Bank deposits, debt were Reliance Ind`s choice to park money Arvind Jayaram RIL trebled its investments in certificates of deposit with scheduled banks. This was a departure from the previous year, when the company parked most of its money in mutual funds. BL Research Bureau: Just like ordinary investors, Reliance Industries (RIL), the most cash-rich company in the private sector, played it safe with its investments in 2011-12. Its latest annual report shows that it sharply increased its time deposits with banks and invested more in debentures from institutions such as HDFC this year. It also moved money out of fixed maturity plans (close end mutual funds) to park it in short-term debt funds that allow any-time withdrawals. Over the year, RIL trebled its investments in certificates of deposit with scheduled banks. This was a departure from the previous year, when the company parked most of its money in mutual funds. The company invested Rs 15,720 crore in certificates of deposit in 2011-12, compared with Rs 4,632 crore the previous year. Interest rates on certificates of deposit rose steadily from 7.3 per cent to 11.5 per cent last year, as a scramble for deposits prompted banks to raise rates for large corporates. Another Rs 6,247 crore was invested by the company in debentures and bonds. This was up 35 per cent over 2010-11. RIL`s two largest bond buys were of Housing Development Finance Corporation (Rs 1,822 crore) and IDFC (Rs 1,060 crore). RIL`s mutual fund investments fell 0.5 per cent to Rs 5,057 crore during the fiscal. But within mutual funds, RIL trimmed exposure to fixed maturity plans and switched to short-term debt and dynamic bond funds. These are actively managed to capitalise on rising rates on corporate paper. It invested Rs 1,021 crore in bond funds from Birla Sunlife, DWS, ICICI and LIC mutual funds. It made minimal bets on government securities, at Rs 5 crore. As of March 2012, the company`s cash balances and short-term investments totalled Rs 66,627 crore. This was a 60 per cent jump from the same date last year. According to the company`s annual report, its current investments rose by 87 per cent to Rs 27,029 crore. Apart from this, it also chose to hold to plenty of liquid cash. After investments, the company`s cash and bank balance registered healthy growth to Rs 39,598 crore. arvind.jayaram@thehindu.co.in http://t.in.com/5n6K...

Bhusbhac, Reliance is only making good use of the opportunities presently in the global markets. In the process what it is doing is only in the national interest of capital building, GDP growth, improving our competitiveness, conserving forex etc. etc - and all this without putting any strain over the forex resources or straining our capital markets. The opportunities in global business are being intelligently leveraged. The global business is passing through lean phase. Therefore, the tech and capital imports from Russia, Europe and US are being actively encouraged by these economies, because it supports employment there. Therefore, with Reliance`s eminent creditworthiness, the financiers in these economies are too keen to give 5-10 years funding for procuring these technologies from their countries. Therefore, we have seen the butyl rubber being funded through equity participation, European procurements being funded by $ 1.5 billionlines of credit from Italian consortia and another $ 2 bn line of credit from the German consortia. and now this latest about the US sourced imports of tech from Philips 66. Likewise, Reliance has funded its overseas investment into shale gas assets in US with Bond issues of $ 1.5. So far, this brings total to over $ 6 bn. There may be more in the pipeline. And the oxymorons - the wise men of the markets - will keep making nagative noises protecting the interests of their favored CASINO. And the casino operators will continue to employ the bouncers to ward of anyone taking away their valuable chips from their casino. Hence the broken record stuck up at the same track. The company is also doing its buyback program. The CASINO owners would like their CASINO`s punting chips to be protected and would rather have RIL buying from the public`s holdings. Therefore they need to employ the rough talking bouncers, who can only speak abusive and derogatory language. ...

Firstly your posts were with regards pricing and so was my reply, if at all the narrow view was posted by me it was reflection of the narrow post from which i did not divert. I am nto for Radical treatment on either side, but i am all against blackmail when it comes to Natural Resources especially ones as important as Natural Gas... I would suggest you to re-read posts made by you and then read mine again...

And what many knowledgeable Boarders seem to be missing out is that country has to pay more on Imports not because local price is low but because local production is low and if you want to suggest that both are co-related or directly proportional then it only adds substance to the BLACKMAIL Theory as proposed by some others.. Why can not production be hiked at prevalent prices, there is no contractual obligation which says until price is hiked production can not be hiked.. IT is only the ill-intent of the Corporate which does not wish to address the issues of production levels until the Government bows down to its demands. And even if the Government does it will be a victory of blackmail tactics and not Righteousness or on Moral Grounds. IT will only be looked upon by people as another example of mi-use of Natural Resources and soon CAG will come out with another report on Loss incurred by the GoI as a result of Production Loss right now and subsequent price hike. So why is this thought process being adopted or promoted on this board that price hike is essential before production can be moved up ? It is only looking at one side of the coin and provides a semi-biased / biased view favoring 1 Party in the Contract....

