The Telegraph
 
 
ARCHIVES
Since 1st March, 1999
 
THE TELEGRAPH
 
 
Email This Page
Buyback follows charity
- Reliance launches biggest operation to mop up shares

Jan. 10: A day after Mukesh Ambani performed the role of a compassionate corporate citizen, his company launched a huge stock market mop-up without a whisper.

Reliance Industries today started the largest exercise by any Indian company to buy its own shares from the market by picking up 6 lakh shares at a cost of Rs 34 crore.

The buyback is being carried out, overruling objections by younger brother Anil, with whom Mukesh is locked in a fierce dispute over control of the nearly Rs 100,000-crore Reliance empire.

At a stormy meeting on December 27, where Anil held up the flag of opposition, the Reliance board had approved the buyback, but corporate troubles were farthest from Mukesh's mind when he visited tsunami-hit areas on Sunday.

'It took his mind off the ongoing business tension,' Murli Deora, the Congress MP who accompanied him, said.

As chairman of the Foundation for International Federation of Red Cross and Red Crescent Societies, Mukesh went to areas near Negombo, north of capital Colombo, and donated 815 million Swiss francs (about $700 million) for tsunami relief.

'Mukeshbhai looked relieved, devoting full time and energy to overcome the great tsunami tragedy,' said Deora, who is vice-president of the International Red Cross.

On January 25, Mukesh will fly to Geneva to chair a meeting of the Foundation to impart greater impetus to relief and rehabilitation, Deora said.

'Mukeshbhai plans to raise over $1 billion,' he added.

Mukesh, whose association with the Red Cross began after the earthquake in home state Gujarat, met Sri Lanka Prime Minister Mahinda Rajapakse and underlined the importance of engaging the private sector in rehabilitation.

Over 30,000 people have died in Sri Lanka.

The task of reviving the Reliance stock began in right earnest today as the company dipped into its reserve of Rs 2,999 crore set aside for the buyback, but the share still dropped by over Rs 7 to close the day at Rs 533.

The buyback is designed to restore the confidence of investors spooked by the public spat between the brothers.

A fund manager affiliated to a leading mutual fund, which has a sizeable amount of Reliance shares in its portfolio, was ecstatic. 'If this is true, then the markets will open with a lot of confidence tomorrow,' he said.

Reliance had announced that the buyback programme would open on January 10 but few had expected it to scoop up shares on the very first day. The buying of 629,800 shares was undertaken in top secrecy with no one in the stock market having any inkling about the operation.

It bought the shares at an average price of Rs 539.62 through its investment bankers JM Morgan Stanley and DSP Merrill Lynch. The price was considerably lower than the ceiling of Rs 570 the company had set.

The buyback has coincided with a slump in the market that began at the start of the year when hedge funds dumped shares amid reports of strong economic growth in the US and speculation of another round of interest rate increases by the US Federal Reserve.

It has been hugely controversial with the Anil camp coming out with several embarrassing disclosures relating to the shareholding of the promoter group companies which prompted capital market watchdog Sebi to give only conditional clearance for the programme. Reliance has been asked to volunteer more disclosures to shareholders, especially the reasons for Anil's opposition to the proposal.

Top
Email This Page