Will Reliance Ownership issue drag the stock down?

TATrader · #1 20th November 2004, 10:27 AM

Will Reliance Ownership issue drag the stock down?

Quote:

The ownership of Reliance Industries, India's largest private sector company, is being disputed by the two Ambani brothers who took control of the group more than two years ago.

On Thursday Mukesh Ambani, 47, chairman of Reliance Industries and older brother to Anil, 45, vice-chairman, publicly admitted what most of the company's 3.6m shareholders have been gossiping about for months.

In an interview with CNBC, the business television channel, Mukesh said: "Ownership is an issue. But it is in the private domain." Anil Ambani, who heads Reliance Energy, a subsidiary of Reliance Industries, India's leading petrochemicals company and leading mobile telecoms provider with almost 10m subscribers, could not be reached for comment.

But people close to the family confirmed that Dhirubhai Ambani, late father of Mukesh and Anil and founder of Reliance, died without leaving a will.

Under Indian law, an intestate inheritance should be divided equally between the offspring and surviving spouse. Dhirubhai was survived by a wife, two sons and two daughters.

It now appears the two brothers are unable to reach agreement on how to divide control of Reliance Industries, 46.6 per cent of which is owned by the family. It has, in effect, been under the control of Mukesh.

The group reported sales of $22.6bn and net profit of $1.4bn in 2003-2004. Reliance Energy, the portion controlled by Anil, is expected to post revenues this year of about $1.5bn. Foreign funds hold more than a fifth of Reliance Industries.

"Reliance's shareholders, bankers, stakeholders and customers now deserve an answer," said a senior banker in Mumbai on Thursday.

But observers dismissed the prospect that litigation - still thought to be unlikely - would seriously affect Reliance's share price.

Please discuss and post your comments here!

sh50 · #2 20th November 2004, 12:08 PM

It was bound to happen sooner or later with the stakes so high though I was expecting something like this from their next generation. I think the media has blown it out of proportion- I don't think that too much should be read into what Mukesh has hinted unless some seriously adverse overt development takes place.

The brothers should settle the disupte amicably without adversly affecting the stakeholders perhaps nearest and dearest to their late father- the investors particluarly so when Reliance is one of the prime engines of the market. Hope Anil Mukesh remain "Bhai-bhai"

sgkalai · #3 20th November 2004, 12:41 PM

i don't think that the problem will affect the share price of RIL on long term.

yes, it may get affected, on short term.

now investors will have wait and watch attidude towards this that will affect on short term, not on long term.

Because of this,liquidity will play major role in coming days that will influence the short term effects.

why not on long term is that company's fundamentals are very strong and strong fundamentals can't be wiped out by external forces.

this is my view and can be questioned and discussed here.

regards
ganesh

kkz59 · #4 20th November 2004, 03:04 PM

In the immediate future, the prices will be effected. There are very big plans for Reliance Energy and Mr.Anil is very close to certain powerful politicians who will ensure an amicable settlement. And at the same time, I am sure both the brothers are mature and sensible enough to have the issue sorted out amicably.
Where huge stakes are involved, this is bound to happen. Both will come out stronger out of this. We should congratulate Mr.Mukesh for his honest submissions and not hiding it.

vijayashankar · #5 20th November 2004, 07:30 PM

Hello traders,
I see this issue as a good oportunity to buy as a famous saying "buy on bad news & sell on good news". Since the fundamentals are good & moreover Reliance is not a one man show. we can wait for some correction & enter in to the stock.

What you say Traderji?

Thanks,
Vijay

sharv · #6 21st November 2004, 09:55 AM

nothing new!
since RAGHUKUL it is happening .
however from trading point of view one will get opportunity to enter at
lower levels i.e. 480

RajK · #7 21st November 2004, 11:35 AM

With mother as mediator, Ambanis to meet on Tuesday

Quote:

Mukesh and Anil Ambani are likely to meet on Tuesday, November 23, and may try to sort out “ownership issues’’ in the Rs 80,000 crore Reliance Group.

The meeting is expected to take place in the presence of their mother, Kokilaben, in Mumbai after elder brother Mukesh Ambani returns from the US, highly placed sources said. The meeting comes within days of Mukesh Ambani publicly acknowledging in an interview to a TV channel that “ownership issues’’ existed within the country’s biggest private corporate house, although he had added that they were in the private domain.

On Saturday, younger brother Anil and Kokilaben visited the Nathdwara temple in Rajasthan and offered prayers, family sources said. Despite various attempts, Mukesh could not be contacted in the US as he was busy in meetings.

Sources said that at Tuesday’s meeting, the two brothers and their families might try to resolve all the issues, including ownership of the Reliance empire.

Although Mukesh had said in the TV interview that the functioning of Reliance would not be affected as it had moved beyond individuals, the stock market had responded nervously to his statement. On Friday, Reliance group shares had dropped, dragging the Sensex down 64 points in their wake. The Reliance group lost over Rs 2,500 crore in market capitalisation on Friday. PTI

sh50 · #8 22nd November 2004, 09:45 AM

Yesterday, I saw the interview for the first time.

Mukesh exactly said," Reliance is a professionaly managed company which has gone beyond individuals- be it Dhirubhai or myself. Some ownership issues remain but in the private domain."

It hardle seems like a declaration of all out war as it is made out to be. The media has a penchant for making a mountain out of a molehill. They have to sell their news.

The mother's intervention though may imply something serious. However I don't think that in the long run investors will be effected as neither of the brothers are fools to adversly effect their interests.

Indians love gossip. Most of this talk is bound to be like stock market speculation-just speculation.

trader9 · #9 22nd November 2004, 12:50 PM

Dhirubhai Ambani was a visionary, the best of his time. But what is suprising is he didn't leave a will before he died. That was a costly mistake. Probably he didn't anticipate that his sons would fight over the Reliance Empire, after he was gone.

As for the stock. it is fundamentally strong and it is good time to enter, after a further slide.

sh50 · #10 23rd November 2004, 05:53 PM

Today, it came in the papers that Mukesh after coming back from the US said that the media had blown it out of proportion and context. The media has to create news where there is none. How can they sell otherwise. Anybody who has heard the original interiview can make out.

Dhirubhai was also known for his meticulousness. Can one really beleive that he would not plan for the next generation. That would be naive.

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