Reliance Industries - Stock buyback


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Case Details:

Case Code : FINA002
Case Length : 08 Pages
Period : 2004
Pub. Date : 2005
Teaching Note :Not Available
Organization : Reliance Industries
Industry : Petrochemical
Countries : India

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Please note:

This case study was compiled from published sources, and is intended to be used as a basis for class discussion. It is not intended to illustrate either effective or ineffective handling of a management situation. Nor is it a primary information source.

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Excerpts

Background Note

A Reliance spokesman outlined in detail the objectives of the programme:

• to manage stock price volatility, lower the beta of the stock and attract long-term investors into the company;

• to return money to the shareholders in a tax efficient and investor friendly fashion without sacrificing growth opportunities;

• to improve return on equity; reduce floating stock, enhance long-term price performance and in the long term enable the use of RIL stock as a currency for acquisition;...

The Options

Speculation also mounted on the possible route RIL could take for the share buyback. Essentially, the RIL board had two options - open market acquisitions of the shares through the stock exchanges or tender offer using a fixed price...

The Road Ahead

On 27th December, the Reliance board after its meeting approved a price not exceeding Rs 570 a share for buying back equity worth up to Rs 2,999 crore (10% of the company's total paid-up equity share capital and free reserves as on 31st March, 2004) from the market, starting 10th January, 2005...

Exhibits

Exhibit 1: The Reliance Group
Exhibit 2: Brief History of Reliance
Exhibit 3: Share price chart
Exhibit 4: Ownership Pattern
 

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