Reliance Industries bought back 629,800 shares from the open market on Monday, the first day of the buyback programme and under the spotlight of the Securities and Exchange Board of India, which had asked the company to make more disclosures on what has been happening over the last two months in the group.
In a late evening statement to the exchanges, Reliance Industries said it had bought 629,800 shares at an average price of Rs 539.62, at a total cost of Rs 34 crore (Rs 340 million). But the Reliance Industries scrip's price fell 1.36 per cent (Rs 7.35) to Rs 533.50 on Monday on the Bombay Stock Exchange.
Responding to the market regulator's concerns, which have apparently been prompted by Reliance Industries Vice-Chairman and Managing Director Anil Ambani's letter to Sebi late in December 2004, Reliance Industries placed a full page advertisement in leading newspapers reiterating what it said in media statements in the past couple of months.
Anil Ambani had requested Sebi to ask Reliance Industries for disclosures on some points. The first of these is the 7.5 per cent stake in Reliance Industries the Petroleum Trust holds, which is shown as part of the promoters' holding.
The second is the 4.71 per cent stake in Reliance Industries held by four companies, Reliance Polyolefin, Reliance Aromatics and Petrochemicals, Reliance Energy and Project Development and Reliance Chemicals.
These companies are treated as "persons acting in concert" with the promoters of Reliance Industries. Anil Ambani had asked the regulator to seek disclosure on the ownership of the four companies.
The third point is the potential conflict of interest of Nimesh Kampani, who is a trustee of the Petroleum Trust, which holds a 7.5 per cent stake in Reliance Industries, and is also one of the lead managers to the buyback programme. The trust is shown as a promoter of the company.
Lastly, Anil Ambani raised issues relating to ownership and management andthe steps taken to separate the two.
Reliance Industries said in its disclosures on Monday that it had accounted for the shares held by the Petroleum Trust and by the four companies in the "promoters/persons acting in concert" category in line with "the change in the definition of the expression 'promoter' in the Sebi (Substantial Acquisition of Shares and Takeover) regulations.
The company also disclosed that Nimesh Kampani, chairman and managing director of J M Morgan Stanley, was one of the trustees of the Petroleum Trust.
It said the sole beneficiary of the trust was Reliance Industrial Investment and Holdings Ltd, a wholly owned subsidiary of Reliance Industries.
Reliance Industries is buying back its shares at price not exceeding Rs 570 per share for an amount not exceeding Rs 2,999 crore (RS 29.99 billion). The last date for the buyback is December 26, 2005.
This amount represents the limit of 10 per cent of the total paid-up equity share capital and free reserves of the company on March 31, 2004. The buyback will be made out of the free reserves and the securities premium account of the company by open market purchases.
In a press release, the company confirmed that it would not purchase shares under the buyback from the promoters or from any person in control through negotiated deals or private arrangements and that funds borrowed from banks or financial institutions would not be used for the buyback.
