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R-Adag may get Sebi ultimatum

admin — Tue, 07 Sep 2010 08:32:00 +0000

Almost three months after issuing show-cause notices to Anil Ambani, chairman of the Reliance-Anil Dhirubhai Ambani Group (R-Adag), as well as a few group companies on “certain dealings” that allegedly violated overseas debt norms, the capital market regulator, Securities and Exchange Board of India (Sebi), plans to issue an ultimatum to Anil Ambani and others.

Sebi had first issued show-cause notices to eight R-Adag entities on 9 June. It had directed the entities to inspect the documents and reply to the notices by 30 June. They didn’t inspect the documents or file any replies.

Subsequently, on 21 July, the entities were given a chance for personal hearings on 2 August.

A show-cause notice is not an indictment and only requires an entity to explain its position, typically within three weeks from the date of the notice.

Only Reliance Natural Resources Ltd (RNRL) and Reliance Infrastructure Ltd (R-Infra), through their advocate, attended the hearing on 2 August.

They had also sought inspection of documents and postponement of the hearing.

Others—Ambani (cited in the notice as chairman of RNRL, and chairman and managing director of R-Infra), and four executives, Satish Seth, vice-chairman of R-Infra, S.C. Gupta, J.P. Chalasani and Lalit Jalan, directors of R-Infra— didn’t appear for the hearing or respond to the show-cause notices.

An R-Adag spokesperson declined to comment for this story.

Sebi, on 2 August, again asked Ambani, RNRL, R-Infra and the four senior executives of R-Infra for explanations on the dealings by first inspecting the related documents kept with the regulator before 17 August, reply to the show-cause by 27 August and appear for a hearing on 3 September.

But the company, according to a senior Sebi official, has neither inspected the documents nor appeared for the hearing within the time frame given.

“Instead, an extension was sought by the company. We have given them up to a month’s time to reply to the show-cause and attend the hearing,” the Sebi official told Mint on condition of anonymity as the matter is sensitive.

Deepak Sanchety, advocate for RNRL and R-Infra, and the company secretaries of the two firms, attended the hearing on 2 August.

“They agreed for an inspection only a few days back. They did not appear for a hearing on 3 September as they wanted an extension of the dates for the hearing and responding to the show-cause,” said the Sebi official.

“We cannot just keep postponing the hearing indefinitely. They should reply to the show-cause notices and explain their stance within the next few weeks. If they fail to do so, we will decide if a binding order could be passed,” added the official.

While responding to a show-cause, an entity can apply for a consent to dispose of a case. Such a consent can be granted by Sebi in lieu of a certain consent fee and/or by certain other penalties. Sebi’s order on consent can be further contested at the appellate tribunal.

Neither Sebi nor the company have provided details of the case, but an official familiar with the development said, “The bank account of the R-Adag companies with UBS was allegedly misused by some entities. The company had raised some debt overseas. More than what was raised through external borrowings were transferred to the company’s account and the dealings were done without the knowledge of the company.”

The official did not want to be named as he is not authorized to speak to the media.

In 2009, government agencies investigated dealings by a less-known foreign institutional investor Pluri Emerging Companies that had bought participatory notes with RNRL and R-Infra stocks as the underlying securities. The enforcement directorate (ED) probed Pluri for a series of allegedly fraudulent dealings, involving the siphoning of money from the UBS London branch accounts of two R-Adag firms.

The money in the UBS London accounts came from foreign loans, or external commercial borrowings (ECB), by R-Adag companies.

In a written reply to a query raised in the Rajya Sabha, the Union government had on 1 December 2009 said that three R-Adag firms—R-Infra, RNRL and Reliance Communications Ltd—had violated overseas debt norms.

In a written reply, minister of state for finance Namo Narain Meena had said end-use violations had been observed by the Reserve Bank of India (RBI) regarding two ECB transactions—of $360 million (Rs1,674 crore today) and $150 million—by R-Infra.

The company brought the proceeds raised through ECBs to India and these were not deployed for the declared end-use in violation of existing guidelines, he said.

