Anil D Ambani Reliance Group~Market Cap & Debt ~ Defence to its Defence

Have a Look at the Market Cap (today closing March 28,2016)& Consolidated Debt (September 30,2015) of these Five Listed Companies of Anil D Ambani

Name Of The Company

Market Cap (Rs.Crs)

Total Debt (Rs.Crs)

Reliance Power

13015

31428

Reliance Infrastructure

13747

24645

Reliance Capital

9117

22730

Reliance Communication

12457

35254

Reliance Defence

5098

6884

Total

53434

120941

Rs 120941 crs was the Aggregate Consolidated Long & Short Term Debt of Anil Ambani’s Reliance Five Listed Group Companies as on September 30,2015 while today’s Market Cap is Rs 53434 crs.Aggregate it and you’ll get Enterprise Value without adjusting for any Cash    

Reliance Defence (erstwhile Pipavav) has come into his fold now and a turnaround is expected after CDR was approved ~ RCom is planning to reduce Debt substantially by selling Assets like it’s Tower Business.It also is being supported by Big Brother Mukesh Ambani’s tie ups for Jio Roll outs etc ~ RPower has just declared and paid it’s maiden interim dividend of 10% in December 2015 but continues to struggle to commission Samalkot Power Plant on non availability of Gas ~ Rinfra & RCap are the relatively stabler companies

As long as his companies keeps servicing debt the Banks who have lend will not have to classify the Loans as NPAs….In fact with Anil Ambani planning huge Defence Sector Investments and Growth in his other Companies the aggregate Debt may increase even after Asset Sell offs

Problem is that Anil Ambani has not been enjoying good Investor Credibility after wealth destruction in RCom & RPower & suspected involvement of top management in the 2G Telecom Scam.Investigation continues

The Group’s Market Cap is Rs 53434 crs ~ Compare this with Big Brother Mukesh Ambani’s Reliance Industries that closed today with a Market Cap of Rs 330654 crs

Now his big Focus is on Defence with India having embarked on a Huge Defence  ‘Make in India’ Endeavour opening out FDI  Cap to 49% in the Sector

None of Anil Ambani’s Companies have approached it’s shareholders or the Public for funds after the Reliance Power IPO at Rs 450  in January 2008

None have as None could !

The Reliance Power IPO was a huge obscene premium assault on the Public from which the Public has yet to recover (Quotes at Rs 47 today after a Bonus Issue in 2008 itself  from the Premium collected that adjusted the Price to @ Rs 270!) .The Issue was hyped by the Investment Banker Wolves to create a huge oversubscription.

Of course in January 2011 Anil Ambani had entered into a Consent Plea with SEBI without admission of guilt & was investigated for misuse of Overseas Borrowed Funds and was personally fined and banned access to Capital Markets for a year and Reliance Infra for two years    read more

Schadenfreude ~ Pleasure derived from the misfortune of another !

Came across Schadenfreude ~ Pleasure derived from the misfortune of another

….came across the use of this word while reading the Huge Mess of Hydel Power Projects in Arunachal Pradesh & the likes of business houses like Jindal Power,IL & FS & Lanco approaching National Hydel Power Corporation (NHPC) to take over their projects….NHPC is not too keen….Says M Rajshekhar,the author of this report “The reason for its reluctance goes beyond understandable schadenfreude. Its solitary project in Arunachal – Lower Subansiri – is stuck in a quagmire as well 

Rather Ironic now that many such Hydel Power Projects were actually taken away from NHPC between 2005 & 2009 and given to the likes of Reliance Energy,Jaiprakash Associates,DS Constructions,Jindal Power & KSK Energy….Most of them,if not all have turned into white elephants….and the privatisation actually led to many misdeeds like signing MOUs merely to raise monies and sell the MOUs itself !

Real woes experienced were the ” absence of roads and power lines. Not to mention local protests and extortion rackets, especially by local student unions. The state government too was a factor. While it wanted 26% equity in each project, it did not have the cash needed to pay for those shares.” says M Rajshekhar

And Now Presidents Rule is being imposed in Arunachal Pradesh !  

Of Course Political Patronage & Crony Capitalism have combined in this Privatisation endeavour that’s created this mess

Remember Reliance Power’s IPO in January 2008 at Rs 450 and the Prospectus announcing the roadmap to create nearly 30000 MW by 2016 & which included Hydel Projects in Arunachal Pradesh !

Wow! A Full House NSE Training Fundamental Workshop !

Wow! A Full House NSE Training Fundamental Workshop yesterday !

Seems to get bigger & better every time !

