Anil Ambani-led Reliance Capital Ltd (Rel Cap) will exit the lending business by December. This was disclosed by Ambani at the company’s annual general meeting (AGM) on Monday.
“As part of the transformation process, Reliance Capital will no longer be in the lending businesses. Both the lending businesses — Reliance Commercial Finance (RCF) and Reliance Home Finance (RHF) — between the two have an asset base of over Rs 25,000 crore. RCF and RHF are working closely with lenders to finalise the resolution plan which is expected to be completed in the next few months by December 2019,” Ambani told the shareholders.
He added that Reliance Capital will only be a financial shareholder in both these companies to “re-converge shareholder value” under a new management and shareholding structure and that the steps will reduce the debt of the Reliance group by Rs 25,000 crore.
While back-to-back shareholder meetings of various firms headed by him were held on Monday, he disclosed that the group has repaid over Rs 35,000 crore in 14 months till May 2019 and will be paying another Rs 15,000 crore till March 2020 aggregating over Rs 50,000 crore through monetisation and cash flows to lenders. He added that the group has over Rs 60,000 crore receivables stuck in regulatory and arbitration matters pending for 5-10 years.
Ambani observed that in the last six months, the firm has suffered “collateral damage due to a combination of factors” which included the crisis in the financial services sector, “irrational” action by auditors and rating agencies, apart from the slowdown in the economy.
On the BSE, the Reliance Capital scrip plunged 12.5 per cent on announcement of the company exiting the lending business.
Meanwhile the shareholders’ meeting of Reliance Communications (R-Com) saw resolution professional Anish Nanavaty of Deloitte addressing the shareholders — the first for the company — as it is now undergoing bankruptcy proceedings. Shareholders expressed concern over the future of R-Com with some even suggesting that liquidation should be avoided.
Nanavaty informed the shareholders that the NCLT has granted an additional three months to complete the resolution process, which will now have to be completed by January 10 next year.