RNRL had issued foreign currency convertible bonds worth $300 million for the purpose of pursuing projects under the automatic route. As much as $275 million was brought to India in May 2007 and was parked in debt mutual funds pending utilization.

Subsequently, in August 2008, an amount of Rs1,160 crore was invested in a wholly owned subsidiary in Singapore, the minister said.

Since the alleged transactions have a cross-border angle and since RBI does not have privileges of investigation, the issue had been referred to ED for investigation, the minister had said.

R-Adag may get Sebi ultimatum is a post from: Indian Stock Market Tips

GTL Infra cancels tower merger deal with Reliance Infratel

admin — Mon, 06 Sep 2010 05:32:44 +0000

GTL Infrastructure on Monday said it has called off the deal to merge the telecom tower business of Anil Ambani led Reliance Infratel with itself.

“The Non-Binding Term Sheet signed by both parties dated June 27, 2010, expired on August 31, 2010,” the company said in a filing to the Bombay Stock Exchange.

“Despite efforts, both parties have neither extended the Term Sheet nor entered into any definitive transaction agreements as envisaged therein. Consequently, the process of merger as originally contemplated would not take place,” the filing added.

On June 27, the boards of GTL, RCom and its subsidiary Reliance Infratel Ltd had given in—principle approvals to the Rs 50,000-crore ($11 billion) merger deal to create the world’s largest independent telecom infrastructure company, neither owned nor controlled by any telecom operator.

Reacting to the development, shares of GTL Infrastructure plunged up to 6.72 per cent to Rs 42.35 in early trade on BSE while Reliance Communications fell 1.07 per cent to Rs 161.65.

GTL Infra cancels tower merger deal with Reliance Infratel is a post from: Indian Stock Market Tips

RCOM in talks with Motorola, HP, Intel for 3G tie-up

admin — Mon, 30 Aug 2010 06:14:00 +0000

Reliance Communications is planning to rope in strategic partners for its infrastructure and technology innovation unit for 3G mobile business, and is in discussions with global players like Motorola and HP. Sources said that discussions are also being held with likes of Intel and Sony.

RCOM, Anil Ambani group’s telecom arm, is looking for partners in its 3G Innovation Lab, which has been set up as an end-to-end wireless network infrastructure and new technology provider for high-speed 3G (third generation) mobile services.

Sources said RCOM will also let out the services of the Lab to other operators and service providers to further monetize its investment in this newly set-up unit. This could be part of RCOM’s plans to raise funds for launch and expansion of its 3G services, for which it has made large investments, they added.

The company paid more than Rs. 8,500 crore for securing the spectrum (radio waves) to offer 3G mobile services and analysts have estimated that more than Rs. 5,000 crore could be required for rolling out the networks.

RCOM is planning to launch 3G services by the end of this year, subject to the release of spectrum next month.

Other players with whom the discussions are being held include global technology players such as Red Hat, SNAPinSoftware, weComm, Rubberduck Media Lab and Skyfire Labs.

When contacted, an RCOM spokesperson declined to comment on the global partnerships the company was seeking. However, the spokesperson confirmed RCOM’s move to set up a full-fledged 3G Innovation Lab.

“Our 3G Innovation Lab will drive all 3G innovations for mobile as well as other platforms. It will aid in demystifying 3G technology and make it simpler for adoption amongst cross- section of customer groups,” the spokesperson said.

Sources said the partnership would help in scaling up the Lab’s capabilities and exploring the monetising opportunities by offering the infrastructure of this unit to third-party players through managed services business model.

The Lab has been set up at Reliance ADA Group’s Headquarters in Dhirubhai Ambani Knowledge City, Navi Mumbai.

RCOM has won 3G spectrum in 13 circles, including key ones like Delhi, Mumbai and Kolkata.

RCOM in talks with Motorola, HP, Intel for 3G tie-up is a post from: Indian Stock Market Tips

Anil Ambani’s Reliance and CBS to launch 3 TV Channels

free stock tips — Thu, 19 Aug 2010 10:51:03 +0000

Anil Ambani‘s Reliance Broadcast Network (RBN) with a joint venture with US’ CBS Studios is all set to launch three English, General Entertainment Channels (GEC) in India with an aim to roll out multiple television channels in the country.

