Investment Advice for Stocks (Share), MF and Personal Finance » Anil Ambani

RCom firmly in the picture after acquiring Digicable

free stock tips — Fri, 02 Jul 2010 06:50:00 +0000

Reliance Communications rose 1.38% to Rs 194.95 at 9:13 IST after the company approved a proposal to acquire cable television services provider Digicable in an all-stock deal for an undisclosed amount.

The announcement was made after trading hours on Thursday, 1 July 2010. Meanwhile, the BSE Sensex was up 79.97 points, or 0.46%, to 17,589.30. On BSE, 2.64 lakh shares were traded in the counter as against an average daily volume of 23.29 lakh shares in the past one quarter.

The stock hit a high of Rs 196 and a low of Rs 192.75 so far during the day. The stock had hit a 52-week high of Rs 319.70 on 1 October 2009 and a 52-week low of Rs 131.80 on 21 May 2010.

India’s second largest listed telecom operator by sales has an equity capital of Rs 1032.01 crore. Face value per share is Rs 5.

Reliance Communications (RCom) will merge its direct-to-home services, internet protocol television services and retail broadband services with Digicable. The new entity will be named Reliance DigiCom.

Last month, RCom agreed to merge its telecom towers business with that of GTL Infrastructure. Financial terms of the deal were not disclosed, but the combined operations will have an enterprise value of over $11 billion and will own more than 80,000 towers, with more than 125,000 tenancies from over 10 operators.

RCom said it will retain its optic fibre network and related assets. RCom will receive cash as part of the deal and its shareholders will get shares in GTL Infrastructure. RCom also said that cash infusion will lead to a substantial reduction of its consolidated gross debt and improve leverage ratio, contributing to enhanced financial flexibility.

Details on the cash infusion to RCom, and the share swap ratios will be finalised in due course, the statement said. The deal is expected to close within six months.

On a consolidated basis, Reliance Communications’ net profit declined 19.5% to Rs 1170.11 crore on 14.9% decline in net sales to Rs 4698.24 crore in Q4 March 2010 over Q4 March 2009.

RCom firmly in the picture after acquiring Digicable is a post from: Indian Stock Market Tips

RIL –Buy- Angel Securities

free stock tips — Tue, 29 Jun 2010 03:49:00 +0000

Reliance Industries (RIL) and Reliance Natural Resources (RNRL) have entered into a new gas supply agreement, as directed by the Supreme Court. The Supreme Court had ordered the two companies to renegotiate the Gas Supply Master Agreement, which was signed between the Ambani brothers as part of the business de-merger in 2005.

While the companies have not disclosed the details of the agreement, however, speculation is that RIL will supply 28 million mmscmd (metric standard cubic metres) to RNRL for 17 years at the government fixed price of $ 4.2/mmbtu. The quantity and the term of the supply are likely to be determined by the EGoM. With the gas supply agreement in place, the ADAG Group will now speed up its power generation projects.

It may take 3–4 years for creating a gas-based generating capacity of 8,400 MW, including its existing projects and the upcoming one in Dadri, Uttar Pradesh. The move improves the project visibility for upcoming power projects of ADAG. However, it does not have much implication on RIL. We continue to maintain BUY on RIL with a target price of Rs1,260.

RIL –Buy- Angel Securities 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

Mukesh Ambani – Reliance Industries buys 95% stake in Infotel Broadband : Enters Telecom Sector

admin — Sat, 12 Jun 2010 05:17:41 +0000

Mukesh Ambani owned Reliance Industries has bought 95% stake in Infotel Broadband for Rs 4,800 crore. Infotel Broadband will now be a subsidary of Reliance Industries. Shares of RIL have been buzzing of late on rumours of foray in the telecom sector.

Unlisted Infotel Broadband Services is the only firm to win broadband spectrum in all 22 zones in India in an auction that ended on Friday. The firm is paying Rs 12,848 crore ($2.7 billion) for the spectrum, the government said. Announcement of the deal came within hours of Infotel emerging as the sole winner of broadband spectrum for the entire country. Reliance would pay this fee, a source direct knowledge of the matter told Reuters on Friday.

