In a rather surprise move, Mukesh Ambani-led Reliance Industries (RIL) decided to reward its shareholders with a 1:1 bonus issue (one share for every one held). The bonus, which comes 12 years after the company had last issued one, is the largest bonus in India, according to RIL.
“On such an occasion and in keeping with our founder to share prosperity with all shareholders, the Board of Directors has decided to recommend a bonus issue in the ratio of 1:1,” Ambani said, while speaking at the 40th Annual General Meeting (AGM) of RIL in Mumbai. Shareholders had been demanding a bonus issue in the past few AGMs, but the company had not paid heed to their requests so far.
Ambani also apprised shareholders about the stock’s value creation over the last 40 years. “Market capitalisation has multiplied from 10 crores to 5 lakh crores. An exponential growth of 50,000 times and a compounded growth rate in excess of 32%. Rs 1,000 invested in Reliance shares in 1977 is today worth Rs 16,54,503 — over 1,600 times more valuable,” Ambani said.
“In simple terms, this means that your money has doubled every two and a half years over the past 40 years,” he added.
Talking about his vision for the company, Ambani said that he hopes that the company’s growth over the next 10 years will be higher than what it has achieved over the last 40 years. “Over the next decade, India has the potential to move from a $2.25 trillion (Rs 150 lakh crores) economy to a $6 trillion (Rs 390 lakh crore) economy. This will have a multiplier effect on each of our existing and new businesses,” Ambani said.
“I am confident that Reliance’s own growth over the next 10 years, and our contribution to the Indian economy will surpass what it has achieved in the past 40 years. Similarly, Reliance’s overall societal value creation over the next 10 years will also be multiple times higher than in the past 40 years, Ambani added.
Ambani also said that he wants RIL to be among the top 50 companies in the world. “Here are my three main aspirations: First, India at 80 should aspire to become and can certainly become one of the three largest economies in the world. Secondly, Reliance at 50 will aspire to become and certainly become one among the top 50 companies in the world,” Ambani said.
“Thirdly, Reliance’s future value-creation strategy will support and lift tens of thousands of small and medium businesses, generating shared prosperity and cumulatively creating crores of new livelihood opportunities for our youth,” Ambani added.
