Online edition of India's National Newspaper
Tuesday, Dec 28, 2004

About Us
Contact Us


Front Page
News: Front Page | National | Tamil Nadu | Andhra Pradesh | Karnataka | Kerala | New Delhi | Other States | International | Opinion | Business | Sport | Miscellaneous | Engagements |
Advts:
Classifieds | Employment |

Front Page Printer Friendly Page   Send this Article to a Friend

Reliance fixes buyback price at Rs. 570

By Oommen A. Ninan



The Vice-Chairman and Managing Director of Reliance Industries, Anil D. Ambani, talking to the media prior to the company's board meeting in Mumbai on Monday. — PTI Photo

MUMBAI, DEC. 27. Reaffirming the absolute control of Mukesh Ambani in the Reliance Group companies, the board of Reliance Industries Ltd (RIL) today noted that the company's strengths and prospects could be maintained and enhanced by its flagship RIL continuing in its present form without any dismemberment.

"This would be in the larger interests of the shareholders, employees and other stakeholders," it stated. The board, which met here today also reiterated its full faith and confidence in the leadership of the Chairman and Managing Director (CMD), Mr. Mukesh D. Ambani, to continue to lead the company in a challenging global environment. All directors attended it.

Anil abstains from voting

This is the first meeting of the RIL board since the feud between the Ambani brothers, Mr. Mukesh and Mr. Anil, became public. Meanwhile the board approved the proposal for the buyback of its shares at a ceiling price of Rs. 570 per equity up to an aggregate of Rs. 2,999 crores. Before the crucial board meeting, the Vice Chairman of RIL, Mr. Anil D. Ambani, told the media that he was neither consulted nor informed of the buyback proposal before sending the notice to stock exchanges. "Considering a buyback is inappropriate at this time as there are several other issues that the group faces and those need to be addressed," he added. Mr. Anil Ambani also abstained from voting for the buyback proposal.

The buyback scheme would be open from January 10, 2005 to December 26.

The board resolved that the present organically integrated structure of the company envisioned and created by the founder chairman, Dhirubhai Ambani, should not be altered in any manner. This, the board felt, will be in the larger interests of providing, on a sustained basis, financial resources, growth opportunities and stability, extending handsome benefits to its very large family of shareholders and significant contribution to the national economy. The company has grown into an integrated organic entity having intrinsic synergy.

In this context, the board also recorded its deep appreciation of the devoted tireless efforts of the entire management team, including the Vice Chairman and Managing Director, Mr. Anil Ambani, Executive Directors, executives and employees under the overall leadership of the Chairman and Managing Director, Mr. Mukesh Ambani. RIL informed that the resolutions were passed accordingly.

Corporate governance

In order to address the issues concerning corporate governance, the board decided to set up a Standing Committee of Independent Directors to oversee various matters. However, the names were not announced.

The board considered various matters relating to infocom initiatives of RIL, including investments in Reliance Communica- tions and Infrastructure Limited (RCIL) and Reliance Infocomm Limited (RIC). The board noted that investments were made in RCIL and RIC, for value creation for RIL shareholders. Earlier, Mr. Anil questioned these investments. However, the board today reconfirmed these investments. "The board noted with satisfaction that even amidst baseless and misleading reports, RIC successfully executed a loan agreement with the U.S. Exim Bank and Export Development, Canada, for an aggregate term loan of $750 million on attractive terms. This points out to a high level of international confidence in RIC and RCIL. RIL has invested in deep discount bonds, which are outstanding. The board noted that all other dues of RCIL and RIC to RIL have been fully paid."

The board noted that the yield from the preference shares (Rs. 8,100 crores) of RIC at 8 per cent per annum, which is tax-free, is higher than RIL's cost of loan funds. In order to arrive at a fair price and determine the right timing for conversion, the board decided to constitute a Committee of Directors of six independent directors — Y. P. Trivedi, M. L. Bhakta, Ramesh Pai, D. V. Kapur, M. P. Modi and S. Venkitaramanan — who may engage the services of valuer(s) of international repute.

Responding to the request of RCIL and RIC, the board decided to nominate two independent directors of RIL — Y. P. Trivedi and M. P. Modi — to the boards of RCIL and RIC as a measure of good corporate governance. The board noted that since allotment, RIL's shareholding in RCIL remains unchanged.

Nullifying the allegations made by the Anil camp, the board noted that there was no infringement of any laws or regulations in the matter of RCIL giving Mr. Mukesh Ambani an option to acquire 50 crore shares in RIC, and his exercise of the option. "The grant of option and its exercise to Mr. Mukesh Ambani have been annulled by RCIL at Mr. Mukesh Ambani's request. Consequently, RCIL's shareholding in RIC has reverted to its former pre-option level."

The board also considered certain matters raised by Reliance Energy Ltd., (REL), a subsidiary of RIL group, headed by Mr. Anil Ambani. The board decided that reasonable assistance would be extended to REL in several respects, as desired by REL, without affecting RIL's operations and projects. It was also decided that it would be prudent to require that large projects of all RIL Group companies be considered by RIL for approval, if necessary. A suitable mechanism for this would be put in place in the interest of the shareholders.

Gas supply

The board reaffirmed that gas would be supplied for the Dhirubhai Ambani Energy City (DAEC) power project. An appropriate official joint group would be set up to work out the details on operational and commercial aspects. The status of KG basin gas production and transportation was briefly reviewed. It was noted that some required approvals (Government, regulatory and others) are yet to be received. For supply of KG basin gas to DAEC, additional pipeline linkages would need to be configured, involving Government, GAIL and others. As soon as it becomes feasible to do so, RIL would be in a position to supply gas to DAEC on the usual terms and conditions.

Resignation by certain (six) directors in November from the board of REL was not at the instance of RIL. The board noted that, "RIL had never expressed any lack of or diminished confidence in the board of REL or its directors. RIL had neither sought nor proposed any change in the composition of the REL board. Any question about continuation of RIL nominees on the board of REL is hypothetical."

Printer friendly page  
Send this article to Friends by E-Mail

Front Page

News: Front Page | National | Tamil Nadu | Andhra Pradesh | Karnataka | Kerala | New Delhi | Other States | International | Opinion | Business | Sport | Miscellaneous | Engagements |
Advts:
Classifieds | Employment | Updates: Breaking News |

Clasic Farm Shaadi.com


News Update


The Hindu Group: Home | About Us | Copyright | Archives | Contacts | Subscription
Group Sites: The Hindu | Business Line | The Sportstar | Frontline | The Hindu eBooks | The Hindu Images | Home |

Copyright 2004, The Hindu. Republication or redissemination of the contents of this screen are expressly prohibited without the written consent of The Hindu