This marks Mukesh Ambani group’s entry into telecom sector in less than a month of he and his younger brother Anil reaching a truce by ending all the no-compete agreements to enable each other an opportunity to enter and invest in areas hitherto barred under the family settlement reached in 2005 for division of Reliance empire.

RIL will invest Rs 4,800 crore by way of subscription to fresh equity capital at par to be issued by Infotel Broadband, the company said in a statement.

The share prices of both HFCL (promoted by Mahendra Nahata) and HFCL Infotel (promoted by son Anant Nahata) today rose by the maximum limit and closed at Rs 11.39 and Rs 10.14 a share respectively. RIL’s shares also surged over three per cent to close at Rs 1,046.25 a share.

Commenting on the initiative, RIL Chairman and Managing Director Mukesh Ambani said, “We see this as the next wave of value creation opportunity in the wireless broadband space. We believe this will pole-vault India’s economy into the digital world at an accelerated pace while creating next generation tools that will enhance productivity and create world-class consumer experiences.”

RIL said that BWA services can provide an opportunity to be in the forefront among the countries providing world-class 4G networks and services.

“A single 20 MHz spectrum when used with Long Term Evolution (generally known for 4G technology) has the potential of providing greater capacity when compared to existing communication infrastructure in the country,” the company said.

In the BWA space, no other player could bag pan-India spectrum. Bharti Airtel and US-based Qualcom won four circles each, while Aircel bagged spectrum in eight circles.

There are reports that RIL was also talking to a new telecom licencee, Videocon Mobile, for a possible stake in the company. Videocon’s share also went up by 0.40 per cent to close at Rs 22.20 a share.

It was reported in The Economic Times that Mahendra Nahata-owned Himachal Futuristic’s arm, Infotel Broadband Services, could be a candidate for acquisition by RIL.

The government today raised over Rs 38,300 crore as the 16-day long auction for Broadband Wireless Access (BWA) spectrum came to an end.

As many as 11 companies, including Bharti Airtel, Reliance, Idea Cellular, Aircel, Vodafone and Tata Communications Internet Services, participated in the auction for Broadband Wireless Access spectrum.

BWA spectrum enables high-speed Internet access as well as Internet telephony and TV services. It can also be used for voice and high-speed data services.

When the brothers split up the family empire in 2005, Anil Ambani gained control of No. 2 Indian telecoms firm Reliance Communications, and his brother was widely expected to return to the industry. While third-generation (3G) spectrum allows high-speed Internet access and data transfer on mobile phones, broadband spectrum would enable firms to provide high-speed wireless data links with better coverage than fixed-line broadband — key for Internet penetration in India’s rural hinterlands, which have poor last-mile fibre connectivity.

Reliance has been working hard break into new markets and broaden its various businesses including refining, oil and gas exploration and petrochemicals, as well as expand its presence outside India. The company, which owns the world’s largest refining complex and operates India’s largest gas find, is in talks to buy a stake in the shale gas assets of US-based Pioneer Natural Resources, two sources familiar with the matter said on Thursday. In April, Reliance bought a 40 percent stake in the Marcellus Shale operations of Atlas Energy for $1.7 billion, to form a joint venture at one of the most promising natural gas deposit regions in the United States.

Mukesh Ambani – Reliance Industries buys 95% stake in Infotel Broadband : Enters Telecom Sector is a post from: Indian Stock Market Tips

Ambani to visit SA, likely to further talks with MTN: Srcs

free stock tips — Thu, 03 Jun 2010 19:00:26 +0000

After the informal talks, now Reliance Communication is engaging different strategies to once again woo the South African telecom operator MTN. Sources said to CNBC-TV18 that Anil Ambani will be visiting Johannesburg to meet the top brass of MTN on Monday.

Sources close to the development also said that even though this time R-Comm is adopting different strategy, the deal does not look possible. Sources add, “MTN can’t be acquired, it will be the acquirer.”

