DB Realty boss, Balwa, arrested by CBI in telecoms scam

Balwa is to be questioned together with former telecoms minister A Raja in New Delhi

Mumbai: The Central Bureau of Investigation (CBI) arrested the managing director of DB Realty Shahid Usman Balwa last night in connection with the telecoms scandal that has hurt the government.

The CBI said Mr Balwa, who is also vice-chairman of Etisalat DB, the telecoms joint venture between the Abu Dhabi company and DB Group, was arrested from his residence in Bandra, in suburban Mumbai. The CBI said that he will be taken to New Delhi for questioning along with former telecom minister A Raja, who is already in CBI custody.

Mr Balwa's arrest comes just two days before the 2G case will be heard again in the Supreme Court. He will be produced before a magistrate in New Delhi today.

The DB Realty stock was down about 20% in morning trade today on the Bombay Stock Exchange.

DB Realty floated Swan Telecom, which allegedly was helped by Mr Raja to get 2G licences in 13 circles, including Mumbai and Delhi, for Rs1,537 crore. Within months of getting the spectrum, Swan sold 45% of its shares to UAE telecom giant Etisalat for about Rs4,500 crore.

CBI sources say they have evidence from the income-tax department of Mr Balwa channelling bribes paid to the former telecom minister to secure 2G spectrum. He is also said to have helped Mr Raja park the money in the real estate business.

Mr Balwa is the fourth person to be arrested in the telecoms scam case after Mr Raja, his former personal secretary RK Chandolia and former telecom secretary Siddharth Behura.

Mr Chandolia and Mr Behura were yesterday remanded to judicial custody on the completion of their interrogation by the CBI.

Last week, the CBI accused Swan, which has since been renamed Etisalat DB, and Unitech of buying mobile licences at unfairly cheap prices. Unitech's joint venture Unitech Wireless is majority held by Norway's Telenor.

Unitech last week denied that it had received any favours and said it had complied with rules, while Telenor said it had no reason to believe the licences were issued improperly.

Shares in Unitech, the country's second-largest listed realty company, also fell more than 8% in morning trade today.


TRAI recommends six-fold hike in price of start-up 2G spectrum

Telecom Regulatory Authority of India has recommended fixing the price for 6.2 Mhz of pan-India start-up 2G spectrum at Rs10,972.45 crore and Rs4,571.87 crore for every Mhz of additional spectrum (on an all-India basis) beyond the contracted limit of 6.2 Mhz

New Delhi: Virtually in line with estimated loss pointed out by Comptroller and Auditor General (CAG) in second generation (2G) spectrum allocation, the Telecom Regulatory Authority of India (TRAI) today recommended Rs10,972.45 crore for a pan-India license with 6.2 Mhz spectrum, reports PTI.

Going by this valuation, six new pan-India licenses given in 2008 would have garnered Rs65,834.7 crore to the government along with additional revenue from other firms who were given licences in fewer circles.

The CAG had estimated loss of up to Rs1.76 lakh crore from 2G spectrum allocation.

This had included new licences, dual technology licences and revenues from additional spectrum beyond the contracted limit of 6.2 Mhz held by various operators especially BSNL, Bharti and Vodafone.

The Telecom Regulatory Authority of India (TRAI) has also recommended 'one-time' entry fee for additional spectrum beyond 6.2 Mhz.

Most telecom firms, including Bharti, Vodafone, Idea and state-owned companies like Bharat Sanchar Nigam (BSNL) and Mahanagar Telephone Nigam (MTNL), hold extra spectrum beyond 6.2 Mhz and the new norms would put a huge financial burden on these telcos.

In addition, the licences of some of the operators, including Bharti, are due for renewal after completing 20 years periodicity in several circles. Such companies would have to pay to renew their licences as per the new norms recommended by TRAI.

When contacted, TRAI chairman JS Sarma told PTI, "Yes we have submitted the recommendations to the DoT on the revised norms for 2G spectrum pricing."

According to the report, the spectrum prices for both categories-up to 6.2 Mhz and beyond 6.2 Mhz -vary from circle to circle.

