The ongoing feud between the two Ambani brothers on several issues may often see them at loggerheads in the courts. However, there remains a thread of gain that ties Anil Ambani to his sibling?s profitability. That thread is the Anil Ambani-led Reliance Capital Ltd (RCL) investment in Mukesh Ambani?s Reliance Industries Ltd (RIL).
According to the investment book maintained by RCL, its exposure in RIL is pegged at Rs 1,718 crore (market value on August 31, 2007) accounting for 48.83% of its Rs 3,518 crore strategic and non-strategic investment across companies.
A research report entitled RCL: A Financial Power House by Motilal Oswal Securities said the unrealised capital gains in RIL shares alone is around Rs 1,604 crore, or a gain of 1,407%. RCL holds 93.55 lakh RIL shares. The cost of acquiring these shares is estimated at around Rs 114 crore.
Based on RCL?s books in March 2007, the value of the entire investment portfolio, which amounts to Rs 3,500 crore, contributes around Rs 145 a share in RCL?s current market price of around 1,241.85, says the report.
Besides this, RCL also has substantial exposure in Rcom, whose unrealised gains based on current market value, stands at Rs 792 crore, while investments in Adlabs Films stand at Rs 658 crore. The report claims that apart from Reliance companies and Adlabs, the company plans to dispose of its investment when full valuation is reached or when its businesses require capital.
Investment consultant SP Tulsian says, ?The main objective of RCL with these non-strategic investments is to realise profit. It has realised the full potential of RIL as a good investment option and has a large exposure in it. As and when RCL thinks RIL has reached its full valuation, it may take a call on its investment.?
Unlike RIL, however, RCL?s investment in Infrastructure Development Finance Company, Entertainment Network, and Global Broadcast News has taken a hit. RCL holds 1 crore worth of shares of IDFC at an acquisition cost of Rs 72 crore, but whose current market value stands at Rs 53.2 crore. Likewise in Global Broadcast News, RCL has 18 lakh shares at an acquisition cost of Rs 84.5 crore, but whose current market value has come down to Rs 63.2 crore.