Reliance sees big leap in profit
Tax waiver on capital gains comes in handy
Rs 1,500 crore to be spent on oil hunt
Enron flashes truce signal
Chrysalis to lift 7% in MphasiS
CSE men connived in margin dodge
Rs 320 cr PNB public issue this year
SBI Life debuts with Sanjeevan
Foreign Exchange, Bullion, Stock Indices

Mumbai, June 15: 
Reliance Industries (RIL), the country’s best-known conglomerate which has given shareholders years of fat returns on their money, expects consolidated net profit to soar to Rs 4,500-Rs 5,000 crore in the current financial year, chairman Dhirubhai Ambani said here today.

The bottomline will be boosted by money which is likely to be mopped up from a planned sale of shares in Reliance Petroleum, a group firm in which it holds 64 per cent at the moment. Speaking at the company’s annual general meeting (AGM), Ambani said the dilution will help unlock shareholder value, but made it clear that the absolute management control will continue to remain in the hands of RIL.

The shares would be offloaded in a piecemeal manner — in tranches spread over a period of time — in a process that will reduce RIL’s stake in the petroleum major to around 51 per cent, Ambani said.

Reliance, he said, will gain from a plan under which the financials of group companies will be consolidated with its own. Their profits will be shown in its balance-sheet in proportion to the stake. For instance, incorporating Reliance Petro’s numbers from the previous financial year could bolster RIL’s bottomline by Rs 1,000 crore.

Talking about the company’s pre-eminence in the petrochemical market, Ambani told shareholders that Reliance was the world’s second-largest producer of polyester staple fibre (PSF), and polyester filament yarn (PFY). It was the third largest in paraxylene, fourth largest in purified terepthalic acid (PTA) and sixth largest maker of polypropylene.

The company won shareholder approval for a proposal which will allow it to offer up to 49 per cent of its equity to FIIs, up from a maximum of 24 per cent earlier.

The meeting also renewed a clearance — on the same terms and conditions — it had given last year for a buyback programme.

Talking about Reliance Infocom, the vehicle for the group’s high-stakes foray into telecom and infotech, Ambani said Rs 25,000 crore would be invested over five years in basic and mobile telephony, national long-distance and international long-distance phones, besides data and value-added services.

On insurance, the RIL chief said the company would go it alone in the life and general segments, the results of which would be clear in a year.


Mumbai, June 15: 
Reliance is expected to capitalise on the tax waiver for capital gains announced in the recent Union budget.

The provision will see Reliance as one of the biggest beneficiaries, as the company is expected to make a neat profit of Rs 2000 crore from the sale of a 13 per cent stake in Reliance Petrochemicals Ltd (RPL). The proceeds are expected to be invested in the equity of Reliance Infocom.

The Reliance group, with a turnover of Rs 60,177 crore has consistently maintained that with the Indian economy opening its doors to the globalisation wave, the Union budget may have very little impact on its fortunes.

That, however, does not mean it will let opportunity go abegging. The recent Union budget had proposed that tax on capital gains be waived if the proceeds are invested in an Initial Public Offer (IPO). The move was to encourage companies to go public and jumpstart the primary market.

The partial sale of RIL’s stake in RPL will generate Rs 3500 crore, with capital gains expected to be around Rs 2500 crore.


Mumbai, June 15: 
Reliance Industries Ltd (RIL) will spend Rs 1,500 crore ($ 300 million) on exploration and production in 25 oil and gas blocks over the next three years.

“The oil and gas business currently contributes to 3 per cent of RIL’s revenues and is expected to grow significantly in the future. Investments in E&P will provide attractive returns on capital and enhance the availability of crude oil,” chairman Dhirubhai Ambani said at the company’s 27th Annual General Meeting here today.

Crude imports in the 2000-01 fiscal stood at Rs 65,932 crore, making it the single largest item on the country’s import bill.

Reliance’s E&P portfolio comprises 25 onshore, offshore, deep and shallow water blocks in the country, covering an acreage of 1.75 lakh sq kms, Ambani said.

RIL recently deployed four vessels for exploration — two each on the east and west coasts. The company has decided to raise the investment limit on foreign institutional investors (FIIs) from 24 per cent to 49 per cent of the share capital, Ambani said, adding the FIIs now hold a 23 per cent stake, whose current market value was close to Rs 9,000 crore ($ 2 billion). Reliance also plans to raise its polyester capacity by 33 per cent to 1.2 million tonnes over next two-three years, he said.

