The Telegraph
Since 1st March, 1999
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Market peaks on Reliance frenzy
- High hopes on eve of AGM

Mumbai, Aug. 2: Shareholder wealth in Reliance Industries surged past the Rs 1,00,000-crore mark on the eve of the first annual general meeting of the country’s largest private sector company since the split in the Ambani family on June 18.

Reliance is now only the second company after Oil and Natural Gas Corporation to have scaled the peak.

The surge in the stock was propelled by a ballast of expectations in the market that Reliance chairman Mukesh Ambani would make a string of announcements. They could include a big-ticket acquisition of a global petrochemicals company and a clear roadmap for the demerger of three Reliance group companies ' Reliance Capital, Reliance Infocomm and Reliance Energy ' which have gone to brother Anil as part of the carve-up formula for the Rs 90,000-crore empire that Dhirubhai Ambani built.

The Reliance Industries’ share flared up by Rs 33.85 to Rs 741.95 today, an impressive gain of 4.78 per cent over the previous close. The market capitalisation swelled to Rs 1,03,391 crore. Investors swarmed to scoop up the stocks ahead of what many believe will be Mukesh’s day in the sun.

Sensex surge

The leap in the bellwether stock’s value sent the sensex to another new high at 7756.04, a gain of 86.59 points for the seventh straight session. The overall shareholder wealth of the market also surged past Rs 20,00,000 crore today.

Big plans

It will be first time at a Reliance AGM that Anil won’t be by his side. Mukesh is also expected to announce expansion plans for the petroleum refinery in Jamnagar and its petrochemical complexes.

The annual general meeting is a platform that the Ambanis have used in the past to announce major plans, including buyouts. Last year, for instance, Mukesh unveiled the acquisition of Trevira, the German polyester fibre maker for $98 million.

Some sections in the market expect him to do an encore. Mukesh has deliberately kept a low profile since June 18 when mother Kokilaben hammered out a truce between the warring brothers with the help of family friend K.V. Kamath, CEO of ICICI Bank.

Investors expect Mukesh to unveil a series of initiatives that will propel Reliance Industries into areas outside its core competence of petro-chemicals, petroleum and gas. These could be in the fields of life sciences (where it has a small presence at the moment) and retail.

Governance issues

Late in the evening, independent directors on the RIL board met to discuss corporate governance issues among other things.

Corporate governance had turned into a major controversy during the nearly year-long battle between the brothers with Anil preparing an opus of charges last December which the board had rejected. Anil had sent the tome to the market regulator and the ministry of company affairs, which had ordered investigations.

Mukesh is keen to exorcise any stigma that might arise from these investigations which have been progressing pretty slowly. The board is also believed to have finalised the restructuring plan for the demerged companies that Anil now runs.

Reliance is expected to spin off its holdings in the three Anil-run companies into three holding entities which will later be consolidated. The RIL shareholders are expected to get shares of the three companies when they are demerged and spun into special purpose vehicles.

The Reliance scrip has the biggest weightage in the sensex at 12 per cent. ONGC, which has a market capitalisation of Rs 1,36,497 crore, has a very small floating capital which is why its weightage in the premier index of the bourses is just a third of Reliance’s.

NTPC is third on the market capitalisation chart with a market cap of Rs 81,588 crore with the infotech majors Infosys Technologies and TCS at Rs 62,425 crore and Rs 62,002 crore, respectively.

Mukesh has been trying to professionalise the Reliance board.

In the past two months, he has inducted two leading academics and management gurus, Dipak Jain, dean of Kellog School, and Ashok Mishra from IIT Mumbai.

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