The Telegraph
Since 1st March, 1999
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Ambanis bicker over cash payout

Mumbai, March 2: The Anil Ambani camp has fired another broadside against the Mukesh side by claiming that it hasn’t been given Rs 3,100 crore in cash as part of the settlement.

The cash component was to have been given by Reliance Industries Ltd (RIL) to Reliance Communications Ventures Ltd (RCoVL) as part of the demerger of the telecom undertakings within the group.

“RIL transferred only Rs 372.08 crore in cash to the company,” RCoVL said in its revised information memorandum submitted to the stock exchanges. “The balance amount of Rs 2,727.93 crore was transferred in the form of deep discount bonds of Reliance Communications Infrastructure Ltd (RCIL) held by RIL.”

The Anil camp claimed that they were shortchanged when RCoVL was still under RIL’s control and the action was taken without the knowledge of Anil’s representative on the board at that time.

Reliance Communications Ventures is due to list on the bourses on March 6 ' the last of the four companies that were demerged from RIL and given to Anil.

The Anil camp claimed it had “decided to take appropriate steps” to recover the amount but admitted that there was no certainty that the action could be reversed. “This has reduced the financial flexibility of RCoVL,” it said in the detailed risk factors given in the 92-page document.

There were other grouses as well: the Anil camp said the Mukesh side had not signed an agreement with RCoVL to provide support in the form of export obligations to enable capital goods imports worth Rs 10,000 crore under the EPCG scheme. Companies are allowed duty-free import of machinery if they can show export earnings that match the foreign exchange outgo.

“RIL has not yet executed any agreement in connection with this obligation. The reconstituted board has decided to take appropriate steps to enter into appropriate agreements with RIL in line with the agreed position to protect interests of the company and its shareholders,” RCoVL said.

The other sticking point is over the manner in which RIL leased out 12 properties to RCoVL for a period of 99 years. This was done through an agreement on shared services that RIL executed with RCoVL on January 14 when it was still under the Mukesh side’s control.

RIL officials declined to comment on the issues raised by the Anil Dhirubhai Ambani Group.

However, sources said Reliance Industries had invested Rs 2,700 crore in RCIL and was issued these deep discount bonds. It merely transferred the bonds to RCoVL, the holding entity for the telecommunications operations.

They also contended that RIL was ready to sign an agreement with the Anil group to provide support in the form of export obligations to enable capital goods imports. They said RIL had notched up exports of over Rs 25,000 crore last year and it would not be a problem. But they claimed the Anil group had not approached them with the request for such an agreement.

Earlier when Reliance Infocomm Ltd was under the control of RIL, some equipment was imported under this scheme and subsequently handed over to Reliance Infocomm.

RCoVL, which is the telecom undertaking demerged from RIL, has three main operating firms within its fold. These include Reliance Infocomm, Reliance Communcations Infrastructure Ltd (RCIL) and Reliance Telecom Ltd (RTL). This apart, it also has holdings in World Tel Holding. It holds 45.34 per cent in Reliance Infocomm, 45 per cent in RCIL, 35.60 per cent in RTL and 3.98 per cent in World Tel Holding Ltd (Bermuda).

In its information memorandum, RCoVL has revealed that as of December 31, 2005, Reliance Infocomm had an accumulated loss of Rs 2,685.87 crore and RCIL had an accumulated loss of Rs 2,204.98 crore. This comes after both these entities made provisions for Rs 2,382.93 crore and Rs 2,104.20 crore respectively on account of bad debts, inventories, claims from government authorities, impairment of assets and other expenditure.

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