Ambani blames govt bodies for slow arbitration award payouts

With nearly Rs 8000 crore worth of arbitrations still pending approvals, Reliance Infrastructure chairman Anil Ambani today criticised government agencies, which drag their feet on arbitration payouts.

Speaking at the 89th annual general meeting of the company, 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 shareholder interest."

He said there are arbitrations of Rs 8,000 crore under advanced stages of approval, comprising Rs 5,300 crore in EPC sector, Rs 1,700 crore for Mumbai Metro and Rs 1,000 crore in the roads sector.

 

"A stark example of this is DMRC's appeal in the DAMEPL arbitration which we won after no less than 68 hearings lasting almost four years," Ambani said.

He further said the company also won when DMRC went into appeal at the Delhi High Court single bench which took seven months to deliver its judgement.

The matter has since been pending before a division bench for further seven months, Ambani said, adding that it has been five-and-a-half years since they went into arbitration and almost a year and a half since they won the arbitration award but the payout is nowhere to be seen.

"This creates an asymmetry where we as a corporate entity remain answerable, as we rightly must, to our lenders for loan and interest repayments, but the defaulting entities have no accountability and nothing to answer for," Ambani added.

He further informed the shareholders that the company has sold off its entire Mumbai power business to Adani Transmission for Rs 18,800 crore, and managed to bring down its debt by nearly 65 per cent to Rs 7,500 crore from Rs 22,000 crore in one single deal.

"As a result, the interest cost for the company has reduced by nearly 70 per cent from Rs 2,600 crore to Rs 800 crore per annum. The company's debt to equity ratio has improved to 0.33 times which is the lowest in the industry, compared to peers with median ratio which is as high as 8:1. We expect to be zero-debt by next year," Ambani added.

He further said the company has won arbitration awards to the tune of Rs 6,300 crore against DMRC, NHAI and Goa government, which are yet to be paid out.

"Apart from this, we have another Rs 5,000 crore worth of regulatory assets under approval related to the Mumbai power business. In addition, there are further arbitrations of Rs 8,000 crore under advanced stages of approval. All this gives us a clear visibility of becoming debt-free," Ambani added.

Replying to a query by one of the shareholders on the controversy over the Rafale deal, Ambani said, "I had clarified in detail that these political parties have been misinformed, misdirected and misled by malicious vested interests and corporate rivals on the Rafale offset exports work share.