The joint venture is called the Big CBS Networks and will target the English-speaking audiences in India. The three channels such as BIG CBS Prime, a premium English general entertainment channel, BIG CBS Spark. While BIG CBS focuses on the youth and Love, an English entertainment channel is meant for women.

According to Tarun Katial, CEO, Reliance Broadcast Network, the English GEC space is long way to go from the ground level in the market. But the move targets at an upper SEC audience for the good response.

As the R26, 000 crore television market in India always extends its hand for booming, the three channels from RBN and CBS Studios will be paid on the subscription-based growth to be available for other DTH players along with Reliance-owned DTH Company.

Anil Ambani’s Reliance and CBS to launch 3 TV Channels is a post from: Indian Stock Market Tips

Anil Ambani eyes stake in Indian commodity bourse

free stock tips — Wed, 18 Aug 2010 15:48:00 +0000

Indian billionaire Anil Ambani plans to get shares in a local commodities exchange, signalling growing corporate interest in bourses where Goldman Sachs and Intercontinental Exchange have bought small stakes.

Reliance Anil Dhirubhai Ambani Group (R-ADAG) plans to buy a stake in the Indian Commodity Exchange (ICEX), a leading bourse for metals including gold, the market regulator, whose approval is needed for selling stakes in bourses, said on Wednesday.

Jaypee Capital wants to acquire 26% in the National Commodity and Derivatives Exchange (NCDEX), the regulator added.

R-ADAG’s Reliance Money, a unit of Reliance Capital, will buy the stake from Indiabulls Financial Services Ltd, which owns 40% of ICEX, two sources at Indiabulls said.

ICEX was founded last year by state-run metals and farm commodities trader MMTC Ltd.

BC Khatua, chairman of the Forward Markets Commission that regulates commodities exchanges, confirmed there was a proposal to sell equity to Reliance Money but he did not say how big of a stake it would be.

The Business Standard paper had reported Ambani wanted 26% of ICEX.

“Yes Indiabulls has approached us… They want to surrender their anchor-investor status to Reliance Money,” Khatua said.

He also said the regulator was considering a proposal from Jaypee Capital Services to acquire 26% anchor investor stake in NCDEX.

Analysts said the entry of large business groups such as R-ADAG would help boost turnover on exchanges.

“Investors are expecting valuations to go up if there are reforms in this sector. The entry of players like Reliance will drive up trading volumes,” said Gnanasekar Thiagarajan, director at Commtrendz Research.

India has four national commodity bourses — National Commodity and Derivatives Exchange (NCDEX), Multi-Commodity Exchange (MCX), National Multi-Commodity Exchange, and ICEX.

A fifth bourse — ACE Derivatives and Commodity Exchange, promoted by Kotak Mahindra Bank — won national commodity exchange status last week and starts up in a month.

India, which allowed futures trading in commodities in 2003, has one of the fastest-growing commodity futures markets and had a combined turnover of Rs77.65 trillion ($1,667 billion) in the 2009/10 fiscal year ending in March.

Growing turnover has attracted several investors such as Goldman Sachs, which bought a 4 percent stake in NCDEX through a Mauritius-based investment arm. InterContinentalExchange also holds a 4% stake in the same exchange.

NYSE Euronext, Fidelity International, Aginyx Enterprises, Intel Capital, and Passport India Investments own stakes in rival MCX, India’s biggest commodities exchange.

Foreign investors are allowed to hold up to 5% equity stakes in local commodities exchanges.

Anil Ambani eyes stake in Indian commodity bourse is a post from: Indian Stock Market Tips

Reliance Broadcast Network Ltd may raise $100 m to fund expansion

free stock tips — Tue, 10 Aug 2010 22:32:00 +0000

Anil Ambani -led Reliance Broadcast Network (RBNL) is planning to raise $100 million (around Rs 450 crore) to fund its expansion plans for FM radio and television broadcasting.