In the category of up to 6.2 Mhz of spectrum, the prices of one Mhz varies from Rs7.60 crore in the case of Jammu & Kashmir to Rs187.38 crore in the case of Tamil Nadu.

In the category of beyond 6.2 Mhz of spectrum, the price varies form between Rs22.89 crore per Mhz in Jammu & Kashmir to a maximum of Rs431.95 crore in Andhra Pradesh.

The revised prices should be made applicable with effect from 1 April 2010 on pro-rata basis depending upon the number of years left for licences to expire, TRAI said adding that any licence coming up for renewal would have to pay for spectrum based on new price.

These prices are for spectrum in 1800 Mhz band, the telecom regulator said.


Expanding gas

Indraprastha Gas has enjoyed secular growth

In the 4 December 2008 issue, Moneylife had recommended a ‘buy’ for Indraprastha Gas (IGL) scrip (at around Rs92) and to hold it for steady long-term gains. The stock has reached around Rs328 on 21 January 2011. The stock has delivered great returns. The New Delhi-based company is in the retail gas distribution business—supplying compressed natural gas (CNG) to the transport sector, piped natural gas (PNG) to the domestic and commercial sectors and re-gassified liquid natural gas (R-LNG) to the industrial sector in the towns of the National Capital Territory (NCT) of Delhi and the National Capital Region (NCR). Among the company’s competitors are Gujarat Gas and Gujarat State Petroleum.

Incorporated in 1998, IGL took over the Delhi City Gas Distribution Project from GAIL (India) Ltd in 1999. With the backing of strong promoters—GAIL and Bharat Petroleum Corporation Ltd (BPCL)—IGL plans to provide natural gas to the entire NCR.

During FY09-10, IGL’s gross turnover increased by 26% to Rs1,213.13 crore from Rs962.14 crore in FY08-09. Net profit also went up by 25% to Rs215.50 crore in FY09-10 from Rs172.47 crore in the previous year.

The company recommended dividend of 45% (Rs4.50 per share) as against 40% (Rs4 per share) in the previous year. Growth has been steady. The total number of CNG stations increased to 241 in March 2010 from 181 in March 2009. During FY09-10, the company added 44,000 PNG connections and 40 commercial customers.

The company is supplying R-LNG to around 21 industrial consumers in Delhi. It has also started supplying R-LNG to the industrial segment in Noida and Greater Noida. During FY09-10, the company started CNG supply to vehicles in Ghaziabad for the first time. The online CNG station was also set up during the year. The company has planned capital investment of Rs240 crore to expand its CNG and PNG networks in NCT and NCR towns of Noida, Greater Noida and Ghaziabad.  

During the December 2010 quarter, IGL’s net profit rose 14.01% to Rs67.19 crore from Rs58.93 crore in the corresponding quarter last year. Its revenues grew 60% to Rs457 crore from Rs284.61 crore in the corresponding quarter last year. The company’s raw material cost more than doubled to Rs259.87 crore, bringing down the operating profit margin to 28% from 36% in the year-ago period.

GAIL is the sole gas supplier to the company and, since it is one of the promoters of the company, IGL does not foresee any risk in oversupply of natural gas. The company has agreements with GAIL, BPCL and Reliance Industries for additional gas supplies to meet its growing requirements. The outlook for the company is positive. The growth drivers for increased CNG demand are car makers coming up with CNG variants. IGL’s average growth in revenues and operating profit over the past five quarters has been 45% and 31%, respectively. Its operating margin is a hefty 31% and return on net worth is 26%. Market-cap to revenues is 2.51, while its market-cap to operating profit is 8.87 times. The stock enjoys a P/E of 21.29 and a dividend yield of 1.37%. Buy at its current price.


We are listening!

Solve the equation and enter in the Captcha field.

To continue

Sign Up or Sign In


To continue

Sign Up or Sign In



The Scam
24 Year Of The Scam: The Perennial Bestseller, reads like a Thriller!
Moneylife Magazine
Fiercely independent and pro-consumer information on personal finance
Stockletters in 3 Flavours
Outstanding research that beats mutual funds year after year
MAS: Complete Online Financial Advisory
(Includes Moneylife Magazine and Lion Stockletter)