RCOM will be debt-free in 2-3 years: Anil Ambani

By siliconindia   |   Wednesday, 29 September 2010, 07:39 Hrs
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Mumbai: Reliance Communications Chairman Anil Ambani promised the shareholders that the company will become debt-free in 2-3 years. He has also unveiled a number of plans to cut debt, expand capacity and issue bonus shares in Reliance Capital during the sixth annual general meeting. RCom currently has a total debt of around 33,000 crore including the $1.8 billion (about 8,200 crore) it raised for the 3G that it recently won via a government-run auction. This has raised concerns among investors as well as stock analysts. "A combination of strategic and financial initiatives would result in a large cash infusion and significantly bring down debt levels in the next few quarters. Indeed, they could potentially make us debt-free in three years or so," said Ambani. Shareholders approved RCOM's plans to issue fresh shares to financial investors in the form of a qualified institutional placement to raise funds. "Over the next 24 months, we will rapidly accelerate the pace of new capacity addition, to leapfrog from the current 600 mw to eight times that number at over 5,000 mw. This pace will intensify even further in 2013. Over the following three years, we will add, on an average, 7,000 mw of thermal power capacity every single year," Ambani told shareholders. RCom's stock went up 0.41 percent in Tuesday's trade to close at 170.30 a share on the BSE. Reliance Power shares gained 2.7 percent to close at 163.25 on Tuesday. The shares are off 13.98 percent over the 52-week high of 189.80 but have recovered 25.57 percent from the low of 130. Reliance Capital CEO Sam Ghosh said the group plans to expand its customer base from 2 crore to 5 crore and increase the number of business partners from 5 lakh to 10 lakh. The company also aims to expand its distribution reach from 5,000 to 20,000 towns and cities.