In the third phase of FM radio (FM-III), RBNL is looking to bid for 90 to 100 FM stations. The company has also formalised 50:50 arrangement with the US media conglomerate CBS Studios International for its television foray. The announcement is expected in next few days.

“We are looking at a one-time fund raising for all our expansion plans. We are planning to raise $100 million. The board will take the final call on it, shortly,” Reliance Broadcast Network CEO Tarun Katial told FE. RBNL is expected to raise the fund via preferential allotment of shares.

Katial said the company is keenly awaiting for FM-III policy announcement before going for the fund raising exercise. This is because RBNL is the single-largest operator of private FM in the country with 45 operational FM stations and is looking to formulate its expansion strategy based on FM-III policy.

“Our first quarter results are encouraging. The share of revenues from tier-II and tier-III cities rose to 45% against 25-30% earlier. This shows that FM-III would be viable for us,” Katial said. For the quarter ended June 30, 2010, RBNL recorded a revenue of Rs 52.16 crore with the radio inventory utilisation standing at 64%.

On television foray with CBS Studios International, Katial said: “Initially, we will start with three to four channels in the English entertainment space as it is witnessing growth due to digital addressable platforms like DTH.”

However, Katial clarified that the joint venture between RBN and CBS will only look after the non-news channels even though Reliance Big Broadcasting has applied for 33 licences for news channels.

The JV with CBS will be an Indian company that will have programming rights of CBS across India, Nepal, Bhutan, Sri Lanka, Bangladesh, the Maldives and Pakistan which could see further geographical spread.

Reliance Broadcast Network Ltd may raise $100 m to fund expansion is a post from: Indian Stock Market Tips

Anil Ambani gets Sebi notice on R-Infra, RNRL

free stock tips — Tue, 03 Aug 2010 04:36:39 +0000

Capital market regulator Securities and Exchange Board of India (Sebi) has asked Anil Ambani, two companies that he heads and four executives belonging to the group for explanations over what it referred to as “certain dealings”, without elaborating.

The show cause notices have been issued in connection with stock market transactions

It also said that Ambani and the four officials belonging to Reliance Infrastructure Ltd (R-Infra) would be given an opportunity to appear in person before the regulator on 3 September, in a posting on its website. A hearing was heard on Monday regarding the issue, which also involves Reliance Natural Resources Ltd (RNRL), following a notice issued on 7 June, the regulator said.

At Monday’s hearing, which was attended by Deepak Sanchety, advocate for RNRL and R-Infra, and the company secretaries of the two firms, Sebi said it was decided that the documents that the regulator has relied upon will be available for inspection up to 17 August. It also directed the executives and the companies to submit replies on the charges by 27 August.

Ambani has been cited in the notice as chairman of RNRL and as chairman and managing director of R-Infra. Of the four executives, Satish Seth is vice-chairman of R-Infra, while S.C. Gupta, J.P. Chalasani and Lalit Jalan are directors of the company.

“Though there is no request to that effect from the other six notices, in deference to principles of natural justice, they are hereby directed, if they wish, to take inspection of the relevant documents on August 17, 2010, at 10 AM, submit replies by August 27, 2010, and appear for personal hearing at 10 AM on September 03, 2010,” M.S. Sahoo, whole-time member of Sebi, said in the order.

“The matter is sub judice. Reliance Infrastructure Ltd, Reliance Natural Resources Ltd, and the concerned individual directors will comply with due process of Sebi, and are confident of suitable resolution of the matter, as legally advised,” a Reliance-Anil Dhirubhai Ambani Group (R-Adag) spokesperson said in an email response.

Neither Sebi nor the company gave any details about the case.

The Union government had on 1 December 2009, in a written reply to a query raised in the Rajya Sabha, said that three firms of R-Adag—R-Infra, RNRL and Reliance Communication Ltd—had violated overseas debt norms.

In a written reply, minister of state for finance Namo Narain Meena said end-use violations had been observed by the Reserve Bank of India (RBI) regarding two external commercial borrowing (ECB) transactions—of $360 million (around Rs1,665 crore today) and $150 million—by R-Infra.

