Reliance Power, and its subsidiary Vidarbha Industries Power, have signed inter-creditor agreement (ICA) with six of their lenders for resolution of debt payments.
Under the inter-creditor agreement, Reliance Power will get a standstill of 180 days to implement the resolution plan with the lenders, failing which, they can be taken to the NCLT, according to the latest RBI Circular of June 7.
As of March 31, 2019, Reliance Power's consolidated debt was around Rs 30,000 crore, which includes all the assets such as Sasan UMPP, Rosa Power plant in UP, Butibori plant in Maharashtra, and other solar assets. However, the debt resolution is for the holding company and its subsidiary. The debt for the standalone holding company is around Rs 7,000 crore.
On June 11, Reliance Power extended the maturity of its Rs 2,430-crore amortizing debt repayment schedule for gas-based Samalkot Power plant from US Exim Bank to bullet repayments, to be paid by June 2022 from 2019 earlier.
The rate of interest has been fixed at 2.6%. The company claims it is in advance stage of relocating the gas-based power plant to Bangladesh.
The repayment delays and asset impairments have added to the short-term debt concerns at the Anil Dhirubhai Ambani Group (ADAG). Other group companies have also faced similar concerns in the recent past.
Reliance Power booked an impairment and write-offs worth Rs 4,170 crore in the March quarter of 2019. Although, it was a one time exercise, the company’s inability to pay installments on the 125-mw Rajasthan solar power plant, and its failure to meet milestones relating to the Samalkot gas-based unit resulted in the reclassification of some Reliance Power loans. It led to wider mismatch between current liabilities and current assets, causing concern over the company's ability to repay short-term debt.
As on March 31, the company's current liabilities were higher at Rs 18,208.45 crore compared with current assets of Rs 5,959.28 crore.
In Q4FY19, Reliance Power reported a net loss of Rs 3,558.51 crore on account of impairment and writeoffs, against a profit of Rs 189.21 crore a year ago.
The company made a withdrawal of Rs 1,017 crore from its general reserves, reducing the impact of the one-time impairment and writeoff. Auditors of the company highlighted that the losses would have been higher without this.