a fee of Rs50 crore and volunteered, along with its directors, to stay away from buying shares in the secondary market. In an interview, Jalan said the company has taken steps to allay investor and analyst concerns. Edited excerpts:
Questions have been raised about corporate governance practices at R-Infra following the Sebi order...
We take a lot of pride in the corporate governance practices of our company. All the best practices vis-a-vis corporate governance recommended by the ministry of corporate affairs are in place... The specific Sebi order pertains to a matter of 2007. We just wanted to close the matter and move forward...
Are you strengthening internal processes?
We are reviewing all our processes in great depth. The policy of rotation of auditors was enforced at our last AGM (annual general meeting), much before it was mentioned in the consent order.
How much has this controversy affected R-Infra’s capital-raising?
In the next four weeks, each and every project in our portfolio would be financially closed. We have 25 projects that entail an investment of Rs38,000 crore. Of this, 22 projects, entailing Rs30,000 crore, have already achieved financial closure. The three projects that are yet to be closed have already been appraised by the lead arranger for the debt, which is up for syndication. We expect formal financial closure within a month.
Clearing the air: Jalan says R-Infra is executing projects at a brisk pace. Hemant Mishra/Mint
How have you addressed investor concerns over these controversies?
Though we have enough equity through internal accruals from operational projects and liquidity on our balancesheet, we realize our stock is owned by a lot of FIIs (foreign institutional investors), domestic investors such as mutual funds, insurance companies and also retail investors. Whenever there is a negative news flow, there is some fear among investors. We are going out of our way and speaking proactively to the investor community, analysts, insurers and bankers to allay their fears...
Your response to worries about R-Infra’s project execution ability?
Project execution is happening at a very brisk pace. Since we are working on around 12 projects at a time, one will see execution happening in every quarter. We commissioned the first phase of the western region strengthening scheme for power transmission in 15 months, as against the typical time of around 28 months as per CERC (Central Electricity Regulatory Commission) norms.
Do you think the controversy surrounding Reliance Communications Ltd (R-Com, another Reliance Group company) has hurt the stock prices of R-Infra?
First, all infrastructure stocks have completely fallen out of favour from investors’ minds. If you look at all the leading infrastructure companies, their share prices have taken a big nosedive. Second, there is a bear cartel at work and we have put together proof of involvement of vested interests spreading misinformation to gullible investors. These two are the predominant reasons for the fall in our share prices.
If you look at the investor profile of R-Com and R-Infra, they are completely different as they operate in different sectors. However, the herd sentiment on the stocks of the Anil Ambani-led Reliance Group is more on the part of traders. When reports of Reliance Group stocks declining flash, it becomes a self-fulfilling prophecy for a while.
Analysts have pointed out to some “excessive, unexplained” investment in group companies such as Sonata Investments Ltd and Reliance Infraproject International. How can these be explained?
These investments are in the nature of inter-corporate deposits (ICDs) that will be reclaimed when we need to infuse equity for our ongoing projects. At any point of time we have around Rs2,500-3,000 crore of liquidity, which we park in the banking system and ICDs. Because the return from ICDs is higher, we park a little more there. There is no risk in these investments.
Are you looking at any inorganic opportunities for growth?
There is some stress in the infrastructure sector at the moment. Companies that may have bid for projects hoping to raise equity later have found it difficult, and those that have operational projects are looking to free up equity. So, there are some assets, especially in the roads sector, on the block, and we are in talks for some of them.