Reliance Capital Sees Banking as Attractive Long Term Growth Opportunity

Anil D Ambani, Chairman of Reliance Capital addressed the shareholders at the company's 27th AGM. He said, "Your company has submitted an application for a banking license in June 2013. Apart from the long term growth potential of the proposed bank as a profitable institution in itself, the immediate benefit to your company will be the reduction in our consolidated debt from approximately Rs 200 billion to Rs 50 billion upon transfer of our commercial finance business to the proposed bank. This will improve our debt/equity ratio to a most conservative 0.5:1, far lower than industry standards."

Mr. Ambani said, that the company was adequately capitalized and has no plans to make a capital call on shareholders for providing initial capital for the proposed bank. He added that the company intends to list the proposed bank in three years in accordance with existing guidelines.

"We presently have no plans to make a capital call, or ask you for money to invest in the bank as your company is adequately capitalized. However, at the end of three years, we intend to list the proposed bank, as per existing guidelines and you may be assured we fully explore all avenues to benefit our over 12 lakh shareholders at that time," said Ambani.

Reliance Capital plans to focus on five major business-life insurance, general insurance, health insurance, asset management and banking for its future growth.

Shares of Reliance Capital Ltd was last trading in BSE at Rs.299.80, down by Rs.15 or 4.76%. The stock hit an intraday high of Rs.315 and low of Rs.297.50.

The total traded quantity was 11.16 lakhs compared to 2 week average of 11.37 lakhs.

Source : Equity Bulls

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