Did the first one on August 8,2015 and had blogged on it  as linked below

Interesting Interaction at the NSE Equity Fundamental Training Workshop

Sunday, August 16th, 2015

Did this one too on “Interpretation of Financial Statements for Stock Analysis” under NSE’s Rapid Series at their NSE BKC Complex

@ 30 Participants,both genders aged 22 to 58 from leading Broking Firms,Corporates,Banks and even Individuals who had come on dot and stayed till 8 pm ! expecting to learn how to read financial statements and  market dynamics to assess risks and opportunities in Indian Equities

Common Question right from Manish Shah,who introduced himself  to me in the lift going up to the Class ” How are the Markets Looking “? ~ “Where will the Sensex & Nifty head in the short term”?

Had taken a Bull along ! really !…a smaller version of the Wall Street one….told the class I love four animals…Elephants (Lord Ganesha),Lions (My Zodiac Sign),Tortoise(Good Luck & of course Bulls (I’m always one!)….and you’ll always find them on my office desk !…in fact four bulls of various sizes !…and clients know my market view on simply seeing how the bulls are placed !…if facing them straight up  (↑)  as they sit across me,I’m very bullish…if slanted ( ⁄ )towards them,I’m bullish…slant inclination reveals how much !….if a horizontal view (↔ ) then indicates market will remain flat to rangebound and if the bulls face me vertically (↓ ) I’m bearish !….and slant facing me shows intensity of being bearish !

That got a few knowing laughs from the participants and set off the mood for the Workshop with humour being interspersed right through

Interacted on the Sensex Dynamics right from base year 1978 and in the last 20 years from November 1,1995 to October 30,2015 when despite nearly half of the @ 4850 trading days saw the Sensex close negatively the Sensex ran up over 650% !…but is that enough!…..the Opportunities & Threats that were clearly visible during the years right from 1991 when Modern Reforms set in to 2001 when Markets had bottomed  out on the ICE Age Melting to the Sharp drop in Interest rates from 14% to 7% in and around 2004 to post Lehman 2008 levels of 8000 in October 2008 and March 2009….showed them from current Sensex of 26657 how to assess fundamentally where we could be heading and the risks associated….discussed Passive Index Investing vs Active Investing and therefore the need for Fundamental Analysis and therefore the need to Interpret Financials & therefore the need to assess Value vs Price  & therefore this Workshop  ! read more

Sterlite Tech upwardly mobile @ Rs 104+ on the Digital India & Demerging Power Story

Sterlite Tech closed strongly upwardly mobile @ Rs 104+

It clearly continues to benefit from Government’s scaling up the National Optical Fiber Network (NOFN) Initiative and the ‘Digital India’ Story unfolding

However an interesting development announced in May was the demerging of it’s capital intensive and yet to contribute to profits Power Segment

The Power Segment is being demerged as of April 15,2015 into a separate company Sterlite Power Transmission Ltd which will remain unlisted

Each Shareholder will get an option to remain invested also in the Power Co or exit it.For every 5 shares held in Sterlite Tech,the Shareholder will get the options of 1 share valued at Rs 112.30 (FV Rs 2) or 1 redeemable preference share for the same value which will be redeemed within 30 days.

The demerged entity will be worth Rs 885 crs after considering debt allocation.This would compute to a Value of Rs 22.46 per Share of Sterlite Tech

Chairman Anil Agarwal states that Sterlite Technologies is at a unique inflection point

When I did the Segment Analysis ,observed that while the FY 15 Topline of @ Rs 3000 crs is more or less evenly split between Telecom & Power,76% of the Segment EBITA of Rs 327 crs comes from Telecom (Rs 249 crs)

Importantly after the demerger of the Power Segnent ,Sterlite Tech will retain just Rs 674 crs  consolidated net debt from the pre-re-structuring consolidated net debt of Rs 4881 crs

With Equity at Rs 79 crs (FV Rs 2) and with the capacity expansion plans one should expect surge in profitability which was being dragged down in the near term by the Power Segment …EBITA over Rs 300 crs for the Telecom Business in FY 16 is on the cards

There is an enabling resolution proposed for Borrowings up to Rs 1000 crs

At Rs 104,the ex demerger price works out to under Rs 82 if opting for exiting the Power business though there’s a few months to go before the demerger is effected

My sense is that whenever the record date is announced in FY 16 for the demerger  and trading switches to an ex demerger  basis just a few days prior,the ex demerger share price will quickly climb back to the cum demerger share price

Though I have had serious reservations on Corporate Governance issues with the Vedanta Group  whenever they have restructured through merging group entitities ,I quite agree with the Chairman,Anil Agarwal that Sterlite Technologies is at an inflection point …and ironically it involves not a merger but a demerger situation ! read more

