Ambanis’ Faceoff
National policy above family pact: RIL
Legal Correspondent

New Delhi, October 20
Mukesh Ambani-led Reliance Industries Ltd (RIL) today pleaded in the Supreme Court that the MoU signed with Anil Ambani’s Reliance Natural Resources Ltd (RNRL) for the supply of gas at a lower price could not over-ride the price fixed by the government at $4.2 per unit.

Beginning the arguments before a Bench headed by Chief Justice KG Balakrishnan, RIL’s senior counsel Harish Salve said the MoU for the sale of gas at $2.34 per unit was part of the family reorganisation pact, but this had become void following the price fixed by the government.

At the beginning of the hearing, Justice RV Raveendran said he held equal number of shares in both RIL and RNRL and if any of the contending parties had any objection he would opt out of the Bench. But all parties said they had no problem with the Judge being part of the three-member Bench, the other being Justice P Sathasivam.

Justice Raveendran said the shareholders of the two companies were the same and as such the case was a sort of “proxy war or shadow boxing” being restricted to the two brothers.
Salve said the Bombay High Court had erred in directing the RIL in June to supply gas from the Krishna-Godavari basin to RNRL as per the price agreed in the MoU. RIL should not be asked to subsidise RNRL, he argued.

The Bench said its queries to the contending parties should not be reported as its observations. The court later adjourned the matter for further hearing tomorrow, when RIL will continue arguments.

PTI adds: Salve argued that the MoU signed by the family members of the promoter group was conditional on fulfillment of conditions.

The RIL counsel said the RNRL petition referred to an agreement reached between promoters, but it did not refer to any document (MoU) nor was any such document produced before the single judge.

“It is RIL’s case that the MoU was not placed before the board and that the members of the board had no knowledge of the terms of the MoU,” the counsel said, adding that the division bench had relied upon the media reports and the board resolution to come to a positive finding that the MoU was placed before the board.

On RNRL’s contention that the government had no role in price fixing for the gas committed to it by RIL, Salve claimed that ADAG, in a presentation to Ministry of Chemicals and Fertilisers in June 2007, had “virtually appealed to the government to fully regulate the gas sector in the country by fixing the prices”.

RIL said while the Gas Sale Master Agreement (GSMA) was approved by the boards of RIL and RNRL, the latter then challenged the same agreement in January 2006 on the grounds of fraud.

Besides, RNRL had alleged that the GSMA was thrust on it but another letter by an affiliate company of ADAG had asserted that the agreement was valid and legally binding.

“This letter has not been produced by RNRL, and has come into the possession of RIL recently,” Salve added.

IOC okays 1:1 bonus issue

Mumbai, October 20
Just days after petrochemical giant Reliance Industries declared a surprise bonus issue, state-run refiner Indian Oil Corporation today said it would give one free share for every scrip held by its shareholders.

Indian Oil Corporation will dole out the bonus shares after a gap of six years. The last time the company had declared a bonus issue was in 2003.

The shareholders of IOC, by way of postal ballot, have approved the 1:1 bonus issue, IOC said in a filing to the Bombay Stock Exchange.

The company has fixed October 30 as the record date for the purpose of ascertaining the eligibility of shareholders for the issuance of bonus shares, 
it added.

Earlier this month, the board of Reliance Industries, after a gap of 12 years, had recommended a 1:1 bonus issue for its shareholders, which the company said would help unlock value.

Meanwhile, shares of IOC closed at Rs 640.15, up 0.10 per cent on the BSE. During the day, the scrip had gained 0.86 per cent to a high of Rs 645.

The board of IOC had last month approved the bonus issue of one equity share of Rs 10 each, for every share of Rs 10 each held.

Post bonus issue, the paid-up equity capital of the company would stand revised to Rs 2,427.95 crore, from the present level of Rs 1,213.98 crore. — PTI

Toyota mulls launching hybrid vehicles in India

Toyota Motor Corporation executive vice-president Yukitoshi Funo (L) and Toyota Motor Korea CEO Taizo Chigira pose with a Camry Hybrid at the launch of the company’s business in South Korea on Tuesday. Analysts say the move could eat into Hyundai Motor Co.’s dominance in the local market. — AP/PTI

Tokyo, October 20
The world's largest car maker, Toyota, today said it was considering introducing hybrid vehicles in India, besides working on other alternative fuel models for the global market.

"We are looking at introducing hybrid vehicles in India and currently we are studying the market," Totota Motor Corporation (TMC) assistant manager (Global Strategic Planning Group) Katsuhiko Koganei told a group of visiting Indian journalists here.

The new vehicle to be launched in India would be a passenger car, he added.

Koganie, however, declined to give any time frame or the likely-hybrid model which would be introduced in India.

Sources close to the development said the company could launch its successful hybrid car 'Prius' in India, depending upon its ongoing feasibility study.

On the initiative taken by the company on alternative fuel technology, TMC project general manager (R&D management division) Yutaka Matsumoto said, "We are working on bio-fuel, natural gas and hydrogen-based vehicles. Toyota develops and offer products based on the 'right vehicle for the right place at the right time concept”.

