Posts
![[Most Recent Exchange Rate from www.kitco.com]](http://www.weblinks247.com/exrate/24hr-inr-small.gif)
Reliance shares, which rose 3% last time when the company declared bonus in 1997, is expected to gain on Thursday, traders say. Reliance, listed in 1978, has so far issued bonus shares thrice in its history — in 1980, 1983, and 1997, data show. The company maintained its dividend for the fiscal year ended March 2009 at Rs 13 a share. Both the bonus and the dividend are applicable to shareholders of the erstwhile Reliance Petroleum, which has been merged with RIL.
Mr Ambani, the company's chairman, said the bonus move was intended to reward shareholders for the successful completion of "two world-class projects." He was referring to the successful commencement of gas production from fields owned by RIL, off the east coast of India, and the building of a new refinery, which was housed in Reliance Petroleum, at Jamnagar in Gujarat.
The company also reported a consolidated net profit of Rs 15,296 crore for the year ended March 31, 2009. Its shares fell 1.5% to Rs 2,101 on Wednesday. Mukesh Ambani owns 49% of the company.
The bonus issue is also an attempt, some analysts said, to erase a perception among some investors that RIL's sale of treasury stock recently was an indication that the company thinks the stock price has peaked for the time being.
"The negative sentiment created by the treasury stock sale has been nullified by this issue," said Amitabh Chakrobarty, president-equity, Religare Securities.
The country's largest private sector firm last month raised around Rs 3,188 crore through sale of 1.50 crore equity shares of the company itself held by its treasury department in Petroleum Trust, the shares it got from the merger of another company, also called Reliance Petroleum, which housed the first 30-million-tonne refinery in Jamnagar, with itself. In the past, the company had issued bonus shares when it was confident of earnings growth.
Dhirubhai Ambani, the founder of the company who had resisted giving away bonus shares during some years, in 1997 said, "A bonus offer reflects our confidence in the future earnings growth of the company".
Wednesday's events certainly lacked the drama which accompanied the previous RIL bonus issue, announced on June 26, 1997. On that day, the company's founder and former chairman, the late Dhirubhai Ambani, announced in the middle of an annual general meeting that the proceedings would be adjourned to enable the RIL board to decide on a bonus share issue. With the markets gyrating rather wildly, Dhirubhai returned after some time to ask the assembled shareholders what they wanted. The shareholders screamed 1:1, a wish 'granted' by Dhirubhai.
In contrast, the latest announcement came safely after market hours and the company's CFO Alok Agarwal, who read out a written statement, didn't take questions.
The company said on Wednesday that it was "ready to invest for the future," though it didn't provide details. RIL to invest $8.8 b in developing KG fields
IT SAID in a written statement that it controlled 25% of the world's refining capacity and has reached a production of 40 mmscmd of natural gas from the famous KG D-6 fields in Jamnagar.
The amalgamation of the Reliance Petroleum refining unit with itself and the ramp up of natural gas production is expected to increase the company's cash flow enabling it to service a larger equity base. RIL had a cash flow of Rs 20,950 crore for the year ended March 31, 2009, and its treasury stock holding is valued at Rs 40,000 crore.
"We had committed to reward our shareholders on successful completion of our two world-class projects... the upstream project has been recognised globally as a defining achievement. Our refinery project has made Reliance the operator of the largest refinery site anywhere in the world," Mukesh Ambani was quoted as saying in a press statement.
The bonus issue may also serve to lure some investors who were shunning the stock as a legal battle with Mukesh's estranged brother Anil Ambani over gas dimmed earnings growth prospects.
"The present RIL stock has discounted the court tussle between the Ambani brothers so the stock was underperforming in recent months. Bonus issue is a positive signal to retail shareholders. But it came as a surprise," Mr Chakrobarty said.
Reliance's retail investors customarily seek bonus shares at almost every annual shareholders meet, but the management has been resisting the temptation, probably to avoid an equity overhang. The latest issue of bonus shares, which will double the outstanding shares to 328 crores, caught some investors by surprise.
RIL, which has the highest weighting of 12.8% in the benchmark Sensex, has underperformed the index this year partly as a result of the fight for gas with Reliance Natural Resources, a company owned by Anil Ambani, raged with many claims and counter-claims.
While the Sensex has risen 74% this year fuelled by global liquidity as the central banks printed money to get the world out of the worst recession since the 1930s, Reliance rose 70% during the same period.
"The refining margins have been weak globally, but the main reason I believe is the dispute between the warring Ambani brothers,'' said SP Tulsian, Investment Advisor.
Anil Ambani's RNRL claims that RIL has to supply gas to its power project in Uttar Pradesh at a price agreed to between the brothers when they split the empire between themselves in 2005. The younger brother claims that the MoU, blessed by their mother Kokilaben Ambani, should be the basis of businesses between the two groups.
But RIL has said the MoU, which stipulates a price of $2.34 per unit, was not approved by the company and it was between individuals. This legal dispute has forced many analysts to reduce their earnings forecast for Reliance Industries as an adverse court ruling could force RIL to sell gas at a sharply lower price than a government-set price of $4.20 per unit.
The company planned to invest $8.8 billion in developing the fields in the K-G basin, of which it has already spent about $5.8 billion.
OR SEND SMS "ON WAY2TRADE " TO 9870807070
|DisasterAwareness | Health |Insurance | Forex| Commodities|
ways2invest 
akbar65 
wilint
0 comments:
Post a Comment