The Telegraph
Since 1st March, 1999
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Anil duo wields the broomstick

Mumbai, Feb. 20: The Anil Ambani group today decided to write off bad debts and make provisions totalling Rs 4500 crore in Reliance Infocomm and Reliance Communications Infrastructure ' the two major operating companies under Reliance Communications Ventures (RCoVL).

This is part of the process to clean up the books before RCoVL lists on the bourses in early March.

“Post write-offs and provisions, the proforma consolidated networth of RCoVL stands at approximately Rs 11,000 crore,” said a statement by the Anil Dhirubai Ambani group (ADAG).

The clean-up has lowered the consolidated networth of RCoVL from an estimated sum of Rs 16,000 crore.

The group said the boards of directors of Reliance Infocomm Ltd. and Reliance Communications Infrastructure had approved the write-offs and provisions which relate to the period up to March 31, 2005, prior to the restructuring and demerger of the Reliance Group.

Four entities have been spun off from Reliance Industries Ltd and they cover the telecommunications, coal-based energy, financial services and gas-based energy businesses. RCoVL is the holding company for all telecom investments of RIL.

According to the Anil Dhirubhai Ambani Group, while the write-offs and provisions are based on an independent report by a leading international accounting firm, these liabilities relate to regulatory and taxation matters, bad debts and irrecoverable amounts, obsolete and slow-moving inventories and impairment of assets.

Although Reliance Infocomm officials did not go into the specific details, it is understood that a portion of bad debts and irrecoverable amounts relate to the aggressive schemes that the company had brought out after its launch. It is also learnt that write offs and provisions also include penalties that may arise due to disputes with the government.

The clean-up exercise comes after the group announced a listing schedule for the four entities. While RcoVL is expected to be listed in the week of March 6, investor interest has been building around the company over the past one month. This is evident from the vibrant grey market deals or dabba trading in RCoVL. The scrip is reportedly trading at Rs 250 in the grey market and it remains to be seen whether the lower networth will have any impact on its actual listing price.

Consequent to the write-offs and provisions, Reliance Infocomm Ltd. and Reliance Communications Infrastructure Ltd, plan to appropriately recast their accounts for the year ended March 31, 2005 "subject to regulatory and/or other approvals, to reflect a true and fair view of the state of affairs in that period," the press statement said.

“Necessary disclosures in this regard will also be made in the Information Memorandum proposed to be filed with the stock exchanges shortly by RCoVL,” the group added.

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