WEEKEND FUN - COMEDY OF ERRORS...

Reliance A(NIL)-Comedy Of Errors Or A Man Wearing Two Hats?

Anil Ambani has gone to press once more, talking about an invisible bear lobby which is attacking it's stocks and mauling them in the process. He may be right or maybe just underlining the panic that investors are facing today.

A few years ago the Ambani scions split up their father's empire. The younger Mr. Ambani got Power, Telecom and Infra businesses. All ventures were new and hence suspect from profitability point of view.

-Reliance Natural Resources had no business model, except distribute gas from KG6.

-Reliance Communication had CDMA technology which was considered inferior to GSM tech.

-Reliance Energy had the power gen and distribution business of BSES.

-Rcap did nothing except promote the Reliance MF.

What happened since then?

-First, in an attempt to step out of the shadow of his elder brother, Anil created a separate identity as Reliance ADAG group.

-Second, in an attempt to grow he acquired Adlabs, and bid for UMPPs under the subsidiary route of Reliance Energy by creating RPower.

Unfortunately, the younger Ambani lost the claim to KG6 gas and lost the business for RNRL. In a mockery of stock markets and its regulators, RNRL instead of going for liquidation was merged with RPower.

Rcom made an attempt to go GSM, and then created a multitude of businesses by breaking into bits Adlabs into DTH/Movie business and Radio FM into Reliance Media.

RPower made a mega issue 3 years ago amounting to Rs 10000 crore at Rs 450 per share. With no project near commissioning, the stock got ripped. Claims were made and allegations made on rivals. A bonus to non promoter shareholders was made and then RNRL was merged with it.

As things stand no business of RADAG is near fruition, all have long gestation period and stocks which suited VC players should never have been listed. Reliance Energy now named Reliance Infra is offering a Buy-Back.

RADAG has decided to drop ADAG from it's reference point and call itself a Reliance group company. Reliance Infra shares a similar sounding name with Reliance Industrial Infra-owned by his brother. So in all likelihood, instead of distancing from the other Mr. Ambani, Anil Ambani is trying to gain some leeway from his brother's company.

The point is, should promoters be managing stock prices or be responsible in turning good corporate performance. If they cannot, then changing technology, splitting companies, changing business models, doling out bonuses, and offering buy-back will not assuage investors who are seeing their life savings go down the drain.

In the end, the two Ambani's remain billionaires have 40-50 storied homes in Bombay, and the poor remains struggling on the Bombay City Trains. The dreams seem over for those millions.

Finally, why a buy-back of stocks why not just de-listing? And why change names? Why not just wear two hats?
SOURCE EMAIL