IF the motive is to let GoI earn and then give subsidy, it will be another case of Financial Engineering. IT is similar to the Koutons theory of Pricing products 3x Price and then giving 66% Discount or Buy 1 Get 2 Free. I dont know how that is a gr8 achievement. Price Increase can happen only if the eventual price hike is moved to end customers . I dont know how hard that is to understand....

Of course the loss of US$ 8 bn includes the price for air (gas not produced at present). Also it suggests that GoI could make as much and subsidise where is wants to directly in form of caqsh from its share of profits. Also the figure demonstrates that by importing costly LNG then that is the figure the nation is burdened with by way of trade deficit. Hence interpret such statements the way you like it. I still maintain that the request of price revision by RIL hints at a middle course for some quantity and a marketing freedom for quantity above that as per the correspondence exchange in toto since the matter has come in dispute....

sorry that waqs in reply to the post of Mr Kiss!...

Bhusbhac, What fun is left to pick the stocks right now. I think we have lot more pain left and one can get good opportunities to pick them 15 to 20 % lower from current valuation. It is obvious current Gov is not capable of doing anything constructive to heal the economy. However I do agree with you it is similar to late 80s and ITs are good bets after the declines are showing sign of stabilizing. Jay...

The Markets ability to predict lows is over hyped. There is never a bottom in place in a bear market until there is extreme pessimism and expectations get crossed on the downside. It is not a time to go bottom fishing for precisely the reasons mentioned, If Europe does go into a prolonged Recession RIL as well as many other corporates will have a hard time with their margins. Sadly although the Currency which has weakened should help our Exports, the weakness in Currency is coming in the backdrop of a slowing Global Economy which is nullifying the positive effects for Exporters while putting additional burden on Imports....

RIL can easily bounce back to near 1000 levels if it can match Q1 and Q2 results which actually depends on global demand irrespective of the level of gas production. With the global crisis unfolding one needs to watch the situation developing in the EUROZONR area. Hence Q1 and Q2 are grey areas not only for RIL but NIFTY as well. If anything untoward develops out nation will also go bankrupt with the policies of the present administration. Hence teh fakers on this MMB are thos who are giving BUY and SELL calls whereas i am quite sure that it is a time to stay away. Firstly it is risky to short the market as the downside may be limted and secondly I expect sideways movement for tge next one or two quarters....

Bank deposits, debt were Reliance Ind`s choice to park money
Arvind Jayaram
RIL trebled its investments in certificates of deposit with scheduled banks. This was a departure from the previous year, when the company parked most of its money in mutual funds.
BL Research Bureau:
Just like ordinary investors, Reliance Industries (RIL), the most cash-rich company in the private sector, played it safe with its investments in 2011-12.
Its latest annual report shows that it sharply increased its time deposits with banks and invested more in debentures from institutions such as HDFC this year. It also moved money out of fixed maturity plans (close end mutual funds) to park it in short-term debt funds that allow any-time withdrawals.
Over the year, RIL trebled its investments in certificates of deposit with scheduled banks. This was a departure from the previous year, when the company parked most of its money in mutual funds. The company invested Rs 15,720 crore in certificates of deposit in 2011-12, compared with Rs 4,632 crore the previous year. Interest rates on certificates of deposit rose steadily from 7.3 per cent to 11.5 per cent last year, as a scramble for deposits prompted banks to raise rates for large corporates.
Another Rs 6,247 crore was invested by the company in debentures and bonds. This was up 35 per cent over 2010-11. RIL`s two largest bond buys were of Housing Development Finance Corporation (Rs 1,822 crore) and IDFC (Rs 1,060 crore).
RIL`s mutual fund investments fell 0.5 per cent to Rs 5,057 crore during the fiscal. But within mutual funds, RIL trimmed exposure to fixed maturity plans and switched to short-term debt and dynamic bond funds. These are actively managed to capitalise on rising rates on corporate paper. It invested Rs 1,021 crore in bond funds from Birla Sunlife, DWS, ICICI and LIC mutual funds.
It made minimal bets on government securities, at Rs 5 crore.
As of March 2012, the company`s cash balances and short-term investments totalled Rs 66,627 crore. This was a 60 per cent jump from the same date last year. According to the company`s annual report, its current investments rose by 87 per cent to Rs 27,029 crore. Apart from this, it also chose to hold to plenty of liquid cash. After investments, the company`s cash and bank balance registered healthy growth to Rs 39,598 crore.
arvind.jayaram@thehindu.co.in

http://t.in.com/5n6K...

