Anil Ambani even referred to the example of Delhi Metro Rail Corporation's appeal wherein RInfra won the arbitration award after 68 hearings over a period of four years.
Reliance Infrastructure (RInfra) chairman Anil Ambani has lashed out against the government entities for delaying the payment of arbitration awards worth around Rs 6,300 crore.
While addressing the shareholders on Tuesday at the company's annual general meeting, Ambani said, "It is an unfortunate fact of doing business in India that despite amendments to The Arbitration Act by the Central government and clarity from the Supreme Court in multiple judgements, many government entities continue to drag their feet on arbitration award payouts to the detriment of shareholders' interest."
He even referred to the example of Delhi Metro Rail Corporation's appeal wherein RInfra won the arbitration award after 68 hearings over a period of four years.
"We subsequently also won the appeal in the Delhi High Court in a single bench which took seven months to deliver its judgement. This matter has been now pending with the division bench for an additional seven months. It has been five-and-a-half years since we went into arbitration and almost a year-and-a-half since we won the arbitration award, but the arbitration payout is nowhere to be seen. This creates asymmetry where we, as a corporate entity, remain answerable as we rightly must to all our lenders for loan and interest repayment. But the defaulting entity has no accountability and nothing to answer for," Ambani said.
There are three government entities - DMRC, National Highways Authority of India (NHAI) and the government of Goa - who have yet to pay arbitration award to RInfra. The total amount from all the three put together is approximately Rs 6,300 crore.
As of March 2018, Rs 5,165 crore was due from DMRC for the Delhi Airport Metro Express. Since then, interest accrued on the outstanding amount has also piled up.
Reliance Infra had also won Rs 292 crore in February from the government of Goa for non-payment of electricity dues. The third amount pending is Rs 200 crore it had won in August from NHAI for the delay in providing land to TD Toll Road Pvt Ltd, a wholly-owned subsidiary of RInfra, resulting in construction cost overrun and loss of revenue.
At present, arbitration hearings are underway for another over Rs 8,000 crore comprising Rs 5,300 crore from the engineering, procurement and construction business, Rs 1,700 crore from Mumbai Metro and Rs 1,000 from road projects.
The Anil Ambani-led company is looking to become debt free in 2019 and eventually become capital-light, high-growth and high-dividend paying firm.
After the recent sale of Mumbai power distribution business to Adani Transmission Ltd for Rs 18,800 crore, the company reduced its debt by 65% from about Rs 22,000 crore to just Rs 7,500 crore. The debt-to-equity ratio has come down to 0.33:1 and interest cost is down by 70% from Rs 2,600 crore to Rs 800 crore.
For future growth, the company is also looking at taking up operation & maintenance of metro rail projects that are under construction in various cities of India.
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