DGH rejects commerciality of RIL gas finds in Mahanadi basin

DGH told Reliance that its two discoveries had already been reviewed and rejected by the management committee and no fresh meeting would be convened

New Delhi:  Upstream oil watchdog, the Directorate General of Hydrocarbons (DGH) has refused to recognise two significant natural gas discoveries that Reliance Industries Ltd (RIL) had made in a Mahanadi basin block, because the company failed to conduct its prescribed test to ascertain the find, reports PTI.

The DGH in March this year told RIL that Dhirubhai 32 and 40 (D-32 & D-40) gas finds in the Mahanadi basin block NEC-25 (NEC-OSN-97/2) cannot be recognised as a discovery because RIL had not carried out drill stem tests (DSTs) on them, sources said.

RIL says the two finds, on which it had conducted other tests, may hold 663 billion cubic feet of gas reserves and can produce 170 million standard cubic feet per day from six wells.

It had proposed an investment of $1.17 billion in developing the finds and another $23.5 million annual operative expenditure in producing 476 billion cubic feet of gas over the life of the field.

Sources said RIL wrote to DGH seeking a re-look at the Declaration of Commerciality (DoC) of D-23 and D-40 finds but the upstream regulator turned that down saying without DST tests it cannot declare the two finds commercially viable.

DoC is a pre-requistie for developing a find, and unless the regulator and the government gives DoC, no operator can invest any money.

DGH told the company that two discoveries had already been reviewed and rejected by the block oversight committee, called the Management Committee (MC). The panel is headed by DGH and also includes representatives from the Oil Ministry.

RIL, the operator of NEC-25, had asked DGH to reconvene a meeting of the committee so that the two finds could be recognised. It had argued that the refusal to recognise the two discoveries was delaying the flowing of first gas from the block.

To expedite the development of the block, RIL said it was necessary that the DoCs were issued at the earliest.

Sources said RIL claimed that a DST was not a conclusive test for a discovery, for it provides information only on the initial well production rate around the wellbore and not on the sustained field production rate.

It claimed that based on the results of DSTs carried out in 25 wells in the area -- including the neighbouring Krishna Godavari basin -- it had integrated several sets of data to prove the discoveries.

The operator argued that there was no need for carrying out any further DSTs as the flow rates for the two discoveries could be derived from the existing data. But DGH stood firm and said no fresh MC meeting would be convened, they added.


HDFC Q4 net profit up 16% at Rs1,326 crore

During the fourth quarter, HDFC registered a 29% increase in its total revenues to Rs4884.7 crore

Mumbai: Housing finance lender HDFC Ltd on Monday reported 16% jump in net profit at Rs1,326.14 crore for the fourth quarter ended March 2012, reports PTI.

The company had net profit of Rs1,141.95 crore in the January-March quarter of the previous fiscal, HDFC  said in a filing to the BSE.

Its total income rose to Rs4,884.7 crore in the quarter ended March from Rs3,774.1 core in the corresponding period a year ago, registering an increase of 29%.

The board proposed a dividend of Rs11 per share on the face value of Rs2 each for the financial year 2011-12.

For the entire fiscal ended March 2012, the company reported a 17% rise in net profit at Rs4,122.6 crore, compared to Rs3,534.9 crore in 2010-11. During the year, its total revenues improved to Rs17,332.9 crore from Rs12,878.9 core in 2010-11. Net Interest Margin of HDFC stood at 4.4% at the end of March 2012.

Loan approvals during the year were Rs90,154 crore as compared to Rs75,185 crore in the previous year, representing a growth of 20%.

At the same time, loan disbursements during the year grew by 18% to Rs71,113 crore as against Rs60,314 crore in the previous year.

As at March 2012, the loan book stood at Rs1,40,875 crore as against Rs1,17,127 crore in the previous year, an increase of 20%. During the year, HDFC sold loans amounting to Rs4,978 crore.

With regard to asset quality, gross non-performing loans stood at Rs1,069 crore at the end of 2011-12. This is equivalent to 0.74% of the portfolio.

