RIL demerger doubles shareholder wealth
27 Jun 2006
Mumbai: The demerger of the Reliance group has helped fuel an upward rally in its scrips, thereby doubling shareholders' wealth in just one year, RIL chairman Mukesh Ambani told the company's 32nd annual general meeting (AGM) on Tuesday, and the first since the divestiture of businesses to younger brother Anil Ambani's Anil Dhirubhai Ambani Group.
RIL had demerged its power, financial services and telecom businesses into four separate companies last year following a settlement of ownership between the two brothers. However, RIL shareholders were also given shares of these firms as part of the demerger process.
The value of shareholders' wealth surged almost 100 per cent within a year of the demerger, while net profits doubled in two years, he told the first AGM post demerger.
Ambani said the demerger of the Reliance empire that Dhirubhai Ambani built - the largest in corporate India's history - has helped generate additional value of Rs46,000 crore for Reliance shareholders in just one year.
The market price of RIL, including those of the four demerged companies, was ruling around Rs650 a year ago while the combined share prices of RIL and the demerged companies currently stand at Rs1,300, he said. The Reliance shares, he said, have significantly outperformed the 40-per cent growth in the benchmark BSE Sensex and other peer group indices globally.
RIL share price has risen nearly 66 per cent, to above Rs1,000 currently, from about Rs600 a year ago. Reliance Communications was trading at around Rs231 a share, Reliance Energy Ventures at Rs31.55, Reliance Capital Ventures at Rs24.20 and Reliance Natural Resources at around Rs19 per share.
Ambani said RIL's net profit has doubled while turnover rose 58 per cent to about Rs89,124 crore in just two years. Exports, at more than Rs32,691 crore, now contribute 37 per cent of the company's turnover, he said, adding this represents 8.2 per cent of India's total exports. The share of exports in RIL's total revenues has also risen substantially, he said.