Financial Daily from THE HINDU group of publications
Monday, Jun 20, 2005
Corporate - Outlook
Anil unveils new identity Announces Rs 3,000-cr investment plan
Mr Anil Ambani addressing a press conference in Mumbai on Sunday. Shashi Ashiwal
Mumbai , June 19
MR Anil Ambani today announced the formation of Anil Dhirubhai Ambani Enterprises (ADAE) to control Reliance Capital (RCL), Reliance Energy (REL) and Reliance Infocomm.
The new entity will invest about Rs 2,000 crore in Reliance Capital and Rs 1,000 crore in Reliance Energy, Mr Anil Ambani said at a press briefing on Sunday.
This was the younger Ambani brother's first comprehensive interaction with the media after the Reliance group settlement.
The boards of Reliance Energy and Reliance Capital have proposed preferential offers of equity shares and/or equity related securities to ADAE and long-term institutional investors, to further strengthen the companies' financial position and generate long-term resources for future growth plans.
At RCL, the offer price will be a minimum of Rs 228 per share (40 per cent premium to the six-month average) and at REL, a minimum of Rs 573 per share (8 per cent premium to the six-month average).
On funding, Mr Anil Ambani, who portrayed the briefing as one to sketch ADAE's "directional view,'' said, "clearly, there are resources that will be personal. There cannot be a greater show of commitment than putting one's personal capital to work."
Proceeds from the offer will enhance REL's resources for various big projects, including a 12,000-MW coal-based power project in Orissa costing Rs 48,000 crore.
Investment plans in REL exceed Rs 80,000 crore and will be done in phases, Mr Anil Ambani said.
RCL will emerge as the second or third biggest financial services and banking company in the country. As and when regulations permit, it will look at banking, he said.
The RCL board will, at an appropriate time, take up the issue of losses incurred during an IPCL-related transaction.
It has appointed Mr Anil Ambani as the Chairman and inducted Mr Rajendra P. Chitale, chartered accountant and managing partner of M.P. Chitale & Co, as Directors.
Mr D.N. Chaturvedi, Mr Anand Jain, Mr D.J. Kapadia, Mr Alok Agarwal and Mr Sandeep H. Junnarkar have resigned from the RCL board.
Details on Reliance Infocomm - the third company in ADAE's fold - were not provided, as the fine print of the de-merger is for Reliance Industries Ltd (RIL) to address.
The board will be reconstituted though there is "no reason" for changing its management team.
Still, Mr Anil Ambani said that Mr Kamal Nanavaty, Chief Operating Officer of the company's wireless business would revert to RIL.
While the previous statements on the prospective listing of Reliance Infocomm remain relevant, Mr Anil said, with reference to his larger group, "If listing is necessary in the future, we will look at it.''
"What has been said is a directional view," he said.
According to him, the difference of opinion in the Reliance group was an issue that needed resolution, and now it had been resolved.
"Investors should have no fears whatsoever. This is a new beginning," he said when asked if the quarrel had ended with Saturday's split.
However, on corporate governance charges he had earlier raised, Mr Anil Ambani said, "The ball is in their court; it is for them to respond."
He viewed its course as a "one-way street."
Mr Anil Ambani refused to comment on reports of a non-compete clause between the two brothers, deeming the subject a family matter. He said ADAE's transformation would be authored by both intellectual and monetary capital.
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