World Business

Reliance dips after meeting

By Natalie Obiko Pearson (China Daily)
Updated: 2010-06-19 10:18

MUMBAI - Reliance Industries Ltd shares fell as Chairman Mukesh Ambani concluded a speech at a shareholders' meeting without his brother attending, eroding speculation the two had put aside a five-year feud and would reconcile publicly.

India's largest company by market value dropped as much as 1.4 percent to 1,056.10 rupees after the billionaire ended his speech around noon in Mumbai. The stock had risen as much as 1.7 percent before the meeting started and traded at 1,058.40 rupees at 1:53 pm local time. Anil Ambani's companies also declined.

"The falling stocks today are a knee-jerk reaction to all the expectation that was being built upon a public display of truce," Taina Erajuuri, who helps manage the equivalent of $1.2 billion of emerging market stocks at Helsinki-based Fim Asset Management, including Reliance Industries' shares.

The shareholder meeting took place exactly five years to the day the Ambanis split India's second-biggest group, which initiates years of squabbles and lawsuits as their business interests clashed. Indian newspapers had speculated about a rapprochement since the brothers scrapped a non-competition accord last month, removing curbs on investments.

The end of the agreement "paves the way for Reliance to participate in the whole value chain of the power business", Mukesh, 53, said amid applause. The company plans large investments in power, including nuclear and solar energy, and telecommunications, he said.

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Mukesh said Reliance Industries plans to use its balance sheet to fund new ventures, add capacity to produce polyester and chemicals, and create "unprecedented value" for investors.

The company is expanding energy exploration off India's east coast and plans to drill in East Timor, Yemen and Oman as well as add shale gas assets, he said.

"Long term, there's value to be created," said Vaibhav Sanghavi, who manages funds for wealthy individuals as director at Ambit Capital Ltd in Mumbai. "Growth looks promising."

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