Investors of Reliance Industries Ltd. hoping that the company would answer some of the many questions about its business prospects, came away from its annual general meeting a disappointed lot.
Reliance Industries chairman Mukesh Ambani's speech was low on specifics and had nothing to ease concerns about falling gas output and un-deployed surplus cash, said analysts.
Shares of Reliance Industries, India's largest company by market capitalization, reversed a 1.7% initial gain shortly after Mr. Ambani concluded his speech to shareholders, and were down 1.4% at 938.35 rupees ($20.9) in afternoon trade. The turn in the stock, which has a 11.6% weight in the 30-share benchmark Sensex, dragged the index down 0.5%.
The specifics in the speech were that the company expects to launch new polyester products and that its retail arm plans to introduce a cash-and-carry format. But the big questions remained unanswered.
The company recently announced a financial services joint venture with the D.E. Shaw group, a U.S.-based investment and technology development firm, but hasn't elaborated on plans.
Shareholders have also been wondering what steps Reliance would take to move into the broadband space after the company bought a 95% stake in Infotel Broadband Services Pvt. and won slots to offer broadband services in all the country’s 22 service areas.
The biggest question for investors is the outlook on falling gas output from the fields the company operates in the D-6 block of the Krishna Godavari basin, off India's east coast. Concerns about gas output have weighed on Reliance's shares for the past three months and have overshadowed the company's $10-billion deal with British energy giant BP Plc. In February, BP said it will pay up to $9 billion for a 30% stake in Reliance's oil and natural-gas assets .
One takeaway from the shareholder meeting is Mr. Ambani's statement that the company will turn debt-free [...]
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