Saturday, October 9, 2010

Dhirubhai proposes, Motabhai disposses : Reliance (nay FARM) Enterprises

The legendary industrialist Dhirubhai used to pamper minority shareholders by way of  fresh offers for subscriptions (eg., convertible bonds starting from 1st issue to the last G-series) and had distributed shares of Rupee One in an unlisted Reliance Enterprises Ltd proportionately. Subsequently, there was consolidation of Face value , open offer to buy back and a  fresh issue of Optionally Cumulative Convertible Preference share of Rs. 10/- at a unheard (in those days) of premium of Rs 190/-. This was a right issue (unlike the present day fashion of preferential issue to the Promoters) and was so priced that it was largely ignored by the general public. Needless to state it was taken up to the fullest extent by the Family.

A brief review of this Company's (surprisingly renamed FARM in lieu of the default name RELIANCE - for the sake of camouflage ?)  the state of finances is being made:
          Capital  (Comprising of Equity & yet to be converted Preference) - 13.94 crores shares of Rs. 10/-,
           Fully diluated EPS of Rs. 4.28 and Fully diluated Book value of Rs. 154/- at present and Rs. 315/-  as & when holders of FV 1 share pay up in full before due date of conversion.

Main business is holding 9.21 crores shares in Reliance Industries Ltd. acquired @ 176.

Somebody may say "Well, I do not understand the title of Blog".

Dhirubhai proposed , a  legend was created by way of DISTRIBUTIONS  , Motabhai disposses the generosity by way of NOT EVEN PAYING DIVIDENDS in spite of good cash flows;
 the company admits Arrear of dividends
(Rs. 15.18 crores) while its profits was Rs. 60.17 crores in FY 2010 .  It looks it will pay dividends once all minority shareholders exit the Company.

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