Ambani added the company will partially bring down its shareholding in Reliance Petrochemicals Ltd (RPL) from over 65 per cent to 51 per cent in tranches and is expected to generate Rs 3,500 crore ($ 750 million), plus capital gains of Rs 2,000 crore ($ 425 million).

The unrealised capital gains of RIL, on its residual investment in the Jamnagar-based petroleum company, stood at Rs 8,500 crore, the RIL chief said, adding Reliance would begin consolidating its exposure in RPL, helping to raise profits by Rs 1,000 crore ($ $213 million), he said.

Ambani said the Reliance group will invest Rs 25,000 crore in the information technology business and the company will hold a 45 per cent stake in Reliance Infocom as a lead investor.

Referring to the company’s buy-back offer, he said shareholders have approved the proposal at a maximum price of Rs 230 per share, aggregating Rs 1,100 crore.

Giving further details on the company’s E&P front, Ambani said RIL, along with Hardy Oil, had been recently awarded four exploration blocks in the second round of bidding under the New Exploration Licensing Policy.

“RIL is completing acquisition of five exploration blocks from Tullow of United Kingdom, covering 21,000 sq kms,” the RIL chairman said.


Mumbai, June 15: 
In a change of stance, Enron-promoted Dabhol Power Company (DPC) today urged the Maharashtra State Electricity Board (MSEB) to resume offtake of power and also agreed to accept the board’s “under protest” bills.

In a late night statement issued today, a DPC spokesman said that “DPC will accept any further payments by MSEB that are owed to it under the power purchase agreement.”

“This step has been taken with in order to further facilitate resolution of issues between DPC and MSEB and after discussions with DPC lenders,” the statement added.

DPC president Neil McGregor along with representatives of the multinational’s, both domestic and foreign lenders, met MSEB chief Vinay Bansal this evening and tried to persuade the board to commence drawing power from the $ 3 billion project’s 740 mw phase one, said official sources.

MSEB had stopped drawing power from DPC since May 29.

“DPC officials also expressed their readiness to accept MSEB’s protest payments without any pre-conditions and also asked for payment of the pending Rs 134 crore April and Rs 140 crore May bills,” they said.

MSEB officials told McGregor and the lenders that the payments for April and May were already adjusted in the Rs 1,200 crore claim made by the board in its petition filed against DPC at the Maharashtra Electricity Regulatory Commission (MERC).

With reference to drawing of power, Bansal made it clear to the US energy major that as per the commission’s order, the board would have to buy “costly” power as a last alternative.

McGregor also handed over a two-page letter pleading the same to Bansal, the sources said.

“Moreover, MSEB officials told McGregor that since DPC had slapped several notices including pre-termination notice, political force majeure, arbitration and conciliation, the board would seek legal implications before taking any steps,” official sources said.

With reference to the fate of DPC’s 1,444 MW phase II, they said it was unanimously voiced that Centre should emerge as a buyer and also play an active role as a facilitator.

Sources said DPC’s lenders also tried to convince the MSEB officials to resume power offtake and start making payments.


Mumbai, June 15: 
Chrysalis, a leading venture capital firm, will pick up close to 7 per cent in MphasiS BFL at a price of Rs 350 per share in a deal whose size is estimated at Rs 45 crore.

The price represents a 70 per cent premium on the MphasiS’ closing price of Rs 205.20 on the Bombay Stock Exchange today. The deal will put Chrysalis director Ashis Dhawan on the board of MphasiS. The company was originally promoted by the Bangur group but later on Barings India bought a 40 per cent stake.


New Delhi, June 15: 
The payment crisis which hit the Calcutta Stock Exchange (CSE) earlier this year was caused by brokers who manipulated margins in connivance with CSE officials and market regulators, the Joint Parliamentary Committee was told today.

Capital market experts who deposed before the JPC explained how brokers playing for stakes running into thousands of crores of rupees manipulated margins which they had to deposit before playing the market and thus were actually gambling huge notional sums with little or no guarantees.

Experts pointed out that with computerisation, not only were CSE officials in a position to know which broker had taken positions at what price on the basis of the margin money deposited but Sebi’s market regulators also had access to minute-by-minute information on the market positions.