The company brought the proceeds raised through the ECBs to India and these were not deployed for the declared end-use in violation of existing guidelines, he said.

RNRL issued foreign currency convertible bonds of $300 million for the purpose of pursuing projects under the automatic route. As much as $275 million was brought to India in May 2007 and was parked in debt mutual funds pending utilization.

Subsequently, in August 2008, an amount of Rs1,160 crore was invested in a wholly owned subsidiary in Singapore, the minister said.

Since the alleged transactions have a cross-border angle and since RBI does not have privileges of investigation, the issue had been referred to the enforcement directorate for investigation, the minister said.

Source : Live Mint

Anil Ambani gets Sebi notice on R-Infra, RNRL is a post from: Indian Stock Market Tips

RNRL, R-Power agree to merge : Ration 1:4

free stock tips — Mon, 05 Jul 2010 06:06:03 +0000

Analysts say that the swap ratio may lead to a downside in RNRL’s stocks when trade opens on Monday

Reliance Natural Resources Ltd (RNRL), the gas trading arm of the Reliance-Anil Dhirubhai Ambani Group (R-Adag) will be merged with Reliance Power Ltd (R-Power), with shareholders of the former receiving one share of R-Power for every four shares of RNRL. At the current market value of the two companies, the merged entity could have a market capitalization of at least Rs50,000 crore, though this depends on how the market reacts to the news on Monday.

The boards of RNRL and R-Power met on Sunday to approve a scheme of amalgamation. According to a statement issued by R-Adag immediately after the board meeting, the 4:1 swap ratio was based on independent valuations of both companies done by audit and consulting firm, KMPG.

Analysts say the deal doesn’t benefit RNRL shareholders much, although they admit that this is purely from the mathematical point of view. They add that the company really didn’t have a future after the government announced a gas utilization policy that doesn’t favour trading companies, and the Supreme Court ruled in favour of Reliance Industries Ltd in a fight between it and RNRL over the supply of gas from the former’s fields in the Krishna-Godavari (KG) basin at a preferential rate.

The merger will expand the equity base of R-Power by 14.6% and reduce the holding of the promoters in the company by 4.36 percentage points to 80.42%.

The dilution in promoters’ equity in R-Power implies that the promoter group led by Anil Ambani need to offload only half of what it needed to before the merger to meet the new listing guidelines issued by stock market regulator Securities and Exchange Board of India. The regulator has mandated that public shareholding in any listed company should not be below 25%.

“The dilution in equity would be compensated by the value that RNRL brings into the company,” a R-Adag official said, speaking on condition of anonymity.

News of the merger has been in the air for some time and on Friday, R-Adag told the Bombay Stock Exchange that the matter was on the agenda for a Sunday meeting of the boards of the two companies. On the same day, shares of R-Power closed at Rs175.15 each and those of RNRL at Rs63.65 apiece. At these levels, RNRL and R-Power had market capitalizations of Rs10,394 crore of Rs41,979 crore, respectively.

Analysts say that the swap ratio may lead to a downside in RNRL’s stocks when trade opens on Monday.

“The current share swap ratio does not give any benefit to RNRL shareholders. If the share price of R-Power does not move beyond Rs175, RNRL’s market capitalization could see an erosion of Rs3,200 crore,” said Rupesh Sankhe, power sector analyst at Angel Broking Ltd.

Sankhe’s views were echoed by V.K. Sharma, head of private broking and wealth management, HDFC Securities Ltd who said that he expected RNRL’s shares to fall by around Rs20 when trading opens on Monday.

“However, the merger was necessary as the government’s gas utilization policy had made it clear that a gas trading company would not be favoured while allocating gas, and the entity receiving the gas should have power generation capacities, which R-Power has,” Sharma added.

The merger will help R-Power’s net worth improve by Rs1,900 crore to at least Rs16,000 crore.

The R-Adag statement also added that R-Power is likely to benefit from RNRL’s equity interests in four coal bed methane blocks and an oil and gas block in Mizoram, though Sankhe said that the benefit would be only marginal.

