Reliance Power mulls bonus issue

Feb 18, 2008 Stock Market

In a completely surprising move, Reliance Power is considering an issue of bonus shares to all investors, excluding the promoter group. The decision will be taken at a meeting of its Board of Directors next Sunday, February 24.

In the aftermath of the company’s poor listing on the bourses and the resultant backlash from retail investors, Anil Ambani has apparently taken some of the criticism quite personally, and this move is aimed at restoring investor confidence in the ADAG brand.

While all this sounds extremely reassuring and nice, it is peculiar that a company is issuing bonus shares within days of being listed, which is a first. Secondly, bonus is to be paid out of reserves (which are non-existent here), but in this case the company proposes to dole out the bonus from the share premium account.

Trust an Ambani to come up with a move like this… !!!

Update: Insights from Sucheta Dalal on the ramifications of this move

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P.Sriram

Regardless of anybodys opinions, anything and everything done by an Ambani is legal. No one has the guts to stand up to them and question these kind of decisions.
P.Sriram

Regardless of anybodys opinions, anything and everything done by an Ambani is legal. No one has the guts to stand up to them and question these kind of decisions.