The company would start leasing about 500 units of Prius with lithium-ion battery in Japan, US and European union countries. — PTI

RBI moots base rate mechanism

Mumbai, October 20
To introduce greater transparency in pricing of loans given by banks, a Reserve Bank committee today suggested that the benchmark prime lending rate (BPLR) system should be replaced with a base rate mechanism.

Under the proposed mechanism, all banks will be required to declare a base rate and charge interest rates over that depending upon the credit profile of the borrower and repayment period.

At present, banks fix interest rates on loans with reference to BPLR.

“The proposed base rate will include all those cost elements which can be clearly identified and are common across borrowers,” said the RBI working group report on BPLR.

The base rate, it added, would also serve as the reference benchmark rate for floating loan products. — PTI

Morgan Stanley to sell retail asset biz

New York, October 20
Financial services entity Morgan Stanley, one of the worst hit by the economic turmoil, will sell its retail asset management business to Invesco in a cash and stock deal worth $1.5 billion. Both companies have entered into an agreement for the deal, which is expected to close in mid-2010.

Invesco said on Monday it would acquire Morgan Stanley's retail asset management business, including Van Kampen Investments for $1.5 billion.

The transaction would comprise $500 million in cash and 44.1 million shares representing $1 billion in Invesco equity. It would also give Morgan Stanley a 9.4 per cent equity interest in Invesco. Once the deal is complete, Invesco would have about 700 investment professionals.

In India, Morgan Stanley has a good presence in various business segments, including investment banking, sales & trading, fixed income and private wealth management services. — PTI

3G Auction
Raja asks FM to intervene
Tribune News Service

New Delhi, October 20
Having written to Cabinet Secretary KM Chandrasekhar seeking his intervention in vacating of spectrum by the Defence, Telecom Minister A. Raja has now written to Finance Minister Pranab Mukherjee’s to help clear the decks for release of the spectrum.

Raja has written to the Finance Minister holding the Defence Ministry responsible for delaying the auction process, as vacating of spectrum by defence forces is imperative for 3G spectrum auction.

“If this issue is not resolved quickly, I apprehend that the revenues anticipated from 3G auction might not be forthcoming this year,” Raja said.

“I request you to kindly intervene in this matter, so as to enable the 3G auction to be completed during this year,” Raja said, while suggesting that Mukherjee might hold a meeting with Defence Minister AK Antony on the issue. 

World stocks hit a new 12-month high
Dollar at 14-month low against major currencies

London, October 20
World stocks hit a new 12-month high on Tuesday, powered by strong results from Apple Inc and Texas Instruments and helping to push the dollar to a new 14-month low against a basket of currencies.

The strength in global stocks, up 75 per cent from crisis-lows in March, boosted optimism on corporate earnings and the global recovery, encouraging traders to sell dollars for higher-yielding currencies.

Crude prices, meanwhile, eased from their earlier highs but gold prices firmed and safe-haven government bonds were steady.

The MSCI All-Country World Index was up 0.2 per cent at 300.10 points, after hitting 300.77, its highest level since late September 2008. Emerging equities rose 0.3 per cent, hitting a new 14-month high.

Japan's Nikkei gained 1 per cent while US stock index futures were up 0.2-0.7 per cent, pointing to a higher start for Wall Street. The FTSEurofirst 300 eased 0.1 per cent after Monday's sharp gains.

"It is what I call 'steady as she goes'. Stay in the asset classes that are doing well for the moment. Don't get carry away," said Michael Dicks, head of research and investment strategy at Barclays Wealth.

Meanwhile, the dollar fell 0.3 per cent to 90.35 yen, while the euro was at $1.4973 after touching its highest level in 14 months at $1.4994 earlier, a tad short of $1.5000.

The US currency has been under sustained pressure this year due to expectations for low US interest rates and questions about its status as the world's reserve currency.

Comments on the euro's strength from an adviser to French Presient Nicolas Sarkozy and a Market News International report quoting an unnamed Chinese government source calling for a reversal of the dollar's slide had limited impact.

But in Asia, the yuan jumped against the dollar in benchmark offshore non-deliverable forwards (NDFs) as overseas speculators bet on long-term appreciation of China's currency. — Reuters

Tech Mahindra net dips 44 pc

Mumbai, October 20
The country's fifth largest software exporter, Tech Mahindra, today reported a 44 per cent fall in its consolidated net profit at Rs 168.95 crore for the second quarter ended September 30, 2009.

The company had a net profit of Rs 302.90 crore in the same quarter in FY'09, Tech Mahindra said.

The company's consolidated revenue stood at Rs 1,141.80 crore in the latest quarter, a minor drop of two per cent over the year-ago period.

Tech Mahindra has a debt of Rs 2,179 crore as of September 30, 2009, and during the second quarter, it refinanced Rs 1,150 crore of debt to reduce the effective interest rate on the debt portfolio to 8.7 per cent per annum, the filing added.

The figures do not include the financials of Mahindra Satyam, which Tech Mahindra took over in April this year.— PTI