Faith Accompli

IT was merely the reaffirmation of a blind faith. Despite the widely anticipated fireworks over share-switching, SEBI inquiries and sundry other controversies, the 22nd annual general meeting of the Rs 8,210-crore Reliance Industries on July 18 ended rather tamely with the stray voices of dissent drowned in a sea of cloying sycophancy. Thanks mainly to master orchestrator and chairman of the company, Dhirubhai Ambani, recently voted by Asia week magazine as the 27th most powerful person in the continent (and the most powerful in the country).

The paralytic stroke Ambani suffered a few years ago may have affected his speech slightly, but it has failed to make a dent in his street-savvy humour and charisma that held over a thousand people in thrall inside the AGM hall and an equal number glued to 10 closed-circuit TV screens out-side. The smiling face failed to hide the unmistakable cockiness as he egged on the lapping-it-up audience, inviting only those speakers "who have some adverse comments to make about the company—I repeat—only adverse comments." In the end, he announced to thundering applause: "Sab theek ho jayega...bolnewale bahut kuchh boltein hain, aap sirf dekhte jao (Everything's going to be all right, people will continue talking, you all just keep watching)." False bravado? Or the courageous wrath of a man wrongly maligned? Whatever it was, he appeared to carry with him a majority of the shareholders.

To be sure, the fantastic results declared by the company did its bit. With a turnover topping Rs 8,000 crore and a net profit of Rs 1,396 crore (up 24 per cent from last year), RIL is eons ahead of its nearest rival in the Indian private sector which may have just about touched Rs 5,000 crore. And the company did it in a year when the rumours of a fall in profitability, due to falling prices in the global petrochemicals market, ruled the bourses. Ambani made short work of the depressing projections when he said: "By 2000 AD, our turnover will exceed Rs 20,000 crore!"

 Clearly, the image-sprucing machinery was working to its last wheel. Apart from the assurance given at the AGM by M.L. Bhakta, leading solicitor and RIL board member, that Reliance has done nothing illegal, the timing of the results was also crucial. Three days before the AGM, the RIL scrip made some sort of market history by recording a 15.3 per cent increase in a single trading session—it started on July 15 on the Bombay Stock Exchange at Rs 165.10, shot up to Rs 198.95 and closed the session at Rs 196, a direct result of the public relations blitzkrieg launched by the company the day before. For the past six months, as accusations of switched and tainted shares gained ground, the share had been pottering around near Rs 150, the nadir it had first touched in January.

It was when the Department of Company Affairs (DCA) filed criminal suits against the three Ambanis and other directors on the board that RIL went on the offensive with all the firepower it could command. It shot off letters to dozens of foreign institutional investors(FIIs) and large Indian investors explaining its position vis-a-vis the allegations by the BSE, SEBI, DCA, the Registrar of Companies (RoC), the Income-tax department, and other authorities.

RELIANCE explained to FIIs and other investors that "its directors, officers, registrars and transfer agents, Reli-ance Consultancy Services (RCS) have at all times exercised the highest levels of care to ensure full compliance of all applicable laws, rules and regulations, and there has at no stage been any deliberate or wilful lapse in this regard on their part. " The key phrase, of course, is "no deliberate and wilful lapse". "Of the 29 complaints filed by the RoC," the letter went on to say, "23 relate to delay in transfer of shares, three complaints relate to transfers of 70.3 lakh 'switched' shares effected at RCS on the basis of transfer deeds bearing corrections and three complaints relate to the issue of duplicate share certificates for 37,600 shares by RCS to Dr Rajul Vasa and her family." Believing that they have an adequate and sound defence against the complaints filed, the company spokesperson hinted that RIL may have to pay some fine to the Company Law Board and the DCA.

The bull run continued on subsequent days, reviving the Reliance scrip to Rs 230 plus. That was four days before its AGM. Says a disgruntled Reliance shareholder (not many of them seemed to be around at the AGM): "The fact is that since the merger of RIL and RPPL, the company has been overcapitalised by almost Rs 500 crore. The scrip has been showing a downward slide ever since. Despite Ambani's so-called fondness for his shareholders, investors have indeed been left holding a lemon for no fault of theirs. These sudden bull and bear runs have only added to the minority shareholders' woes."

Partly to assuage the guilt, and partly showing another inspired sense of impeccable timing, Dhirubhai Ambani fired his final salvo: "All those who are complaining about bonus issues for the last 14 years, take my word for it, you won't have this complaint at the next AGM." It's only the ratio of the bonus that will now be subject to speculation. With this one masterly stroke, the wily Ambani has managed to dangle the carrot and perhaps ward off the bear hug. He has also possibly succeeded in relegating all the allegations concerning switched, tainted and duplicate shares to a deep recess in the minds of his shareholders. If only for the time being.