On consolidated basis, the net profit of the bank increased 21% in 2011-12 to Rs5,462.5 crore, against Rs4,528.4 crore in the previous financial year.


Economy & Nation Exclusive
Escorts' promoters taking trust route to increase voting control

The Nanda family, promoter of Escorts, are planning to increase their voting control to 41.1% by transferring its and its associate companies' voting rights to a trust owned by them. But this will reduce voting rights of other shareholders

In yet another example of poor corporate governance, the Nanda family promoted Escorts Ltd, is planning to increase its voting control to 41.1% through a Court convened meeting on 20th May, says a report from Institutional Investor Advisory Services Ltd (IiAS).

During the meeting, a special resolution for amalgamation between Escotrac Finance & Investments Pvt Ltd (ESCOTRAC), Escorts Finance Investments & Leasing Pvt Ltd (EFILL) and Escorts Construction Equipment Ltd (ECEL) with Escorts would be discussed. IiAS has suggested that investors vote against the resolution as it is not in their interest.

According to a filing by Escorts to the Bombay Stock Exchange (BSE), EFILL and ESCOTRAC are part of promoter group and not persons acting in concert. Escorts hold 49.81% each in both EFILL and ESCOTRAC, thus making both the entities its associate companies. Both EFILL and ESCOTRAC hold 6.5% and 12.83% stake in Escorts, which when clubbed together with the stake of Nanda family (12.43%), takes the promoter and promoter group shareholding and thus voting rights of 31.76% in Escorts. How the Nandas, promoter family of Escorts, holds a 31.7% control of voting with only 12.43% of shareholding in the company, asks IiAS.

According to Company Law Section 42, subsidiaries cannot hold voting rights in parent. However, by keeping their stake in both EFILL and ESCOTRAC below the 50% threshold, Escorts and the Nanda family, allowed these units to have voting rights in the parent.  

ECEL, on the other hand is 100% owned by Escorts. In case Escorts decides to merge all three EFILL, ESCOTRAC and ECEL with itself, the promoters, the Nanda family would be at risk as their stake in these companies would get extinguished.

To avoid the risk, the Nanda family is planning to transfer 19.3% voting rights of EFILL and ESCOTRAC in Escorts to Escorts Benefit and Welfare Trust. The trust would receive EFILL's 6.8 million shares, ESCOTRAC's 13.5 million shares and ECEL's 16.9 million shares. Therefore post merger, the trust would end up with 37.3 million shares out of 122.5 million shares in Escorts. While this will make the promoter's stake to decline to 10.7%, they would end up with more voting control (about 41.1%) through the trust they control.
According to IiAS, adding shares of associate companies to promoter family holding is a misleading disclosure, to create an impression of a larger than actual shareholding by the promoter family. In addition, the Nanda family, recently bought 4% shares of Escorts from Reliance Mutual Fund by way of creeping acquisition.

"Investors should note that the list of public shareholders with more than 1% in Escorts includes OK Balraj (Trustee of Escorts ESOS) holding 3.1%, and Rajan Nanda (Trustee of Escorts Trust) holding 1.3%. Taking this into consideration, the effective promoter control is higher by 4.4%," the IiAS added.




5 years ago

One would rathere be inclined to think that the Indian Trusts Act and the Indian Income Tax Act (whatever is left of it, I mean) should be alert enough along with the MCA to take notice and act! Wasn't it the same group which was mired in a serious ├žornering of shares'controversy earlier too-in the late seventies?



In Reply to Aban 5 years ago

But is it not a commonly practised "business model"for decades in India? What are the NGOs/Foundations patronised/created by the huge business groups or influential persons (including "healers"even) doing?


5 years ago

Corporate governance,come on,you are expecting too much from Nanda.Mr Swaraj paul cried for that some 2/3 decades back.See it is very easy here for old timers,where not to invest in certain groups like JK/MODI/NANDA/RELIANCE etc..as they are answerable to their ancestors.

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