Date:07/03/2006 URL: http://www.thehindubusinessline.com/2006/03/07/stories/2006030704320100.htm

Back `ADAG creates shareholder value of Rs 71,485 cr'

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Reliance Communication Ventures listed at Rs 291

Mr Ambani said, "... the RIL board approved my suggestions, but after much persuasion". Now there was complete alignment between ownership and management of businesses in the two Reliance groups, he said.

MR ANIL AMBANI, Chairman, Reliance Communications Ventures Ltd, at a press conference in Mumbai on Monday. — Vivek Bendre

Mumbai , March 6

Mr Anil Ambani today said Reliance ADA group has become the country's third largest business house, on the basis of financial parameters such as net worth, assets and market cap.

Mr Ambani made this claim at a press conference here today to mark the listing of Reliance Communication Ventures Ltd, which was listed at Rs 291 on BSE.

RIL market cap

With the last of the four demerged companies opening its account on the bourses, Mr Ambani said shareholder value to the tune of Rs 71,485 crore has been created in a matter of nine months.

"The market cap of Reliance Industries when the demerger decision was approved by the RIL Board in June 2005 was Rs 76,615 crore. The cumulative market cap of RIL now (including that of the demerged companies) is Rs 1,48,100 crore. This means, the net increase in market cap, post restructuring, is Rs 71,485 crore," Mr Ambani said.

The birth of Reliance-ADAG (Anil Dhirubhai Ambani Group) has created unprecedented value for over two million Reliance shareholders, generating incremental wealth of over Rs 70,000 crore - which in less than nine months is nearly equal to RIL's entire market capitalisation built over 28 years (1978-2005), he said.

In a brief throwback on the drama that marked the days in the run-up to the demerger, Mr Ambani said, "... the RIL board approved my suggestions, but after much persuasion". Now there was complete alignment between ownership and management of businesses in the two Reliance groups, he said.

Reliance ADA parameters

Listing the parameters that made Reliance ADA group one of the three top business houses in the country, Mr Ambani said his group had a net worth of Rs 25,000 crore, assets of Rs 31,000 crore, market cap of Rs 86,000 crore and operating profit of over Rs 5,000 crore. Reliance Communications has earmarked capex to the tune of Rs 5,000 crore a year, for the next three years. In the next fiscal, Rs 2,500 crore will go into its wireless business, Rs 1,500 crore into broadband and Rs 1,000 crore into global ventures. Since the Communications venture was sufficiently capitalised, the company would take the debt route to fund its future growth plans.

Referring to the problem areas between the two Reliance factions, Mr Ambani said all outstanding issues would be resolved on a bilateral basis.

On getting his share of gas from the Krishna Godavari fields for the `well head to wall socket' conversion, he said, 28 mmscmd was sufficient for 7,500 MW and in case the NTPC contract for 12 mmscmd fell through, Reliance ADA group was committed to taking that as well. And 40 per cent gas for future could not be limited to Jun 2005 status, he said.

There was no lack of clarity on non-compete areas as also sharing of brand and trademark, he said.

The group companies were looking to related areas such as gas transportation and distribution as much as to coal mining; they were also in talks for strategic alliances in areas such as nuclear power and internet protocol TV.