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June 16, 2001
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Money > Business Headlines > Report June 16, 2001 |
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RPL stake sale: Rs 10 billion boost for RIL bottomlineBS Corporate Bureau Reliance Industries Ltd is expected to see a positive impact of around Rs 10 billion on its bottomline in fiscal 2002 when it "starts consolidating accounts" with subsidiary Reliance Petroleum. "The earnings per share is also expected to go up by Rs 10 next fiscal," Dhirubhai Ambani, RIL chairman, said while addressing the company's annual general meeting in Bombay. The proposed partial sale of RIL's stake in RPL will generate proceeds of Rs 35 billion and capital gains of Rs 20 billion. As RIL holds 65 per cent in RPL, the flagship will benefit by over Rs 10 billion. The unrealised capital gain for RIL, on its residual investment in RPL, will be a further Rs 85 billion at current market prices. "In less than four years, the market capitalisation of RIL has more than doubled-from less than Rs 180 billion in June, 1997 to over Rs 380 billion currently," Ambani said. A minimum return on net worth of 20 per cent was targeted over business cycles. The RONW has averaged more than 20 per cent over the last four financial years despite a challenging environment, Ambani said. The company also outlined its investment strategies. RIL's focus will be on identifying attractive new growth opportunities to create a sustainable competitive advantage, managing financial discipline and unlocking shareholder value. Reliance shareholders have approved a share buyback programme on the same terms as applicable last year. The buyback will be for an amount of up to Rs 11 billion, at a maximum price of Rs 303 per share. RIL's shareholders have also approved an increase in the FII limit, from 24 to 49 per cent of its equity share capita. This will result in increased weightage of the company's share in international stock market indices. RIL has become the largest Indian investment of FIIs. International investors presently own over 23 per cent of the company equity. Reliance's oil and gas business, which presently contributes 3 per cent to its overall revenues, is targeting a significant increase in contribution in the future, said Ambani. RIL was recently awarded 4 new exploration blocks in the second round of bidding under the government's new exploration licensing policy, along with UK-based Hardy Oil. Reliance's cellular network, spread across 106 cities, has notched up a subscriber base of over 200,000 in less than four years. The subscriber growth rate of 170 per cent over the last one year is double the industry growth rate. Powered by YOU MAY ALSO WANT TO READ:
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