In a new turn to the raging battle between the Ambani brothers, flagship company Reliance Industries Chairman Mukesh Ambani on Monday called a board meeting on December 27 to consider buyback of shares, ignoring younger brother Anil's demand that the board discuss the contentious Rs 12,000 crore (Rs 120 billion) investment made by the company in Reliance Infocomm.
For the first time since the family feud became public in the middle of November, the RIL board will meet at the company's headquarters at Makers Chambers in Mumbai at 11 a.m. a week from now with a one point agenda 'to consider, inter alia, proposal for purchase of company's own equity shares, that is buyback of shares.'
Anil, the company's vice chairman and managing director, had sought a board meeting to discuss the investment of Rs 12,000 crore in Reliance Infocomm since July 2002, besides the future of Reliance Energy Ltd, where RIL has majority stake.
He had written to his elder brother on December 6 in this regard.
Instead, Mukesh has summoned the board only to discuss buy back of equity, perhaps up to ten per cent of it, which should arrest the steep fall in the share price. RIL shares have already fallen by over nine per cent resulting in erosion of about Rs 6,000 crore (Rs 60 billion) in its market capitalisation.
However, it was not clear as to what position Anil Ambani would take on the issue of buyback of shares from the RIL's reserves, estimated at over Rs 30,000 crore (Rs 300 billion). RIL could buy the shares at a premium over the prevailing market rates, sources said.
The board meeting is being convened in the backdrop of Securities and Exchange Board of India's stricture to the stock exchanges to look into the listing agreement provisions of Reliance Group companies for corporate governance and monitor the trading pattern in all the listed companies of the Reliance empire.
As per the requirements of the listing agreement, the company sent an intimation to the stock exchanges for the meeting of the board of directors on December 27 to buy back shares.
It is pertinent to mention that RIL board had decided on April 12, 2000, to buy back 10 per cent equity share at a price of Rs 303 a share, making a provision of Rs 1,100 crore, RIL sources said, adding that nothing materialised on that front till June 2002, the closing date for the offer.
When contacted, RIL said in a statement that the company had announced buyback of shares from open market through stock exchanges on July 2000 but did not elaborate on the progress.
Global rating agency Standard and Poor's had said the differences between the Ambani brothers has the potential to weaken the Reliance Group's businesses, except oil and petrochemicals, and may impact the strategic direction and business plans of the group.
But another rating agency CRISIL said it would not review its ratings at the present juncture, but would do it only if there were substantial changes.
Anil had said on Sunday that investors' interests in Reliance would be protected and whatever happened in the future would be for the good of investors and employees.
