Reliance Infra Q1 profit drops 23.8% to Rs334.1 crore, holds back InvIT
Reliance Infrastructure Ltd on Wednesday said it has held back its proposed Infrastructure Investment Trust (InvIT) due to the lacklustre performance of the first two that hit the market–IRB InvIT fund and India Grid Trust–but will most likely take it public in the current quarter.
“We had a very good response from investors but since the first two InvITs didn’t list well, our investors took a step back. They wanted the InvITs to stabilize first because nobody wants to take a mark to market loss,” Lalit Jalan, CEO of Reliance Infrastructure said.
Speaking to reporters after the company reported a 23.8% drop in June quarter consolidated net profit to Rs334.1 crore, Jalan said.
Reliance Infrastructure had won a Rs4,700 crore arbitration award against Delhi Metro Rail Corporation (DMRC). He said along with the InvIT and divestment of its WRSSS (Western Region System Strengthening Scheme) transmission projects, this will help the company reduce its debt to about Rs20,000 crore from the current Rs29,000 crore.
The company has long been struggling with high debt. This, along with the stressed balance sheets of other groups businesses, has seen a spate of downgrades in recent times. Just last week, CRISIL downgraded its long-term bank facilities to BBB+ from A- citing delays in the company’s debt reduction plans beyond previously expected timelines. “CRISIL had previously expected significant debt reduction by end of first quarter (ending June) of fiscal 2018. However, debt levels continue to remain high at around Rs16,400 crore (standalone); and debt-to-Ebitda (operating profit before interest, tax, depreciation and amortization; excluding regulatory asset charge recovery) at over 8 times,” the rating agency noted.
The company also said that revenue during the quarter grew 8% to Rs7,559.4 crore from a year-ago period, largely on the back of a 6.7% jump in revenue from the power business.
What pulled the bottom line lower, however, was a combination of an 18% jump in interest expense to Rs1,491.6 crore and a 25.9% drop in other income to Rs526.1 crore. Jalan said despite interest rates trending lower in the system, its cost of funds continues to hover around 11%.
Reliance Group companies have sued HT Media Ltd, Mint’s publisher, and nine others in the Bombay high court over a 2 October 2014 front-page story that they have disputed. HT Media is contesting the case.