Feb 03, 2003 08:34 PM
6585 Views
(Updated Sep 08, 2005 02:02 PM)
Reliance Industries has many firsts to its credit. It has marked presence in industries right from refining to polysters .It is widely appreciated for acheiving vertical integration over its core product- petro chemicals.
Its investor community consists of 2 million people which no other corporate equaled except a mutual fund –UTI. It was among the first indian corporate houses which accessed the cheap overseas funds.It was notorious for its ability to affect government policy in its prime years of growth.
Add to this history, all the latest news about its businesses.It has merged its refineries wing into its parent organisation.It has found huge gas reserves in andhra pradesh and gujarat.It has announced its foray into (WLL)
telephony.during the nine years ending december 2002 it has made a net profit of around 1000 crores and paid around 9000 to government on account of various taxes.
All this would make one feel that its share might be quoting at atleast double its book value in stock markets.But I was surprised to see its share qouting at around its book value(230) during october 2002 and even touching 227 before the announcement of its finding of gas reserves.
I started questioning why it is so.Is it because the investor base is too high .Is it because of lack interest from the side of Foreign Institutional Investors e.t.c.During the same time I read an article by a foreign analyst that he regards Reliance as a high risk corporate house considering its diversification into too many areas away from its core area of petro chemicals.Another analysis read that reliance may not be able to sustain its high growth rate it is presently maintaining in future considering that it has already acheived alot in petro chemicals and in case of other areas it may not be able to acheive the same growth.
Now Iam wondering ten years down the line is Reliance giong to continue its exponential growth it has witnessed or become a big gaint like TATAs where some businesses are good and some are faring poor.Or is it going to be much more worse -bust like Enron which has diversified into too many areas and landed upin the pit.
