Monday, February 25, 2008

Reliance Power Board Approves Bonus Shares in 3:5 Ratio

In the Board meeting held today (the 24th of February, 2008), the Reliance Power Board approved the proposed Bonus Shares to be issued to all the share holders of Reliance Power. This was announced in a Press Release, which can be read here.

The Board approved free Bonus Shares in the Ratio of 3:5 (i.e. 3 Bonus shares for every 5 shares held) to all Shareholders (excluding the Promoter Group), subject to necessary approvals.

As the Press Release Says,
Rs. 269 per share for retail investors, 40% lower than the IPO price of Rs. 430.
Rs. 281 per share for other investors, 37% lower than the IPO price of Rs. 450.

The loss is to be incurred by the Promoters. And to save Reliance Energy's share in Reliance Power, Anil Ambani is to contribute personal shareholding by 2.6%. This issue of Bonus shares, will decrease Anil Ambani's Share from 45% to 40% (approx).

This Bonus Share issue has been a great step towards saving Reliance Power's continuous falling of prices, which were slightly recovered with the announcement of this issue. But then again had stopped increasing with another announcement by Anil Ambani saying that the Bonus Shares will be issued only to those share holders, who don't sell off their shares for at least 60 days.

Another thing to note in here is that, the present press release, mentions nothing regarding this 60 days condition, except for a few words "subject to necessary approvals".

Reliance Power’s IPO closed on January 18, 2008, receiving an overwhelming and record
breaking response, with commitments of nearly Rs. 7,50,000 crore (US$ 190 billion), from
nearly 500 institutional investors across the globe, and 5 million retail investors.

Reliance Power is implementing power projects with aggregate capacity of over 28,000
MW, by far the largest development pipeline in the country.
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11 comments: on "Reliance Power Board Approves Bonus Shares in 3:5 Ratio"

Zubaida said...

i was given 15 shares for relaince power. i applied for 180 shares thru IPO. but i didnt get back my balanced money yet from relaince yet.

SUNIT said...

Seems like you were lucky enough to get those 15 shares. Because I had heard, that people applying for less than 225 shares won't be allotted any shares.

Anyway, I had also applied for 225 shares under two accounts. One via cheque and the other via Bank Demand Draft.

The cheque money was refunded within a week of allotment, directly credited to the bank a/c. While for the account for which I had paid via DD, I got a cheque from them delivered at my home address, just a few days ago.

I have heard, many others have also not yet received their cheques. This might be due to some postal/courier delay.

Ankur said...

try .. i got the chq last week

Archna said...

I've purchased 10 shares of reliance power from market i.e., I'm not actual alottee, So Pls clarify that I'll get the free bonus shares or not....

SUNIT said...

Hi Archana,
An announcement was earlier made by Anil Ambani as a clarification to the first announcement of Bonus shares. In that clarification, he had mentioned that Bonus shares would be issued only to long term investors, i.e. those who don't sell their shares for a minimum period of 60 days.

But, this hasn't yet been clarified, that if non-allottees keep their shares unsold for 60 days, they will be issued this Bonus share or not.

If we get some info regarding this issue, we will surely let you know.

Vikas said...

Actually it is the record date which decides about the issue of bonus shares. Record date is the date set by the company for determining the holders entitled to receive bonus shares. As far as i know for Reliance Power, the date is yet to be declared.

Ankur said...

they are discussing with SEBi. but most likely the IPO allotees will get the bonus

Rajendra said...

I would like to know, if we buy Reliance power shares in the open market, whether Bonus shares will be issued on these open market shares purchase

SUNIT said...

Hello Rajendra,
This is the same question, asked above. Speaking in simple words, it is not yet clear, or hasn't yet been announced, if the Bonus shares will be issued for those purchased in the Open Market..

If we get to know, we will surely post it here.

Ajay Pal Singh said...

If no bonus shares alloted to purchaser in open market then there will be no buyer of reliance power.So whoever have shares on record date will have get bonus shares.This whole issue of bonus shares is for protecting the falling price of shares.If only allotees get bonus shares then the share will be under or around 250 rs.So nobody will gain.In case of rajesh export whoever purchase shares on record date or before will get bonus shares.So clear your mind and start purchasing Reliance power shares.Its currently trading around 336 rs and will fall on monday around 300 rs. Its means 5 X 300 shares worth 1500 rs. After recored date purchaser will get 3 shares.Total shares 8.If price falls to 200 rs after record date even then you got 1600 rs.200 X 8 = 1600.You still get 100 rs. profit at worst possible scenario.Anything above 250 you will get more profit.

SUNIT said...

Thanks for your response. I confirmed from some other sources too. Record date hasn’t yet been declared. Go on purchasing as many shares as you can. But also keep in mind, that as soon as the record date is declared, the price of the shares is sure to have a great fall.

There might be a lot of profit, but there is sure a great risk.