Besides, R-Comm’s current market cap has also slipped to USD 6.5 million compared to its earlier valuation of USD 24 billion in 2008, when the talks between the two companies failed.

Meanwhile, R-Comm is continuing its talks with Abu Dhabi’s Etisalat for selling a 26% stake. Etisalat has already appointed Standard Chartered to advise on the deal.

Ambani to visit SA, likely to further talks with MTN: Srcs is a post from: Indian Stock Market Tips

RIL-RNRL: How do legal, sector experts read the verdict?

free stock tips — Sat, 08 May 2010 05:17:32 +0000

In a severe blow to the Anil Ambani group seeking cheap gas from Reliance Industries, the Supreme Court ruled that the government will have the last word on pricing.The three-judge bench of the apex court, headed by Chief Justice KG Balakrishnan, ruled in favour of Reliance Industries. The court held that the government’s production sharing contract (PSC) was supreme and hence the Ambani family MoU was not binding.

The court also directed Reliance Industries Limited (RIL) to initiate negotiations with Reliance Natural Resources Limited (RNRL) within six weeks to arrive at a sale agreement within the framework of government policy. The PSC dictates a price of USD 4.2 per mmBtu while RNRL wanted gas at USD 2.34 per mmBtu.

In an interview with CNBC-TV18, Hitesh Jain, Partner, ALMT Legal; Pradip Baijal, Former Disinvestment Secretary and Former Power Secretary; RS Pandey, Former Petroleum Secretary gave their perspective on the Supreme Court’s judgement.

Here is a verbatim transcript of the interview.

Q: This is much as you expected that the Supreme Court will uphold the gas utilization policy will uphold the production sharing contract and that will win Supreme Court so pretty much according to expected lines as far as your are concerned?

Jain: As I am reading the judgement in greater detail it is on expected lines. The legal position as regards binding efficacy of the MOU was very clear. There was a previous judgement of the Supreme Court which the Supreme Court has relied in the Rangarajan case that private arrangements arrived between the shareholders are not binding upon the company. So that is also on expected lines.

As regards NTPC, also this judgement is not going to affect because that has been left to the EGoM and the government. So the judgement according to me is on the expected lines.

Q: The Supreme Court has asked both parties to actually to go back and renegotiate and come back within a period of 6-8 weeks and put together a new re-negotiated pact. The Supreme Court in its order says the tenure of such contracts cannot be such that it initiates a development plan as approved by the government therefore the GSMA and the GSPA entered into with RNRL should fix the price, quantity and tenure in accordance with the production sharing contract. So what room really then is there for renegotiation how do you see this re-negotiation roadmap because Harish Salve the Reliance counsel himself is unsure?

Jain: The guidelines have been laid down by the Supreme Court. As far as RNRL is concerned they would look at two guidelines which has been observed by the Supreme Court.

First is interest of RNRL shareholders as reflected in the MoU and the second is overriding public interest.

It is possible on the ground that to promote the industry, to promote the power sector – some concession has to be made in terms of price and if the parties arrive at a unanimous decision and the government feels that it is in the overall public interest that the industry has to promote it then there can be some room of manoeuvering. There are so many grounds on which as enumerated one can really look at the negotiating table.

Q: What have you made of the verdict particularly that it restores the sanctity of the fact that the government is the sole owner of the gas and that government policy overrides any private contract?

Baijal: It’s a very powerful judgment which says that private arrangement or a family arrangement or a MOU cannot overtake public policy.

It is very important that public policy rules over such arrangements.

Q: Has the verdict in that sense brought in the much needed clarity that the government is not just the owner of the gas but also has the power to decide on pricing? Do you think the government stands vindicated today at the end of this battle?

Pandey: Yes. The honorable Supreme Court after saying that the government is the owner of the gas, they have also said that the production sharing contract overrides all other private arrangements including the MoU which was the subject matter of the case.

