Reliance Power Results: invests money in Mutual Funds

There is some news for the shareholders of Reliance Power shares. In the recently reported results by the Reliance Power Company, it reported that more than 98% of the money raised through the Reliance Power IPO has been invested in Mutual Funds.

Now I don’t know what to say – whether it is a good investment or a bad investment. Good, because investments in mutual funds have helped the Reliance Power company earn a profit of around 94 Crore Rs. Bad, because this is how the investors money is betted upon. Is this what investors have given the money to the Reliance Power Management for?

Interestingly, Reliance Power has not revealed which mutual funds the money has been invested. So, investors are completely blind about whether their invested money has been betted upon infrastructure related funds, or growing economy funds, or simply put into bonds based funds.

Through the IPO, a total of 11,562 Crores were raised. Out of which, 11412.81 Crores were invested in Mutual funds. That’s exactly 98.8% of the money. On this investment, the company managed to get a net return of 94.6 Crores. That’s a meager return of just 0.83%. What more can you expect from a Zero Watt Power Company, which is expected to produce real power only after 3 to 5 years. It is we investors who betted upon this stock.

The IPO offer document says that the company “intends to invest the funds from the issue in interest bearing liquid instruments including deposits with banks and investments in mutual funds. These investments may include investments in mutual funds managed or financial products sold by one of our affiliates, RCL (Reliance Capital).”

As per the news, The company has spent only Rs 25.83 crore as of March 31, 2008 in construction and development of its various projects. That’s a mere 0.22% of the IPO money actually invested.

Let’s see when actually this company produces real power and when will the investors be able to get the returns on investments. Fortunately, the book closure and record dates for the allotment date for Reliance Power Bonus shares have been finalized! (Click to know the dates). So investors can now expect to receive the bonus shares.

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