Liquidity has magical powers. When it is in deficit, it can sink an otherwise sensible business into insolvency. On the other hand, when it is in surplus, it can magically salvage an otherwise insolvent business from the cusp of demise.
Many examples come to mind. But the ones that strike you with huge astonishment are the tales of two Anils. One is the long-forgotten younger scion of the Ambani family.
And the other is the metal magnet of Vedanta (Anil Agarwal). It is fascinating to see how the high tide of liquidity has brought them back to the spotlight from the brink of collapse. Starting with Reliance Power, the story was one of the roller coaster rides for investors.
Back in 2008, it had a stunning debut in the markets with a meteoric listing that saw its stock price surge to an all-time high market cap that nearly went close to the Rs 1.0tn mark, a rare feat in those days which belonged to the elite few. But soon, the cracks begin to show.
Regulatory hurdles, project delays, cost overruns, changes in coal policy hit the company hard. The situation deteriorated further when the ILFS crisis shook the credit markets in 2018, leaving many companies unable to roll over their debt. Saddled with huge unsustainable debt and faced with massive challenges in project execution, in a classic textbook fashion, liquidity issues gradually started pushing Reliance Power to the brink of insolvency.
At one point in 2020, its market capitalization dropped below Rs 500 Cr, relegating it t.