Under the PSC, the government has the right to fix a pricing formula, government has the right to have a gas utilization policy and all these have been upheld by the court. So this clarifies doubts, if there had been any, in the government’s mind there was no doubt at all, but there were lurking doubts here and there. So that has been set at rest and the position is very clear.

Q: Mohan Parasaran has said that the case as far as NTPC is concerned is different. This is what we were discussing even yesterday on how this judgment is actually going to impact the current battle thats on in the Bombay High Court between Reliance and NTPCL, what Parasaran clearly suggesting that the yard stick there is different because NTPC is in instrumentality of the state. The profits will actually go to the government and hence this should be treated differently. What are your comments on that?

Jain: NTPC can derive a support from the judgment because the judgment clearly states it is the government who is the owner of the property. Now NTPC being a government arm, it gives a right to the government to discriminate and give a concession to NTPC. The government can justify such concessions, the government can justify that this is not a discrimination and NTPC being an own entity, the government can say that if we are selling to our own arm, we are entitled in public interest to sell at a reduced price also.

So even if the government fix that for the private purchasers, the price will be x and for the government entities it will be lesser, the government will be right in doing so.

Q: Could a different set of yardsticks be used as far as the issue with NTPC is concerned and from a government’s stand point what could be the changed situation?

Baijal: It is absolutely correct that the instrumentality of the government can be charged a concessional price. But it creates a plethora of problems in regulation. After all when you liberalized the private sector companies which entered the telecom network or the gas network, they have to have a level playing field with the public sector company.

So if you come up with a thesis later that the public sector companies have to be given a concession in the price then it will lead to a number of questions and perhaps a determination later. And their par price will also be different if they get the sources cheaper. That will be a very difficult arrangement to sustain in the long run.

Q: Just a point about what the Supreme Court has asked the brothers to do. It has asked them to go back and renegotiate the contract. To your mind what could be the scope for renegotiation?

Pandey: We have really not applied our mind to that. We were not really concerned about what the two private corporates would be doing amongst themselves. But it’s a good thing if they could sort out their dispute through renegotiation then there is nothing like that.

In fact this was one of the options given by the Bombay High court also. If you look at it carefully there were four options and the last two options were about having a new set of agreements or asking for damages etc.

So I really do not know how the renegotiation will be done because I have not gone into the entire dispute. But this is a window through which they can sort out their differences and that is welcome.

Q: We have already heard Anil Ambani saying that they are not looking at filing an review petition at least at this point in time. But what is their thinking going to be to your mind because clearly the family MoU was the basis, the foundation of the division of assets between the 2 brothers. Clearly the gas agreement between the 2 as part of that family MOU was done at a certain valuation. Now that does not stand any more. It puts into question the division of assets per say so. What would you think could be the thinking as we enter into this renegotiation as part of this larger family MoU which even Harish Salve says the court is up held could perhaps be the guiding principles?

Jain: As one reads the judgment in detail, it becomes clearer and clearer. The judgment explicitly states that the court cannot rewrite the scheme of merger again and that the court cannot rewrite the MoU.

Secondly, the Supreme Court in expressed word has also observed that it is the discretion of the EGoM and under the PSC for the government to decide the pricing issue. So one thing the Supreme Court has clearly left that no courts in future can get into this aspect of fixing the price because the Supreme Court said that we do not have an expertise to come to a suitable arrangement or fix the price. It is the prerogative of the government.

With these two clear guidelines when they sit on the negotiating table, one is clearly aware about what his rights are there in the future. Therefore one can see that the Supreme Court has paved the way for parties to sit together and come to the negotiating table.

Q: What the court has also said is that it is high time that the government actually puts a suitable utilization policy, a suitable gas policy in place. Now Mr Jain has already talking about the fact that the court doesn’t want to intervene in future it’s going to be left to the government, its going to be left to the Empowered Group of Ministers. There was a question on whether it should be retrospective or not retrospective, the court has clearly delivered its verdict on that front. We have already heard from our sources that in the past fortnight or so Reliance Industries has asked the government or stated that even USD 4.32 or even USD 6 is not viable anymore. So how do you actually expect now the government to approach the entire issue of pricing a national asset like gas?

