Mukesh Ambani's pvt firms hit slow lane

Net worth of Reliance Gas erodes by Rs 1,900 crore; port, power companies report lower profits

This article has been modified. Please see the clarification at the end.

Mukesh Ambani’s private companies, operating in the gas transport, power and port sectors, moved into the slow lane in financial year 2015-16 (FY16).

This was mainly because of a slowdown in gas production in the Krishna Godavari (KG) basin, and increased provisions for redemption of preference shares and debentures.

According to statistics submitted to stock exchanges, Reliance Gas Transportation Infrastructure (RGTIL) reported a loss of Rs 538 crore in FY16 compared to a loss of Rs 436 crore a year ago.

The company had refinanced a loan of Rs 4,500 crore last year with with a longer repayment schedule. 

Falling gas production from the KG basin eroded the company’s net worth by Rs 1,891 crore. It earned five per cent less revenue in the FY16 at Rs 1,295 crore.

When contacted, an official spokesperson of Reliance Industries (RIL) declined to comment.

RGTIL expects better performance in the long run because of the commissioning of liquefied natural gas  terminals and an increase in gas production, it informed bondholders. The Ambanis have promised to invest more equity in the company, which constructed a 1,386-km gas pipeline from the east coast of India to Gujarat to supply industries based in west coast.

However, sales and profit fell in line with RIL’s gas production. The company’s finance costs fell to Rs 571 crore from Rs 657 crore as on March 2015, thanks to the 5/25 scheme.

At present, RGTIL charges its customers according to the tariff fixed by the Petroleum and Natural Gas Regulatory Board (PNGRB) and has made provisions for Rs 2,515 crore of revenues for the period April 1, 2009 to March 31, 2015, which is the difference between the provisional tariff and final tariff that is yet to be cleared by PNGRB.  This will be recovered from future bills of gas transport from its customers after PNGRB clears the tariff, the company said.

While RGTIL is making losses, Ambani’s power and port companies earned good profits. However, as they had to make provisions for redemption of preference shares and debentures, both companies reported lower profits.  Reliance Ports and Terminals made a profit of Rs 55 crore as compared to a profit of Rs 472 crore in FY15.  The company reported revenues of Rs 3,792 crore in FY16 as compared to Rs 3,653 crore in FY15.

Reliance Power and Utilities made a profit of Rs 31 crore, down 16 per cent compared to the previous year. Its revenues were Rs 1,741 crore, up 7.5 per cent as compared to Rs 1,620 crore in FY15. Both Reliance port and power companies cater to the demand of RIL’s Jamnagar refinery.

CLARIFICATION 
In an earlier version of this article, it was mentioned that Reliance Gas Transportation Infrastructure (RGTIL) had received a loan restructuring package from banks under the 5/25 scheme last year for its debt of Rs 16,000 crore. The company has clarified that it was not a restructuring under the 5/25 scheme but refinancing of the loan with a longer repayment schedule in accordance with and after satisfying the conditions laid down in the relevant Reserve Bank of India circular. Also, the amount of debt refinanced was Rs 4,500 crore and not Rs 16,000 crore. The errors are regretted.