Reliance Industries Ltd Vice-Chairman and Managing Director Anil Ambani has argued that in the interests of its shareholders, RIL's Rs 8,100 crore (Rs 81 billion) preference shares in Reliance Infocomm should be converted at par (Re 1), instead of RIL having to pay a premium of Rs 49, to take RIL's stake in Reliance Infocomm to about 75 per cent from the about 42 per cent now, a source close to him said.
Anil Ambani is also said to have argued that RIL should have the majority of directors on the boards of Reliance Infocomm's holding company, Reliance Communications and Infrastructure Ltd (RCIL), and of Reliance Infocomm, and not just two independent directors, since RIL had provided the most support to Reliance Infocomm.
He also questioned the Rs 570 price for the buyback. The last time RIL announced a buyback in April 2000, the price was at a 10 per cent discount to the then prevailing market price. This time the price is at a 9 per cent premium. Said the source, "The buyback price is intended to be a floor price, not a cap."
Anil Ambani sought information on the Reliance Infocomm group's structure. "The RIL board still does not have details on who the other shareholders of Reliance Infocomm are," the source said.
Anil Ambani is said to have dissented on several of the 20 items on the RIL board's agenda, nearly all relating to Reliance Infocomm and RIL's share buyback. Ambani also is said to have placed before the board several letters he wrote to the board relating to the buyback and to Reliance Infocomm.
A senior Reliance Industries spokesman confirmed that Anil Ambani objected at the board meeting to the conversion of RIL's preference shares at a premium and to the buyback price, apart from the point that RIL will provide "reasonable" assistance to Reliance Energy, of which he is the chairman and managing director.
On the preference share conversion and share buyback price, the spokesman said: "But that his opinion. The final decision will be made by the board after the board committee looks at this."
On Anil Ambani's demand that a majority of directors on the RCIL and Reliance Infocomm boards should be RIL directors, the spokesman said, "That may be his opinion, but the board felt that two RIL directors are sufficient." Asked whether the other directors merely sat through the meeting without saying anything or whether Mukesh Ambani was present when matters relating to Reliance Infocomm were discussed, the source said, "I have no idea."
The next RIL board meeting is scheduled on January 21 to consider the company's results for the quarter ended December 2004.