Baijal: These are very complex issues. The prices of gas change the world over. We import gas, we import other sources of energy, we import naphtha. Now to say that the Indian indigenous price for some reason will be very different is not sustainable. You can’t have a very low indigenous price and a high import price because that would lead to a situation where the importers will get a much higher price and the indigenous producer will get a smaller price, which will inhibit his ability to invest further in getting resources in India.

And that is very important that the price should be fixed by the government. But the production sharing contract very clearly says that it should be based on commercial principles, and that is what the government has done.

Now as the volatility increases or as the problems increase or as you find resources which are very expensive to explore but yet you see that the world prices have gone up maybe the government will have to take a view. That is precisely what the honorable Supreme Court has said that we leave it in the area of government and the government and the experts will sit down together and decide on these issues. These issues cannot be sorted out very quickly they will need a lot of deliberation.

Q: There is a stipulated period between which these two brothers have to actually arrive at a renegotiative pact. This is only in the well known speculation. If in deep they cannot arrive at a renegotiative pact by that time what then is the future course of action or what then happens really to where things stand?

Jain: According to me, six or eight weeks cannot be sacrosanct if the parties need 12 weeks or 2 months or 3 months and if the parties think that they are closer to the settlement, they can try and explore in the extended time.

In view of the guidelines, the parties would try to achieve the settlement as expeditiously as possible or wait for the settlement. If the settlement is not possible then the court said that you have to come with a suitable arrangement and go back to the company court. So then the parties will be back to the courts.

Source : Money Control

RIL-RNRL: How do legal, sector experts read the verdict? is a post from: Indian Stock Market Tips

Reliance Capital (RCap) shifts focus to five businesses

free stock tips — Tue, 04 May 2010 07:07:05 +0000

Marking a clear shift of strategy, Reliance Capital Ltd, or RCap, has decided to drastically reduce its dependence on the sale of securities to shore up earnings and instead focus on five core businesses—asset management, brokerage, consumer finance, life and general insurance.

New businesses, including private equity (PE), mortgages and asset reconstruction, remain peripheral.

Besides, it will also divest its stake in some of the core businesses to raise return on equity. The divestment process could begin as early as this quarter.

The flagship financial services firm, owned by the Reliance- Anil Dhirubhai Ambani Group, is looking to close at least two divestment deals in 2011 fiscal, besides ensuring that both its life and general insurance businesses break even—a critical milestone for RCap if its “core businesses” have to turn in sizeable profits.

Speaking to Mint hours after a conference call for analysts on Monday, RCap’s chief executive Sam Ghosh said: “We earlier made most of the profits from our investments to make sure there was dividend payout” for the shareholders. The objective now is earn-it-and-distribute-it and ensure “superior return” to shareholders.

“We now want to generate most of the profits on a sustainable basis from our core businesses,” he added, referring to RCap’s interests in asset management, brokerage, consumer finance, life and general insurance. The key word is “driving profitability”.

The numbers bear out this strategic change. A 3 May note put out by Alchemy Share and Stock Brokers Pvt. Ltd’s sector analyst Shashin Upadhyay has analysed that the “finance and investment” segment in the last quarter contributed merely 14.1% to overall revenues, down from 16.1% in the immediately preceding quarter and 38.7% in the March quarter in 2009.

RCap’s 2009-10 net profit, reported on Saturday, fell 57% to Rs435 crore and by nearly 80% for the January-March quarter to Rs65 crore—making it the fifth straight quarterly dip. Revenue rose 3% to Rs6,141 crore. Ghosh, however, remains unperturbed by the numbers. He agrees the period is transitional, but “not painful”, saying this was in line with the carefully thought-out strategy.

RCap lost 0.84% to close at Rs733.05 even as the benchmark index of the National Stock Exchange, the 50-stock Nifty, closed at 5,222.75 points, 1.05% lower. In the last year, the Anil Ambani firm has gained 29.53%, lagging the 43% gain of the Nifty, of which RCap is a constituent.

