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.

Table of Contents

Reliance Power Bonus Issue Allotment Date

Hundreds of Reliance Power Share owners are waiting for the Reliance Power Bonus issue.
After the hopeless listing of the Reliance Power Shares, the company had declared bonus shares in the ratio of 5:3, i.e., anyone holding 5 shares of Reliance Power, will be given 3 extra shares as bonus shares without any cost. This allotment will be done only to non-promoters and the promoters will absorb the loss.

Related: Reliance Power IPO Review & Reliance Power IPO Complains & Price Calculations and Adjustments for Bonus issue

Finally, the much awaited news for Reliance Power Bonus issue allotment date has arrived.

As per the news, Reliance Power Limited today announced date of closure of its Register of Members from Tuesday, June 3, 2008 to Thursday, June 5, 2008 for the purpose of determining the entitlement of shareholders to the Bonus shares to be issued by the Company.

As approved by the shareholders of the Company, Reliance Power will issue Bonus shares in the ratio of three new equity shares of Rs 10 each for every five existing equity shares of Rs 10 each held, to the public shareholders of the Company.

The bonus shares will be issued to those shareholders whose names appear in the Register of Members as at the end of the close of business hours on Monday, June 2, 2008.

And what have the Reliance Power management done with the money raised through the Reliance Power IPO? They have invested it into Mutual funds. Interesting!

Still more than a month to go….don’t expect any miracles and sudden jump in prices.

Table of Contents