Shareholders were upset with RIL's increasing focus on non-core areas and its reluctance to pay dividends
RIL chairman Mukesh Ambani had to face a barrage of questions from the shareholders on Friday, mainly on the plunging price of the bellwether stock and on the loss-making media business, among others.
The shareholders were equally upset with Reliance Industries' increasing focus on non-core areas (media, retail, telecom that have been cash guzzlers for the past three years with no operations) and its reluctance to pay dividends even as it sits over Rs 2.14 trillion in cash reserves, according to one shareholder.
Besides, the company has Rs 84,000 crore (Rs 840 billion) in cash piles, which is over 60 times its paid-up equity capital.
Meanwhile, the 41st annual general meeting of the country's largest private sector corporate here today also marked the formal presence of Nita Ambani, the wife of Mukesh Ambani and chairperson of Reliance Foundation, as she was recently inducted into the company's board as an independent director to meet the regulatory demand.
The AGM was also conspicuous by the absence of Ambani's mother Kokilaben Ambani.
Most of the nearly 50 shareholders who spoke at the AGM were worried over the steep fall in the price of RIL share, which closed 1.4 per cent up today at Rs 889.15, against the benchmark Sensex gaining 0.21 per cent.
But this is a whopping over 25 per cent down from the 52-week high of Rs 1,112.95 on this day last year.
Even on a day when the Sensex hit the life-time closing high of 30,024.74 points on March 4, 2015, the RIL counter plunged 1.6 per cent to Rs 886.95.
It can be noted that the RIL counter, which for many years had the highest market capitalisation at over Rs 4 trillion, is way below that peak for many years, and is far behind newbie TCS, which has been maintaining over Rs 5 trillion in m-cap for more than a year now.
As of today, RIL's m-cap stood at Rs 287,768 crore (Rs 2877.68 billion) which is the second highest, while that of leader TCS was Rs 492,042.3 crore (Rs 4920.42 billion) as the scrip shed 2.3 per cent on Friday on the BSE.
Many investors also complained that the company has not been not offering any bonus shares or dividends for many years now, citing large capex.
During his address, Ambani said the board will take a call on share buyback/issuing bonus shares or paying large dividend as the company is nearing its capex cycle of over Rs 3 trillion in the petrochemical and telecom businesses.
They also demanded that the next dividend payout should at least be 150 per cent. But some of them asked for bonus debentures in the interim as they said that they are stuck with the low price of RIL shares which ideally should be priced at around Rs 5,000 apiece.
One shareholder even suggested that RIL should check whether some cartels are at work punting the shares down.
Many investors also complained about the continuing losses of its media arm - 17 news channels under Network18 and 14 GEC channels as also their e-commerce and publishing arms.
An investor also questioned the rationale behind the company extending an interest free loan of Rs 350 crore (Rs 3.5 billion) to NDTV Group even as it already has these many channels and also queried about the fate of this investment.
Another set of investors expressed their concerns about the poor returns and the issues surrounding the once-prized KG-D6 wells.
Strangely, Ambani did not offer answers to any of these shareholders' questions at the end of the near four-hour-long session.
Addressing the shareholders, Ambani said RIL will invest another Rs 2 trillion into the oil business and launch its 4G telecom venture by December.
RIL will begin commercial operations of its much-awaited 4G telecom services by December, while it plans to complete projects worth over Rs 2 trillion in the core oil and petrochemical businesses over the next 12-18 months, Ambani said.
Looking to reap full benefits of these investments from 2016-17 onwards, Ambani said RIL will have a unique portfolio of globally competitive petrochemical and refining business with a new age India-centric consumer business with very high growth potential.
"This will place Reliance in a select group of most valuable companies in the world," he told the AGM.
