How will Anil Ambani-led Reliance Group look like in future?

Amidst debt worries, the Anil Ambani -led Reliance Group is on an exit spree - 2G services, telecom towers, spectrum, real estate, Mumbai power distribution, DTH among others. But while it is exiting from many parts of the telecom business, it has tied up with a slew of global defence majors for starting production in India and, recently, commenced construction of a manufacturing facility of Dassault Reliance Aerospace (DRAL) in Nagpur.

How are all these developments changing the group?
The big change is that its flagship telecom business Reliance Communications (RCom) will shrink in size and scale while its management control goes to lenders. The company has now offered 51 per cent stake in the entity to lenders for the debt they hold. The company will repay over Rs 27,000 crore debt-- raising Rs 17,000 crore through monetisation of spectrum, towers, fibre network and media convergence nodes. Another Rs 10,000 crore will be through the sale of real estate assets across eight major cities. Post repayments and debt to equity conversion, the debt will come down to Rs 6,000 crore from Rs 44,000 crore now.

The market valuation of Reliance Naval & Engineering (RNE), the erstwhile Pipavav Shipyard which was acquired by Reliance Infrastructure in 2015, is now close to that of RCom today. RCom which had a peak market cap of Rs 1.69 lakh crore on January 9, 2008, is now valued at Rs 3,907 crore. Compared to the January 2016 market value, the RNE valuation has fallen 42 per cent now.
 
Reliance Power, which had a Rs 11,700 crore IPO in 2008, is now valued at Rs 11,472 crore, lower than the capital it raised from IPO. The peak valuation of Reliance Power was over a lakh crore in February 2008. The IPO power of Anil Ambani's group hasn't faded yet as the Rs 1,540-crore IPO of Reliance Nippon Life Asset Management (RNAM) got overall subscribed 81.49 times at the end of last week.
 
Reliance Capital is the largest company in the group considering the valuation in the market, though the company's value is one fifth of its peak. The engineering, procurement and construction (EPC) firm, Reliance Infrastructure is the second largest in the group according to the market capitalisation. The total market value of the Anil Ambani's Reliance Group companies comes to less than Rs 50,000 crore now, compared to aggregate peak values of over Rs 4 lakh crore. For a comparison, his elder brother Mukesh Ambani's Reliance Industries is valued Rs 5.95 lakh crore in the market.
 
With the exit of 2G, Mumbai power distribution and DTH businesses, Reliance Group's B2C size will be drastically reduced. In parallel, the defence and infrastructure businesses will demand larger consolidation -- especially the consolidation of engineering and manufacturing activities. The group may look like a mini-L&T, except a few businesses outside, say some industry experts.