Reliance Infrastructure’s Cash Flow Won’t Fall After Mumbai Power Unit Sale, Says Lalit Jalan

Reliance Infrastructure Ltd. said the sale of its power business in Mumbai to Adani Transmission Ltd. will not affect the Anil Ambani-led firm’s profitability.

“We don’t expect any decrease in cash flow since the Ebitda (earnings before interest, tax, depreciation and amortisation) will go down by Rs 1,600 crore after this sale,” Chief Executive Officer Lalit Jalan told BloombergQuint after the completion of the Rs 18,800-crore deal. “A Rs 1,600-crore reduction in the interest now will keep the profitability unchanged.”

The company, according to Jalan, expects an arbitration award won for Delhi Metro, roads under the National Highways Authority of India, and Goa Power to generate Rs 6,000 crore worth of cash flow.

The sale of Mumbai power business comes at a time the Anil Ambani-led firm is looking to repay debt. “It is the largest-ever debt reduction in the infrastructure sector,” Chairman Anil Ambani told reporters on Wednesday at a press meet. The company, he said, will be debt free by the end of financial year through March 2020.

After the deal, Reliance Infrastructure’s debt is reduced to Rs 7,500 crore from Rs 22,000 crore.

The fall in the company’s revenue after the sale will be compensated by the engineering and construction business. The turnover from this business will grow to Rs 7,000-8,000 crore in two-three years, Jalan said.