Reliance meet likely to be a stormy affair

The Reliance Industries' board meeting on Monday promises to be a marathon and a stormy event. Dominating the agenda will be issues related to Reliance Energy, and particularly those raised by two independent Reliance Energy directors, VP Mallick and Leena Shrivastav.

Sources close to the development said after discussing the primary agenda of a buyback, the board might take up issues related to Reliance Infocomm and Reliance Energy with the permission of the chairman. The resignation of Reliance Industries' director ML Bhakta is also scheduled to be taken up by the board.

Former Army Chief General Mallick and energy economist Shrivastava had written a letter to Reliance Industries on December 4, seeking clarifications on the future of projects announced by Reliance Energy.

• The Reliance ownership issue: Complete Coverage

The directors said in their letter that Reliance Energy had received only Rs 1,500 crore (Rs 15 billion) against an approved investment of Rs 5,000 crore (Rs 50 billion) on January 29.

Monday's board meeting, which will be the first after the rift between Reliance Industries' Chairman and Managing Director Mukesh Ambani and Vice-Chairman and Managing Director Anil Ambani broke out in mid-November over the ownership of the group, has many distinctions. All the Reliance Industries directors are expected to attend the meeting.

In addition to Mukesh and Anil Ambani, the other directors include Anil Meswani, Hital Meswani, HS Kohli, Ramniklal Ambani, ML Bhakta, Ramesh Pai, Yogendra Trivedi, DV Kapur, MP Pai and S Venkitaramanan.

For the first time in the past four years, the board meeting will be held at Maker Chambers IV, the corporate headquarters of the Reliance group.

During these years, Reliance used to have its board meetings at the Reliance Centre, the group's office complex in Ballard Estate. This will be the fifth meeting of the board in 2004, marking another "first" in the company's recent history.

Normally, the Reliance Industries board meets once in a quarter or four times a year. In the normal course, the Reliance Industries board would have met in January 2005, but "this extraordinary meeting has been called to deal with an extraordinary situation".

Executives close to Mukesh Ambani described the "extra-ordinary situation" as the company's intention to buy back its shares while those in the Anil Ambani camp said it was the pressure created by their boss to take stock of the issues related to the company's investments in group companies.

Anil Ambani is likely to call upon the board for the appointment of the company's auditor, DN Chaturvedi, to vet all accounts of the past few years to see "whether fit and proper disclosures were made" in regard to all investments made by Reliance Industries in Reliance Infocomm.

Anil Ambani may even call upon the board to "take remedial action to ensure that Reliance Industries shareholders are suitably informed."

According to a Reliance Industries executive, the price of the buyback would be set in a manner to serve a dual purpose-- the company intends to reward its shareholders from its capital reserve and at the same time, wants to offer an exit option to those who are sceptical about its future.

He indicated that the buyback price would be fixed in line with the stock prices that existed before the rift over the ownership issue went public.

On November 18, the RIL stock was priced at Rs 545.54. The board would also decide on the size of the buyback as well.

Under the Companies Act, firm can buyback shares up to 10 per cent of its paid up equity capital from the open market.