The proposed amalgamation would facilitate the accelerated implementation of R-Power’s plans for setting up at least 8,000MW of gas-based power generation capacity with gas coming into the company through RNRL’s gas supply master agreement with RIL, the statement added.

The R-Adag official quoted earlier said that R-Power might not have to sign a new agreement with RIL, as the benefits of the agreement signed by RNRL is likely to flow naturally to the company.

The proposed merger is widely seen as a result of a Supreme Court ruling passed on 7 May that overruled a family agreement between the Ambani brothers giving RNRL access to gas from RIL’s KG basin at lower price than what was subsequently fixed by the government. The two companies subsequently revised the agreement and submitted it to the Bombay high court for approval on 30 June.

Source : Live Mint

RNRL, R-Power agree to merge : Ration 1:4 is a post from: Indian Stock Market Tips

Anil Dhirubhai Amabani Group (ADAG) Stocks: Which ones are experts betting on?

admin — Thu, 17 Jun 2010 10:06:22 +0000

Anil Dhirubhai Ambani Group (ADAG) stocks have been fire for the last couple of sessions. In an exclusive interview with CNBC-TV18, Deven Choksey, MD, KR Choksey Securities and SP Tulsian, sptulsian.com, talk about which ones you should be betting on and which ones fundamentally appear attractive from that pack.

Q: Let us start with Reliance Communications, there has been a lot of talk about tower stake sell etc, what do you think is the most likely transaction? Would you still buy it after the recent rally?

Choksey: I think to me the transaction would be in two parts. First transaction would be for Reliance Infratel, wherein I think they would be possibly selling a majority stake in this particular company and in turn even in the minority stake in order to facilitate the new tenants for the towers, going forward. At the same time, I think this particular transaction is going to probably reduce that debt, which is there in the books of Reliance Infra at this point in time. That would possibly going to go a little bit more positive, going forward.

The second part of the transaction, which should happen, would be with RCOM, wherein they would probably in their own books and also to fund the rollout of 3G, I think probably they would be selling 26% stake in this company, which would ultimately end up realising for them around close to Rs 15,000-16,000 crore. So that would possibly going to be the second transaction.

Both these transactions put together, I think the company, which would be a little bit more attractive hereafter, would be Reliance Communications because I think the kind of valuation at which it is at this point of time traded, probably those dark clouds would go away once the debt starts disappearing, though the equity would probably get diluted in the interim period. But still with the kind of better process emerging thereafter, I think Reliance Communications should get re-rated from current levels. The viewpoint is that the stock should be trading somewhere between Rs 205 and Rs 225 levels, should this transaction take place.

Q: There has been a lot of talk around Reliance Media Works as well on whether they will buyout star stake in Balaji, all unconfirmed right now. But do you expect any significant re-rating or corporate moves in that company?

Choksey: Possible and at the same time, I think slightly difficult. Difficult more from the point of view that this entertainment business is so far not generating the bottom-line for the company and you end up acquiring one after another company which are not still making profits, I think that gives you the discomfort that we are talking about.

Possible more from the point of view, yes, I think it is a financial transaction. You have the wherewithal to handle that kind of a transaction, so it could be possible. In my viewpoint, the consolidation at this point of time in ADAG pack in the media space is more required than additional buying of this sort.

Q: There has been a lot of talk that next week we could see the signing of the gas pact between the two parties and a hint of that might come in the Reliance AGM as well on Friday, what are your expectations?

Tulsian: Definitely it is likely because we are approaching the timeline set by the Supreme Court. But I think it will more be in the recommendatory form where I have been maintaining my view that it will be the direct agreement by the Reliance Industries with the ultimate user of the ADAG, which would be Reliance Power. That recommendation will be sent by Reliance Industries to the government for their final approval. But till you have the policies getting changed by the government for the greenfield gas based power projects, I don’t think that those can be taken as the conclusive agreements, having reached between both the parties because that still remains on the table as having agreed between the parties, which needs a final approval by the government.

