Billionaire Anil Ambani is conscious of the debt burden he is shouldering for Reliance ADAG group companies at over Rs 1.22 trillion. Naturally he is making every attempt to infuse equity and pare debt from the over-stretched balance sheets of group companies.
But Reliance Capital is facing least of the problems among the four listed firms of the group including Reliance Power, Reliance Infrastructure and Reliance Communications.
However, the sale of multiplex operator Big Cinemas to Carnival Films for Rs 700 crore serves twin objectives for Reliance Capital. On one hand it pares debt which was over Rs 25,500 crore at the end of last financial, stretching the balance sheet to debt equity ratio of 1.82. On the other hand it brings focus of the financial services firm that diversified into the film exhibition business back to the core.
The sale of Big Cinemas will reduce debt by approximately Rs 700 crore through a combination of transfer of debt of Reliance MediaWorks and infusion of cash proceeds. Reliance MediaWorks is a unit of Reliance Capital. The deal excludes real estate owned by Reliance MediaWorks at IMAX Wadala and other properties that the company intends to separately monetize for approximately Rs 200 crore.
The company that unsuccessfully tried for banking license is now looking to get into many new businesses in the financial services arena. In the annual general meeting of the company Anil Ambani shared plans to explore new opportunities in health insurance besides getting into the affordable housing space.
This would require fresh capital and deleveraging of the balance sheet would be helpful in that. The company is also in talks with 2-3 international investors to sell its 16% stake in leading travel portal Yatra.com for an estimated Rs 500 crore. This shows its continued focus on the core business to capture next phase of growth.