The Hindu : Business : Reliance Energy to buy-back shares

Online edition of India's National Newspaper
Thursday, Jun 10, 2004

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Business

Reliance Energy to buy-back shares

By Oommen A. Ninan

MUMBAI, JUNE 9. The board of directors of Reliance Energy Ltd. (REL), at a meeting held today, approved the buy-back of fully paid-up equity shares of the company up to a maximum price of Rs. 525 a share for a total amount of up to Rs. 350 crores. These decisions were announced at its annual general meeting (AGM) here today.

According to REL, the price of Rs. 525 per share is a 23 per cent premium to the low of Rs. 426 per share touched on May 17 and a 12 per cent premium to the low of Rs. 463 quoted on May 31, the day on which the notice to consider buy-back of shares was issued to the stock exchanges.

REL will buyback shares on the Bombay and National stock exchanges through open market purchases, from time to time. The shares purchased under the buyback programme will be cancelled leading to a reduction in the company's outstanding equity capital. This would help increase its earnings per share (EPS) and improve return on net worth and other financial ratios, Reliance Energy stated.

REL's fully diluted equity capital is Rs. 205.69 crores and its market capitalisation is over Rs. 11,400 crores.

Meanwhile the AGM was marred by protests by Bombay Electric Workers' Union and consumer organisations. Vittal Raoji Gaekwad, General Secretary, Bombay Electric Workers' Union, said in the last two years the workers were oppressed and highly frustrated by the policies of the company. "The workforce was reduced by 500 people and even though salaries were increased it was only on paper. We had tried to raise these issues with the management but they did not listen to us. So today we were forced to break the gate and entered the AGM. Finally, the management has agreed to discuss the issues we have raised and a meeting may be held tomorrow to sort out these issues," he added.

Shook Pendle of Mumbai Grahak Panchayat, a consumer organisation, which has been campaigning for fair electricity prices said people have been complaining about the high bills from Reliance Energy. Reliance gets half its power from the Tatas, which uses liquid fuel to generate power, and is subject to changes in oil prices. The fuel adjustment charges have increased as a result of oil prices going up. Reliance, however, is transferring some of these hikes onto the consumer, people feel, said Mr. Pendse.

Reliance Energy, a member of the Reliance group, is India's leading private sector utility group, with aggregate estimated group revenues of Rs. 7,700 crores and total assets of Rs. 9,800 crores.

The group distributes nearly 16,000 million units of power to over 25 million consumers in Mumbai, Delhi, Orissa and Goa, across an area covering 1.24 lakh sq. km.

Reliance Energy generates 941 MW of power, through its power plants located in Maharashtra, Andhra Pradesh, Kerala, Karnataka and Goa.

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