So, I don’t think that reference of that will be made or will be seen in the AGM, which will be held on this Friday. There could just be a reference that, yes, the things will all be moving in the coordinated manner and everything will get settled and sorted out. But I don’t think that the specific reference of gas pact having signed between ADAG and Reliance Industries will be made in the AGM.

Q: Do you expect to hear any positive triggers at all, at the AGM in terms of either reference to telecom or closely working with the ADAG, do you think any such reference will be there in the speech?

Tulsian: I think a lot of the reference or focus will be made on the telecom venture because the management will justify their venturing into the broadband wireless. Probably one could read between the lines that the eventual plans of Reliance Industries could become an integrated or complete telephony company and by having the voice telephony also in their fold. But I don’t think even the power, which is the next big area for Reliance Industries, will have any reference.

I don’t think that the ADAG will have any specific reference because Reliance Industries will still be keeping their distance because at no point of time or at none of the platform, there will be lauding the role of the ADAG. But the references will all come that the judgement of the Supreme Court has set at the rest the whole dispute. Now, in view of the non-compete clause having dismantled, the Reliance Industries has plans of going into the telecom venture. So instead of giving any reference to the ADAG, the AGM will be more focused on the dismantling of the non-compete clause and the foray and the prospects and the growth potentials in the telecom sectors, which Reliance Industries is seeing in the time to come.

Q: What could the potential signing of the gas pact as early as next week mean for RNRL as a stock because that has zoomed to nearly Rs 68-70?

Choksey: Important aspect is that once the gas pact is signed my reading says that RNRL as a company whether they would continue to hold the trading rights for gas, that is something, which is a question mark. In my view point, till this particular announcement is out it would be speculative to say anything for or against how exactly this business would move.

But assuming this judgement, which will be government’s dictate I would believe that, I think the gas would be sold to those players who are end users and in such situation though middle party would be allowed. In such situation, I think RNRL as a company for the gas trading purpose would not assume a further business model that is my view point. But then we will have to wait for lot of clarity before it is made a rule as far as RNRL is concerned.

Q: Do you agree because the market is very excited about RNRL, but that is one risk that RNRL gets cut out in terms of the gas supply agreement, which is done directly between RIL and Reliance Power and Reliance Infra, RNRL doesn’t come into the picture as a middle party? What do you think?

Tulsian: I have been maintaining the view that there is no necessity of RNRL now to exist between these supply agreements, which will get concluded eventually between Rel Power and RIL post Supreme Court judgment. If you see there is one more point in this, I am not prepared to accept that there has not been any consideration payment by Mukesh Ambani Group to Anil Ambani Group and obviously that consideration amount is unknown to anyone. But part of that can get satisfied by taking over RNRL, which has been in the news couple of months back also when the litigation was on or maybe six months back when the litigation was all going on. So, probably because RNRL has the assets like coal bed methane, they have one oil exploration blocks, so one can always conclude that takeover of this company will give growth potential for RIL to expand in these areas and in pursuance to that this company is being taken over.

The ultimate aim of both the groups would be to retain the valuation of the company because RNRL today is enjoying a valuation of Rs 8,000-8,500 crore and no group would be interested to see the value getting eroded, which will largely be impacting about 2.5 million shareholders because 45% stake of that is held by those companies and that will really be a big dampener to the reputation of both the group. So ultimate aim is to preserve the market capitalisation and to achieve that objective, probably RIL I won’t be surprised to be taking over RNRL. But if you try to derive some value with gas rights, which presently are held by RNRL, I won’t be giving any consideration or valuation on that aspect or on that point to RNRL.

Q: What about Reliance Capital that is up about 15% since the new MoU, how do you value that?

Choksey: I think the important aspect is and I would strictly go with re-rating sentiments, which are happening into the market. Now, the investors are more comfortable because they believe now the managements of these companies are a little bit more free to look at business per se.

