Reliance generating strong cash flow will get paid off: Sean Darby

Sean Darby, Head of Regional Strategy, Nomura International

Now that the two brothers have kissed and made up Reliance will be able to do some thing with the kind of free cash flows that it will be generating over the next four years something like $18 billion that it otherwise wouldn't have known what to do with now it can go ahead and do power for instance?

Indian companies do have very good domestic franchises and I certainly wasn't casting any aspersions over the Indian domestic companies. I think the key theme here at the moment is being that we are globally been in a cyclical upswing and I do expect some of the North Asian companies to rebound. I think with respect to Reliance and some of the Indian companies, there is no doubt that they are coming to this cycle in far-far better condition in terms of cash flow then they have done in the past and so many of the companies recover in India have actually net cash on their balance sheets at this moment in time and when you take a look at Reliance and then take a look at some of its peers perhaps in China certainly the ROEs (Return on Equity) and also number of other financial indications for Reliance would actually put it in the top quartile of many of its Chinese counterparts. So I think the key here is that the generally large cap companies like Reliance when they are generating very strong cash flow in this type of market will get paid off very aggressively and this is a said in a relation to that its peers in China it would be in the top quartile.