Just a Reliance Power Thought for Anil Ambani as he forgoes Personal LPG Subsidy

The leadership Team of Anil Ambani’s Reliance Group has opted to forego LPG Subsidy on the PM’s request for well to do people to do so to reduce the subsidy burden

This triggered  a thought without offence or malice for Anil Ambani to consider and addressed to him in first person :

Your Reliance Power Market Cap is Rs 16410 crs at Rs 58.50 with 75% held by you as Promoter and most at par.The Public hold just over 14% while the big guys FIIs and DIIs hold 11%

The Shares were allotted in a heavily record oversubscribed IPO to Retail Investors in January/February 2008  at Rs 427.50,after a 5% discount on IPO Price of  Rs 450 and within months of the IPO Listing company issued a 3:5 Bonus in May 2008 under pressure to reduce holding cost of  retail allottees to Rs 267.19 per share

I don’t know how many of the original allottees yet continue to retain faith and hope and  hold the share but your records can identify such

The Thought for what it’s worth :

Why don’t you,Mr Anil Ambani  emulate Richard Branson who bought back Virgin shares at cost from shareholders and went private again when the share price had tumbled  after listing ?

Branson committed 182.5 Million Pounds in 1988 for this and wrote about it in his inspiring book ” Screw it,Let’s Do It”

You,Mr Ambani ,have just committed thousands of crores by acquiring Pipavav Defence recently.

Can you commit some more for this =>Reliance Power Equity is @ Rs 2800 crs and Public(excluding FIIs & DIIs) hold only Rs 390 crs of it of which only a portion would be original allottees in your IPO  seven year ago in January 2008.Even assuming all are original allottees or you also wish to compensate those who sold out you would need Rs 10500 crs to to so at their cost of  Rs 267.19

Or you wish to quote your good friend Amitabh Bacchan’s father’s great quote  ” Joh Beeth Gayi woh Baat Gayi”   

No Offence and No Malice,Mr Ambani but in one stroke you would have redeemed for the Reliance Power fisaco

May not be a practical exercise but even voicing Intention can be a great step

Forbes put your latest 2015 real time networth at US  $ 3.7 B down considerably from the US $ 42 b in 2008 when Reliance Power IPO ‘hit’ the market

I’ve got a great feeling that committing US $ 1.5 B to play out this above thought in Reliance Power will catapult your worth in more ways than one in quick time….Reliance Power was willing to pay US $ 2 B for Power Plants of Jaiprakash Group in July 2014 in a deal that came apart….believe me that you will create a much higher value intangible asset immediately that will lead to higher tangible worth going forward if my thought is played out read more

Pipavav on Lower Circuit Rs 68.85 despite or because Anil Ambani taking over !?

Pipavav on Lower Circuit Rs 68.85 despite or because Anil Ambani taking over !?

Pipavav under CDR with Heavy Debt,Huge Capacities but Few Orders to serve the Debt was up for sale and Mahindras & Munjals were interested if there was Debt Restructuring

However listed Reliance Infra &  it’s unlisted Reliance Defence of Anil Ambani has bought out most of Pipavav Promoter’s Stake at Rs 63  and will make an open offer to Other Shareholders for another 26% at Rs 66

This announcement was made post market hours yesterday

Pipavav which was hovering in the mid 70’s for a week  opened this morning down 10% on the lower circuit at Rs 68.85  on both NSE & BSE

Is this because the Buyout  & Offer Price  was lower  that yesterday’s closing of Rs 76.45 !?

This could be one reason…..but think about this ….after the Reliance Power IPO and post IPO mess up where Shareholder Wealth has been destroyed in the past five years  Anil Ambani had eroded a lot of his market credibility ~ Reliance Power is currently down at just Rs 60 from an IPO Price of Rs 450 which adjusts to @ Rs 270 after a Bonus from Premium collected to appease IPO Allotees !

He & his companies  were even banned from accessing the Capital Markets after a consent fine of Rs 50 crs for misuse of ECB Funds overseas

This begs the question…can Anil Ambani redeem himself with Pipavav Defence  even as his Power Company is Powerless yet in a sense ! ~ Market is ruthless and has given a huge thumbs down today !

Contrast this with the entry of Sun Pharma’s Dilip Shanghavi in Suzlon at Rs 18 last month with an Open Offer to coming at this price ~ Suzlon raced away over Rs 25 on this announcement !

Incidentally after Sun Pharma Price shot up yesterday,Dilip Shanghvi (US $ 21+ billion) overtook Mukesh Ambani (US $ 20+ billion as the Richest Indian

Don’t you wish even Dilip got into Defence ! 🙂

So which Anil Ambani Company now do you prefer at Rs 60 to Rs 70 ! ~ Reliance Power or Pipavav ! ?