Reliance Power

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Reliance Power Limited
Type Public company
Founded 2007
Headquarters Mumbai, India
Key people Anil Ambani, Founder and Chairman
Industry Electricity generation
Website http://www.reliancepower.co.in

Reliance Power Limited, a part of the Reliance Anil Dhirubhai Ambani Group, was established to develop, construct and operate power projects in the domestic and international markets. Reliance Energy Limited, an Indian private sector power utility company along with the Anil Dhirubhai Ambani Group promotes Reliance Power.

Along with its subsidiaries, it is presently developing 13 medium and large-sized power projects with a combined planned installed capacity of 28,200 MW.

Contents

[edit] About the company

The company was incorporated in January 1995 as Bawana Power Private Limited and changed its name to Reliance Delhi Power Private Limited in February 1995. Later, it changed its name to Reliance EGen Private Limited in January 2004, to Reliance Energy Generation Limited in March 2004, and to Reliance Power Limited in July 2007.[1]

The company website identifies project sites broadly to be located in western India (12,220 MW), northern India (9,080 MW) and northeastern India (2,900 MW) and southern India (4,000 MW). They include six coal-fired projects (14,620 MW) to be fueled by reserves from captive mines and supplies from India and abroad, two gas-fired projects (10,280 MW) to be fueled primarily by reserves from the Krishna Godavari Basin (the "KG Basin") off the east coast of India, and four hydroelectric projects (3,300 MW), three of them in Arunachal Pradesh and one in Uttarakhand.

[edit] Initial public offering and controversies

On January 15, 2008, the company attracted $27.5 billion of bids on the first day of its initial public offering (IPO), equivalent to 10.5 times the stock on offer, thereby, creating India's IPO record. The upper cut off price for the bid was Rs. 450 [2] The proposed IPO was to fund the development of its six power projects across the country whose completion dates are scheduled from December 2009 to March 2014.[3]

A media report suggested that, if the company’s stock price were to cross Rs. 650-700, Anil Ambani would go past L. N. Mittal to become the richest Indian.[4] "It is a reflection of world community in the future of India... Investors seem to be confident in the future of Indian economy," Indian Finance Minister, P. Chidambaram told the media about the IPO.[5]

The Securities and Exchange Board of India, which is an organization that regulates the activity in the Indian stock market, placed some restrictions based on a complaint about the formulation of the IPO.[6] The complaint also resulted in a public interest litigation being filed against the company. However, the Supreme Court of India passed a ruling that the IPO would go ahead even if any order is passed by any Indian court against the venture.[7]

Reliance Power debuted on the stock markets on February 11, 2008. However, the markets were still reeling after the January 2008 stock market volatility, and concerns over speculation that the issue was overpriced sent the stock plummeting soon after its listing. At the end of the day, the stock traded at a value that was 17 per cent lower than its issue price of Rs. 450 .

It is surprising to see all the banks and financial institues who were queueing up to buy the share at a premium the daye before and advising the value in the share vanished instantly. It has exposed the rot in the Indian stock market and the way money power is used to manipulate things and flout all norms which ultimately hurt the retail investor.

[8]. Investors who were betting on the stock reaching 1.5 or even twice its issue price lost a fortune in the process. On February 25, in an effort to mitigate investor losses, Reliance Power decided to issue 3 bonus shares for every 5 shares held [9].

[edit] References

  1. ^ "Reliance Power Limited: Private Company Information", Business Week. Retrieved on 2008-01-16. 
  2. ^ M.C. Govardhana Rangan, Archana Chaudhary. "Reliance Power Record IPO Gets $27.5 Billion of Bids", Bloomberg, 2008-01-15. Retrieved on 2008-01-15. 
  3. ^ Noronha, Paul. "Reliance Power set to raise over Rs 10,000 cr via IPO", The Hindu Business Line, 2008-01-05. Retrieved on 2008-01-16. 
  4. ^ Times News Network. "father would have been a happy man: Anil Ambani on REPL IPO", The Economic Times, 2008-01-16. Retrieved on 2008-01-16. 
  5. ^ Press Trust of India. "Reliance Power IPO subscribed 10 times in 4 hrs", The Hindu Business Line, 2008-01-15. Retrieved on 2008-01-16. 
  6. ^ Layak, Suman. "SEBI puts curbs on Reliance Power offer", Hindustan Times, 2007-12-28. Retrieved on 2008-01-15. 
  7. ^ ENS Economic Bureau. "Reliance Power can go ahead with IPO: Supreme Court", Indian Express, 2008-01-12. Retrieved on 2008-01-15. 
  8. ^ Hard lessons from the primary market fiasco financial scene - The Hindu
  9. ^ Reliance Power offers 3:5 bonus, share cost now Rs. 269 - DNA India

[edit] External links

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