For Reliance Capital, looking at the fundamentals, I think the growth prospects are emerging a little brighter. Few of the things, first out of lot would be the insurance business, at some point of time you should be seeing the unlocking of this particular business happening. That is where the market up till now which was skeptical because of the management time not available for this kind of activity is now more looking positively and that is why you are seeing some kind of re-rating. We do believe that going forward in each of their areas of business in financial companies, I think would start getting better attention and that is why markets are seeing some better hopes and this re-rating. Otherwise, fundamentals are expected to follow in the businesses in which they are operating.

Q: What about Reliance Industrial Infra, it has gone up 40% since the new MoU came in, what is driving that stock?

Tulsian: Amongst both the group this company has shown the highest appreciation as you have rightly said, it has appreciated by about 35-40%, especially in last three-four days. I won’t be attributing this rise since the dismantling of the non compete clause, infact that has happened couple of weeks back, but the rise has happened only in the last four days. This company has a marketcap of just Rs 1,500 crore and you cannot expect any company from Mukesh Ambani Group to remain at such a low level, such a low marketcap. Now, people have started talking that the old expectations that probably the gas transportation infrastructure, which are held by Mukesh Ambani in his personal capacity could get pooled into this company. Presently, this company only has a Chembur Patalganga pipeline, which transports crude from BPCL refinery to Patalganaga of about 60 kms, so this fits into the object of the company. 46% stake is held by RIL in RIIL and if the gas transportation infrastructure network is pooled into this company promoters, along with Mukesh Ambani, can increase their stake in the company to about 90% and further dilution can happen and huge amount can get mobilised.

Second talk, which has started happening from last couple of days, that probably Infotel broadband can also come in this company. So this is largely on the hopes of a massive restructuring likely to happen in RIIL by putting in some existing projects, which will increase the size of the company maybe by 10-20 folds.

Source : Money Control

Anil Dhirubhai Amabani Group (ADAG) Stocks: Which ones are experts betting on? is a post from: Indian Stock Market Tips

What is RIL going to do with the spectrum it acquired?

free stock tips — Sun, 13 Jun 2010 06:15:02 +0000

What is Reliance Industries going to do with the spectrum it has acquired? CNBC-TV18′s Siddharth Zarabi tries to find out details of what its strategy might be.

The initial estimate for capex is not expected to be as intensive as 3G. Preliminary estimates suggest Rs 6,000-7,000 crore depending on usage of existing technologies and the fact that there will be a lot of synergies with Reliance Communications’ existing telecommunications network.

It is expected to be a fast rollout, a data driven strategy across the country offering free and subsidised devices possibly harking back to Reliance’s original CDMA entry across the country five years back.

RIL plans to start with WiMax and progress to Long Term Evolution (LTE) over 2-3 years. Initial plan is for municipal wireless and then full city coverage, making it available freely across towns just like Google has done in San Francisco in the past. It plans to rollout Wi-Fi hot spots across 100 cities.

It is not going to be a holding strategy for spectrum according to RIL. It is probably going to be in a position to be able to offer services in select cities to start with between two to three quarters. The data cloud that RIL will be in a position to offer would be on a solid and robust physical infrastructure owned by Anil Ambani.

ADAG‘s statement today welcoming RIL’s entry is actually a clear hint in that regard.

Policy roadblocks:

Data, entertainment and voice possibilities exist via broadband wireless access. RIL has acquired a category ‘A’ ISP Infotel broadband.

Sources said the policy barring domestic voice over IP will need a relook. Internet service providers (ISPs) have been barred from offering domestic voice over IP since 2002.

Barring internet access, RIL is likely to pay a 6% annual revenue share.

Luring customers:

The company plans to address corporate and home user demand for data. It sees Wi-Fi phones and smart devices as key to customer adoption. Free or subsidised devices will also be key to faster adoption.

BWA ready:

Sources said the company’s entry into broadband will be big bang. RIL can be in a position to launch services in the next 2-3 quarters.

It is in a position to dominate broadband services market and has the potential to replace the VSAT services market.

RIL can hire fibre from Reliance Communications and others.

Well planned entry:

Sources said RIL’s broadband foray was planned over a year ago. Its broadband foray possibilities were discussed informally.