Market players were cautious over Reliance Industries on Wednesday following reports that Sebi has asked CBI to probe into UTI's subscription to the company's debenture issue.
The debenture issue was made in the mid-1990s.
The reports precipitated a subdued trend in Reliance Industries, as it slipped 1.18% to Rs 289.05 by 10:05 IST. A total of 97,331 RIL shares changed hands on BSE by then. This was a reversal of trend on the counter, as it had gained 11.13% to Rs 292.50 from Rs 263.20 in the 21 sessions between 31 January and 4 March 2003.
According to media reports, the Securities Exchange and Board of India has suggested that the debentures issued by RIL in the mid-1990s, subscribed to in a big way by mutual funds behemoth Unit Trust of India, be probed by the Central Bureau of Investigation.
Sebi has also initiated investigation proceedings with respect to the validity of the debenture issue.
But, geopolitical tensions are also being blamed for a weak RIL today, as also for other pivotals. Some analysts say, that, in fact, the probe should not have a major bearing on RIL, unlesss, ofcourse, some major discrepancy becomes evident.
RIL was also subject to some rumours (about over a month back) on irregularities in allotment of equity shares to UTI in 1994. But RIL denied these, charging a section of the media with being deliberately manipulated by its corporate rivals, as part of a continuing campaign of calumny and disinformation, to repeatedly sensationalise issues which are more than 8 to 10 years old, and on which there were no adverse conclusions against the company.
RIL said the matter relating to the allotment of shares to UTI in 1994 was examined at great length in the past, by various regulatory authorities, including Sebi, the Department of Company Affairs, several audit firms, and various committees constituted by the government.
The company said that on successive occasions, three finance ministers have commented on this matter on the floor of Parliament. CBI had also filed affidavits on the matter before the Delhi High Court.
The company said it was consistently stated by each of these authorities / organisations that there were no irregularities in the allotment made to UTI, and no further investigations were necessary.
Further, the Tarapore Committee recorded a categorical finding that these investments in RIL shares by UTI were profitable.
RIL reiterated that it complied with all applicable laws, rules and regulations, and that the allotment to UTI in 1994 was properly and validly made. The company said it received legal opinion from an eminent senior counsel, confirming that there were no irregularities in this matter, and that the company and its board of directors acted in good faith, and in proper exercise of their powers in making such allotment.
RIL is basically a petrochemicals maker (the largest in the country) and a petroleum refiner (after it merged group company RPL with itself). The company has emerged as among the largest private sector players in the oil exploration segment as well.
RIL registered impressive results for the third quarter ended 31 December 2002. It posted a 24% rise in net profit to Rs 1,083 crore (Rs 10.83 billion), compared to Rs 873 crore (Rs 8.73 billion) in the corresponding period of the previous year. Total income increased by 7.58% to Rs 11,243 crore (Rs 112.43 billion) from Rs 10,450 crore (Rs 104.5 billion) in DQ 2001. The figures for the corresponding previous period have been restated to include the effect of the amalgamation of Reliance Petroleum with RIL with effect from 1 April 2001.
The promoters hold 43.7% equity stake in RIL, while the public, domestic and foreign institutions hold 15.3%, 13% and 26.4%, respectively.
BSE code: 500325
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