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Anil capitalises on energy

Mumbai, July 19: Anil Ambani today unveiled ambitious plans to shareholders of Reliance Energy and Reliance Capital that have been designed to pitchfork the power utility and financial services company within his group to the forefront of the businesses in which they operate.

Ambani, who gained control of both companies after the June 18 settlement that resolved the ownership dispute with older brother Mukesh, said he would double the generation capacity of Reliance Energy's proposed plant at Dadri in Uttar Pradesh and turn RCL into the third largest financial powerhouse behind ICICI Bank and HDFC in the financial services sector in terms of net worth.

The younger scion was addressing successive extraordinary general meetings of REL and RCL. He later won shareholder support for preferential share issues by both companies. The share issues will see the eponymous Anil Dhirubhai Ambani Enterprises (ADAE) investing Rs 1,500 crore in the share capital of REL and Rs 2300 crore in RCL.

Addressing shareholders of REL, Anil Ambani indicated that the generation capacity of its Dadri project would double to 7,480 mw. The original capacity of the project, to be commissioned by 2008-09, was 3740 mw.

At the meeting, REL shareholders approved preferential issue of about 2.58 crore shares at a price of Rs 573 per share to ADAE. Commenting on the infusion of fresh equity into the company, Ambani said other institutional investors had committed Rs 250 crore.

It is learnt that about six foreign institutional investors, including New York Life Investment Management Fund and Boston-based global investment management firm GMO, will invest Rs 250 crore in REL to pick up 41.18 lakh preferential shares.

With the preferential issue, the stake of Reliance Industries Ltd in REL will come down to 45.63 per cent from 52.64 per cent at present. At the same time, ADAE will have a stake of 11.46 per cent. Anil Ambani’s holding company doesn’t own any equity in the company at present.

Ambani showed the same gusto at the shareholders’ meeting of RCL where he revealed that the financial services company would focus on the entire gamut of services.

Responding to shareholder queries, he said RCL would look at marketing and distributing life insurance products in the country after obtaining requisite approvals from the authorities. Over a point of time, the company would also look at the entire gamut of general insurance products that will be offered to other customers.

Ambani did not rule out the possibility of entering banking as and when regulations permit.

At the extraordinary general meeting, RCL members approved infusion of Rs 2,300 crore to the share capital by ADAE at Rs 228 per share. They also cleared a proposal to raise the FII limit to 49 per cent from 24 per cent.

Ambani was cheerful at both meetings, but showed a little irritation when a shareholder V.M. Raasthe said RCL had been neglected for the past 10 years. He riposted that it had been run till 2002 by his late father Dhirubhai Ambani. “I will not tolerate from any Indian citizen an insult to my father," he said.

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