A subdued looking Anil Ambani addresses ‘Share Owners’ at the Reliance Capital AGM this morning

Just saw Live Coverage on TV of  Anil Ambani addressing his ‘Share Owners’ at the Reliance Capital AGM this morning

Imagine a serious looking Gentleman presenting some very good looking Group and Company and Business Potential Statistics in a dull,monotone…that’s what I felt Anil Ambani was doing this morning

Dressed in a Black Suit and even a Dark (Black?) Tie probably reflected his subdued and sombre look…looked as if he has not slept well last night….There was not even a flicker of a smile and he was lacking his usual confident and aggressively positive demeanour…..There was a person who created a mild sloganeering disturbance as Anil spoke,but was quickly whisked away from the Indoor Auditorium.

2008 and 2009 so far have been challenging years for Anil Ambani….His Reliance Power issue in Feb 2008 took Rs 427.50/share from Retail alottees and a face saving bonus dropped the holding Price to just over Rs 267…The share had listed marginally positive ,but then the decline began and the holding price has yet to be reached again…It’s currently Rs 168 levels…and yesterday in the continuing RIL v/s RNRL war for the former not honouring the MOU between the Ambani Brothers for supplying 28 mmtu of Gas daily from the KG basin to the latter ,the Supreme Court allowed rival brother’s RIL to continue it’s Gas Sales to third Parties as per the Jan 2009 agreements  

Anil Ambani desperately needs his woo his shareholders to stay with his Group….and so now we have the personal touch….Addressing Shareholders as ‘Share Owners’….His ‘Share Owners’ would have appreciated more if he had only priced his Reliance Power Issue below Rs 200 and not at Rs 427.50….Maybe Anil,you can make amends by issuing Reliance Life Insurance at Par to the original allottees,who yet hold the shares, of Reliance Power !

Another interesting part of the AGM Address was Anil’s revelation that they are planning to unlock value for shareholders of Reliance Capital by going for an IPO or a strategic Investor sale or a combination of both of the wholly owned subsidiary,Reliance Life Insurance Ltd….Some value of this Insurance Subsidiary is already embedded in the Current Share Price of Rs 890 of Reliance Capital…last Three Months,the share Price has surged by over 70% from levels of Rs 500

Some very Interesting Points from Anil Ambani’s Presentation are below

• ADA Group is spread across a wide spectrum of sectors…Energy,Power,Telecom,Financial Services,Infrastructure,Media and Entertainment
• The Group has 12 million Share Owners,17 million Clients,over 12000 distribution outlets in over 5000 towns and cities and 130000 Employees servicing 150 Million people ( One  out of every Eight Indians)   
• Group Market Cap is Rs 160000 Crs making it to the Top 3 Business Groups in India
• Group Networth is Rs 64000 crs,Annual Cash Flows are Rs 13000 crs and the Net Profit is Rs 8000 crs
• The Power of Execution enabled three things….Expansion of Distribution Network,Scaling Up of Business and Wresting Market Share
• Growth has been Purely Organic…that is ,Made in India
• Retail Finance is expected to grow multifold to Rs 400000 crs this year from levels of Rs 150000 crs
• Reliance Capital has a standalone Networth of Rs 7300 crs,third highest on the Private Financial Sector,behind ICICI and HDFC
• Reliance Mutual Fund has over 7 million clients and manages Assets of Rs 103000 crs…SIP Client base has touched One Million
• Two new Business Verticals launched last year are being scaled up…Institutional Broking and Private Equity…Private Equity Funding is being sourced from within India itself from Institutions and HNWI,rather that sourcing from overseas
• Potential  for Insurance Business is huge with 80 % of Indians not having any kind of Insurance at all…Infact the Penetration of Life Insurance is just 4 % while that of Non Life Insurance is 0.5% with per capita Insurance premium spending of just Rs 2000 for Life Insurance and Rs 300 for Non Life Insurance against the World Average of Rs 18000 and Rs 13000 respectively
•  Huge Potential for Business in General is indicated by the fact that in a country of over a Billion people,only 400 Million have a Bank Account,45 Million have a Mutual Fund Account and only 15 Million hold a Demat Account
• 31% of USA invests in Equities while in India the figure is below 4%

Hang in there, Anil….The Potential in your Verticals is clearly Huge,especially Power,Infrastructure and Insurance…..Hope you get a Big slice of Luck to combat the odds you’re up against…Perhaps one day,Steven Spielberg,the Highest Grossing Hollywood Director (he topped US $ 150 Million last year) with whom you have just signed a US $ 850 Million Movies Making Deal will make a Movie on you !…Oh ! and one last thing !…don’t make the fatal mistake of overpricing any of your future IPO issues !…as I voiced earlier in this blog…How about  a Reliance Life Insurance IPO at Par !

Cheers !