Reliance earmarks Rs 2999 cr for buyback

Reliance Industries (RIL) has earmarked Rs 2,999 crore for the share buyback, making it the largest ever buyback in the history of corporate India. This amounts to 10 per cent of the total paid-up equity capital and free reserves of the company as on March 31, 2004.

With this amount, Reliance can buyback 5.26 crore shares at Rs 570 a share. However, if one goes by the current market price of Rs 516.85 a share, Reliance can buy 5.80 crore shares.

If the company exercises the option fully, the promoters' stake in RIL will go up between 1.54 and 1.70 percentage points.

At present, promoter's stake is at 39.17 per cent, exclusive of the 7.5 per cent stake of the company held with the Petroleum Trust.

The buyback will commence on January 10 and end on December 26 next year, subject to Sebi approval. JM Morgan Stanley and DSP Merrill Lynch have been appointed merchant bankers for the buyback.

The buyback amount of Rs 2,999 crore beats the earlier record of Rs 1,100 set by the company itself. Earlier in 2001, Reliance had proposed to buy back Rs 1,100 crore worth shares at a support price of Rs 303 per share.

However, it did not buy a single share then as it did not drop below the maximum specified buyback price.

Anil Ambani, vice-chairman and managing director, however, abstained from voting on the issue at today's board meeting.

The buyback price of Rs 570 has been set at a 10.28 per cent premium over today's close of Rs 516.85. It represents an 8 per cent premium over the last three month's average price.