Reliance ADAG group

For readers of my blog this is not a new news. I have not been a fan of any businessman who is more into ‘market capitalisation management‘ rather than business management. When the Reliance Power IPO came at Rs. 450 I did not apply though of course there are many people who applied.

I wrote this EVEN BEFORE the issue that if NTPC was priced at Rs. 240, the correct price for a new company should be in the range of Rs. 75, not Rs. 450. Of course many people laughed. N0w there is a new gimmick of merger….none of the actions by this group is helping the cash flow situation of this group. It is making losses in Rcom, the Media companies are still investing. The lucrative Bombay franchisee is seeing intense competition from Tata Power which has a cost of production of Rs. 1.8. Reliance insurance and mutual funds will not make money – there are no more NFOs anymore….God bless the market capitalisation.

Also for me this was a good example – the promoters had taken the shares of Reliance Power at Rs. 16 (not sure). I used to tell my friends the price is Rs. 450, and the value is Rs. 16.

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6 Responses to “Reliance ADAG group”

  1. M S PANJWANI on July 5th, 2010 at 8:37 pm

    What about NANO a big failure from tata’s……..
    Hdfc’s lending to satyam…and deepak parekh on board subsequetly..conflict of interest?
    L&T flirting with satyam share’s…risking sharholder’s wealth…
    Suzlon and punj lloyd promised themselves to be the next LT…where are tanti’s and punj’s of the world now….
    Recently hdfc mutual fund……
    Me too not a big fan of ADAG…..
    But bathroom meh sab bina kapdo keh hi hote hai…..mere bhai
    Jo pakda gaya vohi chor………….lol

  2. Keep away from media blitzing Companies like Suzlon etc.

    Subra is right in telling the basic premise of ADAG group i.e. managing for market cap. However, I strongly believe and I have said this earlier too – that Reliance Mutual Fund is No.2 in the business and manages nearly 100,000 Crores. Even keeping 1% margins, net of all expenses and commissions, it is easily 1000 Crores free cash flow to the Group. And I am not defending ADAG or anybody. Just the stats, as they seem before me.

  3. Nano a failure? Nice to know, thanks. Sorry Subra a better editing policy will be usefull.

    By the way NPR the Reliance Asset Management is a big fund management company and it manages a big mutual fund, PMS, EPFO funds, international fund management (Singapore) etc. In March 2009 it had an aum of Rs. 80,963 crores. Going by NPR’s logic it should have had an income of at least Rs. 800 crores (topline from the amc itself). However it had only Rs. 444 crores.

    Amusing? Well looking for an answer….

  4. Viswanath
    I think u hold tata motors shares,no doubt its a blue chip….but even blue chips comes out with bad products…..
    Do u remember Maruti Versa from Maruti…and all hype by roping in Bachchan trio for marketing the product….but maruti versa was a big failure…
    Whether much hyped reliance power ipo or Nano car or my name is khan…..different products…but the fate is same.
    Editing..nice u are not in information and broadcasting ministry……LOL

  5. Viswanath,

    I completely agree with you, but frankly I am too lazy to edit the replies. Except for unparlimentary language (not found so far except on one occassion) I do not mind what people say. When I write for a magazine or a book or for a company, I address the exact audience. I do not even know the audience of my blog – rather the range is just too wide for me to define the ‘average’ reader. It is like addressing the 40 year old because you have 100 30 year olds and 100 50 year olds in the audience of 200 people. So I actually let anybody and everybody comment – this is the first time one reader has commented about the comments of another reader. Always a first time 🙂

  6. I too disagree about Reliance MF and Reliance Insurance. As per your earlier blog about “indicators” , i think they are good companies. Coz i am cunsumer for both. Abt RMF NPR has said right, and other thing i would like to point out is the convenience RMF and R. insurance bring. online travel insurace (provided by others also) but i use reliance, very convenient (agent takes double of wat u pay online). And i am a big fan of ATM card given by RMF. its like earn more than FD yet have very good liquidity. ofcourse these indicators do not mean the businesses are doing well.

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