Mumbai, Jan. 10: Under the shadow of a general market downtrend, the Reliance group bought back shares for the first time in its history.
But with Anil Ambani, the younger Ambani sibling and vice-chairman and managing director of Reliance Industries, staunchly opposing the share buyback, the Securities and Exchange Board of India (Sebi) gave only a conditional clearance to the programme. The watchdog is believed to have directed the company to mention prominently in its offer advertisement the points raised by Anil.
The buyback assumes significance as previous plans were never put into action and remained only on paper.
Acting in secrecy through its investment bankers, Reliance Industries acquired over 6.3 lakh shares at an average price of Rs 539.62 apiece. It, however, did little to enthuse the market, which was largely unaware that the mega buyback was kicked off.
The sensex went into a tailspin after a smart price recovery last weekend, ending 112 points in the red at 6308.54, a one-month low. The high volatility was attributed to a late bout of selling by hedge funds as well as operators. However, Sebi figures showed that FII sales overtook purchases by a measly Rs 7 crore.
The volume of business on the BSE was relatively low at Rs 2141.66 crore compared with Rs 2224.71 crore last Friday. RIL remained the most active scrip, clocking a turnover of Rs 116.86 crore, followed by Infosys Technologies at Rs 90.09 crore. The Infosys stock dipped Rs 56.75 to Rs 1994.15 and RIL's Rs 7.35 to Rs 533.50. Reliance Energy, which also launched a buyback, fell Rs 1.10 to Rs 526.95.
Unlike earlier plans, the current RIL buyback is different since it is mainly a market operation; the earlier plan was through a tender.
The investment bankers stumped up Rs 33.99 crore for the Reliance shares. The coming days could see more purchases as the corpus laid out for the buyback is Rs 2,999 crore, a scale normally associated with all mega-projects that RIL implements. The buyback is mired in controversy as Anil has staunchly opposed the move.
The buyback was unleashed even as an addendum appeared in the local newspapers on several clarifications made by Mukesh Ambani and RIL. They were replying to recent accusations revolving around ownership issues and those related to subsidiaries that own shares on behalf of RIL shareholders ' not the promoters alone.
Market players were surprised that the plan was uncorked on the first day. The earlier buyback plan, extended once, was never implemented even though the share fell below the offer price of Rs 303 two years ago.
'This time, it is Mukesh who is in charge of the buyback exercise and he wants to tell the world that he means what he says,' said a broker.
The coming days could see lot of pulls and pressures on the stock as the Reliance group continues to be hammered by more disclosures as Anil tries to keep the issue boiling.
Meanwhile, brokers say the decline in markets over the past few days is also because of a general apprehension ahead of the big corporate results.