Sahara to invest Rs 100k cr
Contrary to reports of a financial crisis, the Sahara Group proposes to make huge investments in retailing, housing, media and entertainment, hospitality, medicare and other sectors totalling over Rs 100,000 crore over the next five years, its Chairman Subrata Roy said on Sunday.india Updated: Feb 25, 2006 18:55 IST
Contrary to reports of a financial crisis, the Sahara Group proposes to make huge investments in retailing, housing, media and entertainment, hospitality, medicare and other sectors totalling over Rs 100,000 crore over the next five years, its Chairman Subrata Roy said on Sunday.
The 58-year-old corporate honcho dubs as "unfortunate" the rumours about the group's financial health as also about his own and attributes this to "crap mentality" of certain sections of society.
Describing himself as a "contended man", Roy told PTI in an interview here: "I am pained at the tendency to criticise." This along with lack of knowledge about the working of a closely-held company had led to all kinds of perceptions and rumours about his group, Roy said, asserting nothing would deter him to go ahead with his plans for mega investment that would help tripling the group's assets up to Rs 150,000 crore in the next five years.
"From 1998 onwards the growth was very high till the end of 2003. After 200304, the growth is much much higher. The group is growing by 30-40 per cent now. There is no cash crunch," Roy said, dismissing the perception that sale of aviation business Air Sahara was due to financial compulsions.
Asked if the group had made any money out of the sale of Air Sahara for Rs 2,300 crore, Roy said, "I cannot give the details but I will say only one thing it was a positive sale. Ours was a sweet exit." On reasons for exiting from the aviation business, he said the sector was now suffering from a mis-match of demand and supply and "we could not have maintained the standards if we were to match the low cost airlines. In future it could have gone in losses.
More over, there was no business synergy between our core strength and aviation." Dismissing the reports that he would also sell his media and entertainment business as also the much touted AmbyValley project as the group was on the brink of a financial collapse, Roy said "there is nothing, absolutely nothing like this. "What I foresee is that the group should more than double its size now in the next five years. Assets could grow by 2-3 times from the present level of Rs 50,000 crore," he added
As a result, the net worth of the company will come down to around Rs 11,000 crore. Said the company in a statement, "Reliance Infocomm and Reliance Communications Infrastructure proposes to appropriately recast their accounts for the year ended March 31, 2005, subject to regulatory and other approvals, to reflect a true and fair view of the state of affairs in that period."
Reliance Communication Ventures is scheduled to be listed on the bourses in the week beginning March 6, 2006, subject to necessary approvals, the company said, adding "necessary disclosures in this regard will also be made in the Information Memorandum proposed to be filed with the stock exchanges shortly".
Experts feel that this will have a major bearing on the listing price. Prior to the adjustment, the net worth of RCoVL was Rs 15,395.67 crore. This includes paidup capital of Rs 611.56 crore and general reserves of Rs 14,783.42 crore. Under the scheme of de-merger, excess of net assets over the amount of share capital amounting to Rs 14783. 42 is declared as general reserves.
The write-off of Rs 4,500 crore means an erosion of Rs 37 per share in the book value. The announcement comes within days of Anil Ambani taking control of all the four de-merged entities, including RCoVL from his elder brother Mukesh Ambani as part of the demerger of the Reliance Group in June last year.
"The disclosure is being made in the interest of transparency and fairness, for the benefit of over 22 lakh Reliance shareholders, who have become shareholders of RCoVL, based on the demerger scheme approved by the Bombay High Court," the statement said.
First Published: Feb 25, 2006 18:55 IST