Market sees fireworks at Reliance Industries AGM

Days after announcing a truce with younger brother Anil, Asia’s richest man Mukesh Ambani is slated to address shareholders of Reliance Industries (RIL) on Friday and is expected to announce mega investment plans, possibly in power and telecom sectors.

“With limited greenfield options in the traditional oil & gas businesses, we believe RIL is now actively seeking new options across businesses and geographies. RIL management has historically used its AGM to announce long term plans and growth strategies and hence the AGM scheduled on June 18 has increased significance,” analysts Kumar Manish and Puneet Gulati of HSBC Securities and Capital Markets, Mumbai wrote in a note.

The cash-rich company has its options open to enter telecom, power and finance sectors, which were hitherto no-go areas as spelt out in a separation agreement between the two brothers on June 18, 2005.

The non-compete pact was scrapped last month as part of the truce reached shortly after the Supreme Court verdict denying cheap gas to Anil Ambani-led RNRL from Mukesh Ambani-run RIL on the basis of a family agreement.

The bonhomie has also led to speculation that RIL may pick minority equity in three companies, including Reliance Communications, led by Anil and that younger Ambani, along with his wife Tina and mother Kokilaben, would attend the meeting.
Mukesh, 53, may use his address to RIL shareholders at Mumbai’s Birla Matoshree auditorium, the first after the Supreme Court judgment on the bitter gas dispute, to spell out how the $2-3 billion of surplus cash the company is generating every year will be put to use.

Reliance on June 11 acquired an Internet services company for $1 billion and fund manager Deven Choksey says more initiatives may be outlined by Mukesh in his speech to shareholders.

“Now there is clarity about them getting into new sectors and investors look forward to the next phase of growth,” said Choksey, chief executive officer of KR Choksey Shares & Securities.

“I expect Mukesh Ambani to lay out the road map for new businesses such as telecom and power,” he said.