The core verticals, the company anticipates, should double this year and touch Rs1,000 crore in the next few years. Meanwhile, both life and general insurance businesses are expected to break even this fiscal.

“The focus is on the core businesses and we will do whatever needs to be done to make them profitable,” Ghosh said.

“There will be a divestment announcement in the next one quarter and by the end of this fiscal, we should close two divestment deals. This will reduce our capital investment and improve our returns on equity,” Ghosh explained, but refused to comment on which specific verticals could sell a stake, to whom and at what valuation.

RCap’s life insurance venture is expected to sell 26% stake to the Zurich-based reinsurer, Swiss Reinsurance Co. Ltd while its general insurance unit—a laggard in RCap’s portfolio that nearly doubled its losses last year—is also in talks to hammer out a deal to partner British firm RSA Insurance Group Plc after Sundaram Finance Group exits the Royal Sundaram Alliance Insurance Co. Ltd.

The claims under the health insurance portfolio are a drag on the general insurance segment’s profits, but RCap says it has “significantly reduced its exposure to group mediclaim products” and has received the insurance regulator’s nod to re-price its retail product some 150% higher.

RCap has also started a spate of new businesses such as corporate lending, mortgages, PE, merchant banking, asset reconstruction and a commodity spot exchange.

These businesses, with less than 5% contribution to overall revenue and even less to profit, were currently supplementary to RCap. None of these businesses, started in the last 12-18 months, have really taken off.

RCap’s corporate loan book is now around Rs2,500 crore and that of mortgages Rs2,300 crore. The PE fund, which has raised about Rs1,000 crore from domestic institutional investors and high networth individuals, wants to raise funds overseas.

It has also started buying and selling government bonds in a small way as it prepares to set up a primary dealership. Its application seeking a licence for primary dealership has been pending with the Reserve Bank of India (RBI).

RCap also wants to set up a bank. RBI will release a discussion paper on new bank licensing norms by July and an external committee will be appointed to vet the applications.

A Mumbai-based analyst with a domestic brokerage said he was having trouble crunching numbers and arriving at a sum-of-the-parts valuation for RCap as the company was “restructuring and reorganizing so much, but RCap (and its profits) is certainly through the trough”.

The restructuring seems far from over, especially with the divestments, a probable initial public offering for the life insurance business and a banking licence that RCap is avidly looking for as soon as RBI clearly spells out who can make the cut.

Source : Live Mint

Reliance Capital (RCap) shifts focus to five businesses is a post from: Indian Stock Market Tips

Ambanis now fighting over trademarks for Reliance Finance Vs Reliance Financial

free stock tips — Fri, 26 Feb 2010 02:43:22 +0000

Days after the Reliance-Anil Dhirubhai Ambani Group (R-Adag) opposed Reliance Industries Ltd’s (RIL) trademark application for “Reliance Finance”, the latter has hit back by opposing R-Adag’s application to trademark the similar-sounding “Reliance Financial”.

An R-Adag spokesperson said the group would fight RIL’s opposition.

An RIL spokesperson declined to comment.

The R-Adag spokesperson referred to a 2005 agreement between estranged brothers Mukesh Ambani —who controls RIL—and Anil Ambani, in which the two brothers apportioned the united Reliance group’s businesses between themselves and said financial services was “part of R-Adag”.

The trademark spat between the companies controlled by the brothers, who have been fighting a legal battle over natural gas, is interesting because it is the first time they are sparring over trademarks. Both groups have displayed restraint and ignored conflicting trademark applications from the “other Reliance” in the past.

Earlier this month, R-Adag had opposed Reliance Retail Ltd’s application to trademark Reliance Finance, a brand name under which it would sell financial services products.

RIL’s response to this is its opposition to R-Adag’s attempt to trademark Reliance Financial for financial services products.