MMB Messenger

There are too many scratched gramaphone records on this MMB and you are asking such technical matters of them?

What do you think? At least start the discussion with your comments whether this is a diversification or horizontal integration or a vertical integration. Else tmany on this MMB will think that RIL is on to something new despite its promise that it will increase it core business multifold. Without your comments this article is meaningless....

TondonA

Cannot understand why the scratched gramaphone record is going round and round circles merely since RIL does not seem to be heading for Rs 500.

Sure if RIL borrows from a country where it gets its plant & machinery equipment then it does help our nation not upset the exchange rate by purchasing dollars through the exchange. Whether deliberate and / or otherwise even when it helps our nation there ought to be some change in attitude and if not at least the discussion should progress to a different plane and discuss current topics.

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Scratched gramaphone record!...

jai sharemaster

Your reply is too narrow since it concentrates ONLY on the price issue.

Since more than two years Oil Ministry did not approve the capex as required under tne PSC, made discoveries no discoveries on technical grounds, also on grounds that they were not commerically viable. While the delays in approval of the capex incurred and the method of audit GoI insisted on four more wells being drilled. It is not for me or anybody to say about the correctness or not on part of GoI however a private contractor must have certainty going forward regarding capex approvals and audit. Even CAG has advised that the profit share should be in a direct form such as a royalty that would obviate the need of audit and disputes arising.

The main problem to my mind are the various DISPUTES and not necessarily the price which has affected the production of KG D6 Basin. What happened and / or transpired in the past regarding corruption and gold plating allegations has no relevance to the cost of production in actual practice which needs to be determined and WHY RIL cannot be given a price of US$ 5.25 per mmscmd as given to ONGC and ESSAR as an interim measure and / or telling the contractor that if there is production above 60 mmscmd then the higher price would be applicable.

I am suggesting MUTUALITY and not RADICAL treatment as suggested by many of you!...

Of course the loss of US$ 8 bn includes the price for air (gas not produced at present). Also it suggests that GoI could make as much and subsidise where is wants to directly in form of caqsh from its share of profits.

Also the figure demonstrates that by importing costly LNG then that is the figure the nation is burdened with by way of trade deficit.

Hence interpret such statements the way you like it. I still maintain that the request of price revision by RIL hints at a middle course for some quantity and a marketing freedom for quantity above that as per the correspondence exchange in toto since the matter has come in dispute....

Law ministry wants govt to fix gas price
Attorney general gives opinion that the power to fix market price should not be delegated to PNGRB
Appu Esthose Suresh & Aman Malik
New Delhi: The Union law ministry has said gas prices should be determined by the ministerial panel looking into the issue rather than a statutory agency such as the Petroleum and Natural Gas Regulatory Body (PNGRB).
This would effectively mean the government continues to be the sole decision-making authority on the contentious demand by producers such as Reliance Industries Ltd (RIL) to raise the price of gas. RIL pumps gas from the D6 block of the Krishna-Godavari (KG) basin and has asked the government to link the price of gas to market rates. It has sought a threefold increase in rates.
The empowered group of ministers (eGoM) headed by finance minister Pranab Mukherjee had asked the oil ministry to ‘‘suggest an appropriate regulatory authority to aid and advise eGoM on the issue’‘, and thereafter referred the issue to attorney general Goolam E. Vahanvati for advice on whether PNGRB could be asked to determine the price. Mint had reported this on 29 March. Vahanvati told the oil ministry in a 16 May legal opinion that the power to discover the market price should not be delegated to PNGRB. Mint has reviewed a copy of the attorney general’s advice.
‘‘Reference to the regulatory authority is not compulsory but discretionary. In context of the fact that the matter is being considered by an eGoM, I do not consider it appropriate that this aspect should be referred to a regulator at this stage,’‘ his opinion said.
PNGRB, which was created by an act of Parliament as an independent regulator, does not have the power to determine the price formula, he said.
‘‘In order for the central government to be able to do so (to ask PNGRB to discover the market price), suitable amendments have to be carried out in the Petroleum and Natural Gas Regulatory Board Act, 2006, and eGoM will then have to specifically delegate its powers by way of resolution,’‘ he added.
A senior PNGRB official, who did not want to be identified, concurred with this. Since the government owns the gas and allocates the fuel among various downstream sectors, it is well within its rights to determine pricing. ‘‘Moreover, PNGRB has not been notified for the job, so we cannot regulate pricing until that happens,’‘ he said.
PNGRB oversees transportation tariffs and other costs of petroleum commodities related to refining, processing, storage, transportation, distribution, marketing and sale.
An email query sent to an RIL spokesperson on Monday remained unanswered at the time of going to press.
The government’s stance could perhaps be an indicator that it does not want to lose control over key decision-making, said Dipesh Dipu, director of the consulting practice at Deloitte Touche Tohmatsu India Pvt. Ltd.
‘‘Considering the fact that there have been allegations in the past about natural resources being given away cheaply, the government would want to retain control to ensure it has the power to reconsider any decision in future,’‘ he said.
The opinion had been sought after a plea by RIL to increase prices, which had been fixed in 2009 for a period of five years, from a basic cost of US$ 4.2 per million British thermal unit (mmBtu) to US$ 14.2 per mmBtu.
RIL started supplying gas from its D6 fields in the KG basin in April 2009 to power and fertilizer firms at a base price of US$ 4.2 (Rs. 230) per mmBtu. The supply contracts end in 2014, after which they have to be renegotiated.
Vahanvati said there was no legal hurdle in the way of eGoM itself revising the price formula. Mint had reported on 2 April, citing government documents, that a price revision to US$ 14.2 per mmBtu will indirectly cost the government around US$ 8 billion.
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Scratched gramaphone record!...

