‘Our debt will be negligible after exiting power distribution, roads’

As Reliance Infrastructure gears up to focus on the defence business, its flagship power distribution and road construction segments may witness a revamp, aimed at improving the company’s debt position. RInfra’s Chief Executive Officer LALIT JALAN tells Megha Manchanda about the sale of the cement business, monetisation of land assets of the Mumbai Metro project and airport business. Edited excerpts:

Reliance Infrastructure is selling its entire portfolio of 11 road projects to Brookfield. What is hampering the deal?

These projects are multi-billion dollar projects and, therefore, the duediligence process takes time. We are hopeful that by the end of the current financial year (2016-17) we will finalise the deal.

If the company is exiting roads and airport projects, do you plan to only continue as a power distribution company?

We have moved from BOT (build, operate, and transfer) model to EPC (engineering, procurement and construction) model, as it required a lot of equity investment and we realised that those were back-ended returns. Now, we are only focusing on road construction. There is business opportunity worth ~2 lakh crore in that segment and we are eyeing 10 per cent of that in the next 12 months, as the current government is providing a thrust to the development of roads, ports and other marine infrastructure.

How will the sale of road and power business impact the company’s debt position?

After exiting the roads business fully and power business partially, the standalone debt of the company, ~15,500 crore now, would be negligible. Consolidated debt would come down to ~8,000 crore from the current ~25,500 crore.

How is the company’s defence business progressing?

Defence is a major focus area. We have revamped operations at Pipavav Defence, where the group acquired nearly 35 per cent equity. We have also received (Reserve Bank of India) permission to exit from the corporate debt restructuring package. The company is in discussion with commercial banks and some progress on the front is expected in the next quarter.

RInfra was planning to monetise its Mumbai Metro business? What is the update as the Mumbai Metropolitan Region Development Authority had objected?

We are looking at monetising 10,000 square feet of metro station space in Mumbai and the Act allows it. The matter is with the court and it will hear the case soon.

Isn’t the company also looking at exiting non-metro airport business?

The airport business is a very small part of our portfolio and we were keen on executing metro airports. Metro projects are not coming along and we are not keen on nonmetro projects.

ON MUMBAI METRO WE ARE LOOKING AT MONETISING 10,000 SQUARE FEET OF METRO STATION SPACE IN MUMBAI AND THE ACT ALLOWS IT. THE COURT WILL HEAR THE CASE SOON