Their point was that such manipulation could not have occurred without the connivance of Sebi and CSE officials. The CSE trading crisis had resulted in huge losses to investors and had to be covered up from reserves with national depositories. It is considered as a precursor to the bigger Mumbai exchange scam and many feel is the key to understanding the entire scam.

Market experts felt the badla system should be banned so as to protect small investors.

JPC chairman Prakash Mani Tripathi told reporters that two experts — L. C Gupta and Ajit Dey, former Calcutta Stock Exchange president — felt the forward trading system had a lot of scope for misuse which the brokers had taken advantage of.

Though the experts’ view on whether the Indian stock exchanges should have badla system or not was divergent, they were unanimous on the total misuse leading to erosion of investors’ confidence particularly that of small investors, he said

The badla system was banned in the country from 1994 to 1996 after the 1992 multi-crore securities scam. It was reintroduced after D R Mehta took over as Sebi chairman. It has now been suspended again in the wake of the recent stock scam.

The ban on the badla system reduces the volatility of the capital markets, but also grossly cuts the volume of the trading, Tripathi quoted the experts as saying.


New Delhi, June 15: 
Punjab National Bank plans to raise Rs 320 crore through an IPO later this year to shore up its capital base as well as dilute the government holding.

The bank, which posted a net profit of Rs 463.64 crore for 2000-01, an increase of 13.6 per cent over last year’s Rs 408.14 crore, cleaned up its balance sheet by providing Rs 482 crore towards tax liabilities, non-performing assets, pensions, depreciation and gratuity.

“Gross profit of the bank without VRS expenditure touched Rs 1,216 crore at the end of March 2001 compared with Rs 820.16 crore in the previous year registering a growth of 48.3 per cent,” PNB chairman S S Kohli said here today while announcing the results.

“We have already filed the documents for the IPO with Securities and Exchange Board of India. We have priced the share with a face value Rs 10 at a premium of Rs 30,” Kohli said. The bank will issue a total 8 crore shares.

He said to improve performance, the bank had embarked on a restructuring exercise, reorganising credit structure and setting up separate branches to deal exclusively with large firms.


Mumbai, June 15: 
SBI Life Insurance Company Ltd (SBI Life), the insurance joint venture between the State Bank of India (SBI) and Cardif SA, today commenced operations with the launch of ‘Sanjeevan,’ its first single premium, money-back product.

SBI chairman Janki Ballabh told newspersons today that the joint venture will soon come up with more innovative products, one of which will be a life insurance policy linked to loans disbursed by the bank. It will also unveil a product targeted for persons below 40 years of age.

Ballabh added the joint venture will not initially invest in the equity markets. As per the current regulations framed by the Insurance Regulatory and Development Authority (IRDA), insurance companies can invest around 15 per cent of the total collections in the capital markets and 50 per cent in central and state government bonds. The venture, he said, will largely invest in such bonds.

SBI Life’s insurance products will be marketed through 100 branches of the SBI and the marketing network is expected to be expanded later. Apart from the bancassurance channels (SBI branches), SBI Life will distribute products directly to corporate clients, as well as through insurance agents.

The venture is also eyeing SBI’s over 80-million strong retail accounts base.

Ballabh said Sanjeevan, targeted at VRS retirees, is designed to provide a liberal risk cover as well as tax-free annuity payments to the policy holder.

It provides life cover up to a maximum of 75 years of age and premium payment is followed by a deferment period, after which the policy holder will receive five or 10 annual instalments.

Overseas listing

Meanwhile, the State Bank of India (SBI) is gearing up for a listing on the international markets, by adopting the US GAAP accounting norms.

While the exercise relating to adoption of this accounting practice is expected to take a year, Ballabh was non-committal on when the listing would be done.

The SBI chief, however, confirmed to newspersons that the bank was eyeing an overseas listing, while hinting there could be a domestic issue as well.

At present, the Reserve Bank of India (RBI) is the single largest shareholder in the bank, with around a 59.7 per cent stake.

In its latest monetary and credit policy, the central bank governor Bimal Jalan had announced that it would sell this stake to the Union government.

Ballabh added that the bank will focus on the personal banking segment this year.

The contribution from this segment is expected to touch around 15 per cent of its total lending portfolio and will be 20 per cent after five years.



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