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Anil to put Rs 3,000 cr in REL, Capital

BS Corporate Bureau in Mumbai | June 20, 2005 09:06 IST
Last Updated: June 20, 2005 16:36 IST


Within 24 hours of taking over the reins of the Anil Dhirubhai Ambani Enterprises Group, the name he has given to his new business empire, Anil Ambani on Sunday announced that he would invest Rs 3,000 crore (Rs 30 billion) in Reliance Energy and Reliance Capital from his "personal resources".

He confirmed that all the three companies, the third one being Reliance Infocomm, would be demerged from the Reliance group.

The Reliance 'ownership issue'

There would not be any specific flagship company in the group and all the three firms would get equal importance, he added. Also, the ADAE group will be free to use the Reliance logo.

Addressing his first press conference in his new avatar, Ambani said he was putting in his own money as he had enormous confidence in the potential of these companies.

"I hope the shareholders appreciate this confidence. So far, I have been managing Reliance Energy. Now I am an investor too," he said, adding that he would always remain a Reliance Industries shareholder.

Ambani will invest Rs 2,000 crore (Rs 20 billion) in Reliance Capital at Rs 228 per share -- a 42 per cent premium over the average share price of the last six months.

Reliance Energy will get Rs 1,000 crore (Rs 10 billion) from Ambani at Rs 573 per share, representing 8 per cent premium over its average price of the last six months. He also invited the existing long-term investors to put in fresh capital into the company.

However, he did not mention the timing of the proposed investments. When asked about it, he only said "I gave you a broad vision."

Analysts closely watching the Reliance spat over the last seven months said the investment would take place only after Reliance Industries, the principal shareholder, pulled out of these companies.

Ambani, who flew into the city from Tirupati on Sunday morning, attended the board meetings of both Reliance Energy and Reliance Capital.

He was elected the chairman of Reliance Capital replacing D Chaturvedi, while vice-chairman Anand Jain and a few other independent directors -- D J Kapadia, Sandeep H Junnarkar and Alok Agarwal -- resigned from the board. They were replaced by S S Thakur, Rajendra Chitale and Amitabh Jhunjhunwala.

Ambani said the ADAE Group could be listed if necessary in future. However, Reliance Infocomm would be listed "in due course". He hinted that the 24 per cent holding of foreign institutional investors in Reliance Capital could be raised.

Ambani said he wanted Reliance Capital to become a full spectrum financial services power-house and among the top three financial services firms in India.

"The company would explore the possibility of becoming a bank as and when the Reserve Bank of India regulations allow it do so."

On Reliance Infocomm, the other Reliance group company now under his control, Ambani said the company had a great future and it was reflected in the fact that he had been flooded with calls in the last 24 hours from potential investors.

He also ruled out any top level changes in the company. "The 43,000-plus employees of Infocomm have done a spectacular job and the top team is immensely talented," he said.

On Reliance Energy, Ambani said his investments would increase the company's resources for various investment plans. In coal-based power generation, the company is bidding for a Rs 1,000-crore (Rs 10 billion) project in Uttar Pradesh. It is in talks with the Orissa government for setting up a 12,000 MW power project in the state.

It is also developing a 3,740 MW gas-based power generation project at Dhirubhai Ambani Energy City in Uttar Pradesh. In addition, it is in the process of implementing a series of projects in gas-, hydro- and wind-based power projects.

The ADAE group has also bid for the privatisation of Delhi and Mumbai airports. It has been shortlised for the mass rapid transit system between Andheri-Ghatkopar and the Mumbai trans-harbour project which envisages sertting up of 22 km bridge over sea connecting Sewri and the Nhava Seva Port.

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