Reliance Retail, too, has opposed this separately. Both oppositions were made on 15 February, according to the trademark office’s website. It takes years for India’s Controller General of Patents, Designs and Trademarks to process any trademark application before opening them for public scrutiny.

Both R-Adag and RIL had made their applications in 2007 and the trademark office put these applications in the public domain late last year. Objections have to be made within four months of the applications being placed in the public domain.

On earlier occasions, the rival Reliance groups have turned a blind eye to conflicting trademark submissions. For instance, RIL has already registered Reliance Big in the retail and hospitality sector, though R-Adag uses the Big brand name for its entertainment and media businesses.

R-Adag, in turn, has registered Reliance Big Retail, though RIL operates a billion-dollar retail venture under the Reliance Retail brand.

Ambanis now fighting over trademarks for Reliance Finance Vs Reliance Financial is a post from: Indian Stock Market Tips

Reliance Capital’s plan to acquire stake in Quant Capital puts the stock in green

admin — Sat, 28 Nov 2009 18:39:48 +0000

Reliance Capital is currently trading at Rs 831.10,up by 4.30 points or 0.52% from its previous closing of Rs 826.80 on the BSE.

The scrip opened at Rs 802 and has touched a high of Rs 838.45 with a low of Rs 730. So far 1413067 shares were traded on the counter. The BSE group ‘A’ stock of face value Rs 10 has touched a 52 week high of Rs 1066 on June 5, 2009 and a 52 week low of Rs 274.20 on March 9,2009.

The scrip price has witnessed a correction of 4.06% since last week and an upswing of 4.89% since last month.

Reliance Capital proposes to take a majority equity stake in Mumbai-based Quant Capital Group. The existing management team at Quant Capital will continue to be responsible for its operation.

Reliance Equity International (a wholly owned subsidiary of Reliance Capital) and Quant Capital will integrate operations to achieve full benefits of business synergies, cost optimization and increased scale of operations.

Reliance Capital, part of the Anil Dhirubhai Ambani Group (ADAG), has interests in asset management and mutual funds; life and general insurance: private equity and proprietary investments.

Reliance Capital’s plan to acquire stake in Quant Capital puts the stock in green is a post from: Indian Stock Market Tips

Reliance Power gets 4,000 MW Tilaiya UMPP

free stock tips — Wed, 28 Jan 2009 21:19:00 +0000

The project entails an investment of Rs16,000 to Rs18,000 crore and will have a debt equity ratio of 70:30

Anil Ambani Group firm Reliance Power today bagged its third 4,000 MW Ultra Mega Power Project, at Tilaiya, in Jharkhand.

“Reliance Power has bagged the 4,000-MW Ultra Mega Power Project at Tilaiya in Jharkhand,” a source said. The Reliance bid for the project was Rs1.77 per unit.

Five companies including NTPC, Reliance Power, Lanco Infratech, Jindal Power and Sterlite Energy, of the 11 pre-qualified bidders, were in the fray for the project.

The financial bids for the project were opened today. A high-level committee, which includes state representatives from Bihar and Jharkhand, selected the developer.

The financial and technical bids for the coal-based thermal power project were invited on 29 December and the final financial bids were to be opened within 15 days.

The bidding process for the UMPP had been delayed due to various reasons, including the global slowdown.

Apart from the delays in bidding, the Tilaiya project faced loss of time on identifying the site, getting the water source and obtaining other regulatory clearances.

The project entails an investment of Rs16,000 to Rs18,000 crore and will have a debt equity ratio of 70:30.

PFC is the nodal agency for UMPPs and is facilitating the process of selecting the developer of the Tilaiya project.

Tilaiya is the fourth UMPP to be awarded to a developer. Earlier, two UMPPs bagged by Reliance Power are those of Sasan and Krishnapatnam. Tata Power got the Mundra UMPP.

The financial closure for Tata Power’s Mundra project has been completed and the other two are expected to follow suit.

Source : Livemint

Reliance Power gets 4,000 MW Tilaiya UMPP is a post from: Indian Stock Market Tips