avin57

The scratched gramaphone is ranting. Anyway he gave a target of 850 abd is still boasing and dancing round and round in circles.

Anyway I am NOT a buyer in this market including RIL however on the way up whenever the time is ripe I will once again pick a portfolio of stocks including banks which I sold off anf they have come to my price to book valuations.

Also if RIL collapses even further it is nothing great in the global collapse being witnessed. Even if you look at the currency markets US Dollars is 250 to 750 pips stronger than ALL global currencies for NO fundamental reason.

Once again Indian Rupees will be well under pressure on Monday and Indian investors are out of liquidity to support the market at ANY price.

I might take a shorterm call around the time of the RIL AGM.

It is not RIL but the policies of this GoI I am betting against not that it would have made much difference with the kind of global uncertainty at this point of time where a paper currency like the US$ is gaining strenght and crating huge volatility.

If QE3 in USA is announced it may be a time to take a call in the market and this time I may try out with banking stocks for a longer term outlook and faster recovery....

babboo-q

It is YOU who raised the issue that CAIRN pays royalty whereas RIL doesn`t. In fact ONGC has been footing the ENTIRE royalty whereas CAIRN was royalt free. When GoI overturned this CAIRN initiated arbitration proceedings which was compromised as the CAIRN VEDANTA deal was blocked.

So YOU are quite simply the moron hurtling false allegations....

TondonA

I wonder why so many issues being raised here? Even above any court of law is the mutual agreement to the signatory of the parties under the PSC and between the various agreements between the end users.

The way the currency markets are movong today we could be staring at Rs 55 to a US$ even at a lower crude price. Is it better to pay more money overseas or is it better to pay in Indian Rupees for domestically produced energy.

ONGC and ESSAR get a price of US$ 5.25 per mmscmd and have stated in the past that a production similar to KG D6 Basin cannot be less than US$ 6 to US$ 7. DGCH and ONGC are quite conversant about the COST so trying to enforce an agreement outside the PSC has a thin line to legal and illegality. The contractor may well have deliberately not taken steps to ramp up gas production due to the capex issues, discoveries made no discoveries and revised FDPs being struck down and sticking to the guns of frilling four wells without capex approval which was under dispute.

Even regarding CAG reports it only proves that a private enterprise which puts its own monies on stake would work differently to a PSU.

Now I think the time for delaying tactics by GoI is over and even if it has to buckle in a little it should do everything to restore the growth of this nation, give up dependence on foreign oil and gas as much as possible and let there be free trade.

At the end of the day competition (with the overseas players) should be left for the market to determine.

Time to decide whether wealth should flow out of this nation or remain here even if it is with underperfoming RIL for sometime. Afterall ONGC is with CONOCOPHILIPS so it is upto GoI to measure up with RIL.

...

hkre

Banks also do the same. RIL invests in first glass GoI bonds, FDs and Mutual Funds. Through mutual funds I suppose RIL can control the rest of the market when the time comes.

RIL cannot LEND money to anyone since it does not have license for banking as yet although it has interest in a subsidiary which does lend. Hence the other income component might be considered core if the income becomes regular in nature for two years....