Companies & Sectors
HC admits plea seeking SFIO, CBI probe into RNRL-RPower merger


The petitioner alleged that the share swap ratio fixed by the company caused heavy loss of about Rs2,105.9 crore to investors

Madurai: The Madras High Court bench has admitted a petition seeking a probe by the Serious Fraud Investigation Office and the Central Bureau of Investigation (CBI) into the merger of Reliance Natural Resources Ltd (RNRL) with Reliance Power (R-Power) alleging it caused a loss of Rs2,105.87 crore to shareholders, reports PTI.
Justice RS Ramanathan ordered issuing notices to SFIO and CBI and posted the case for hearing on 25th June.
The petitioner submitted that 1.97 crore investors bought RNRL company shares after the company signed gas supply master agreement with Reliance Industries. The closing price of a RNRL share on July 2, 2010, was Rs62.95.
The same day the announcement came that RNRL would be merged with R-Power. The value of RNRL and R-Power shares stood at 2.7:1 on 2 July 2010. The share swap ratio was fixed at 4:1 for the merger.
The merger plan brought down the share value of RNRL from Rs63.95 to Rs45.20, the petition said. It alleged that investors were defrauded to the tune of Rs2,105.87 crore. The petitioner said he himself had lost Rs18,000.
Markets regulator Securities Exchange Board of India (SEBI) failed to protect the interest of investors, it alleged. The petitioner alleged that the share swap ratio fixed by the company caused heavy loss to investors. This should be investigated by the SFIO and CBI, he said.
Both the agencies had said since the matter was being looked into by SEBI and they had no role.
SEBI in turn said that complaint did not come under its purview and it was the duty of the SFIO to investigate as SFIO was specially constituted to curb economic frauds. 
The petitioner sought a direction to SFIO and CBI to probe his complaint.


Bank funding still a pipe-dream for 53% SMEs says CRISIL

After a survey of over 3,000 SMEs on their funding patterns, CRISIL has found that 53% of them met their funding needs through promoters' funds and personal loans in FY11


Mumbai: Rating agency CRISIL on Tuesday said a large majority of small and medium enterprise (SME) promoters - as many as 53% - continue to use their own funds to tide over inflationary pressure as getting bank funds are not without difficulties for them, reports PTI.

"Easy access to bank funds has always been difficult for of small and medium enterprises (SMEs) from the lending institutions would have provided additional fillip to the sector," CRISIL senior director for SME ratings Sachin Nigam said in a note.

After a survey of over 3,000 SMEs on their funding patterns, it has found that 53% of them met their funding needs through promoters' funds and personal loans in FY11, Nigam said quoting a survey finding.

The survey revealed that while revenue of the SMEs increased 29% last fiscal, raw material costs rose 31% while operating margins marginally declined (1%), showing their inability to pass on the inflation pressures to their customers, he said.

In the same fiscal, equity capital bought by SME promoters increased 29%, while loans from promoters' family and friends were up 24%, indicating that funding requirements were met through promoters' funds than through bank borrowings.

The CRISIL study said companies in the engineering and capital goods, textiles and chemicals, which have high input costs, are most susceptible to inflationary pressures.

However, with the interest rates going down and ease in inflation, CRISIL feels that the situation will get better for SMEs, its director for SME ratings Yogesh Dixit said.

Notably, country's largest lender State Bank of India recently announced an up to 3.5% reduction in interest rates for the SMEs.


SEBI takes up probes very fast; completes it slowly


SEBI took up 107 cases but completed investigations in only 14 cases with large number of cases related with market manipulation, price rigging and insider trading remaining incomplete over the last five years
New Delhi: Market watchdog Securities and Exchange Board of India (SEBI) seems to be moving at the fastest pace in at least five years while taking up cases for investigations, but the same speed seems to be lacking in completing them, reports PTI.
As per the latest data disclosed the market regulator, it took up 107 cases for investigations in the last fiscal till December 2011 -- higher than the full-year figures since 2006-07.
On the other hand, it could complete only 14 cases in the first nine months of 2011-12 -- representing a sharp decline from the full-year figures in the past 10 years.
Although the numbers are not exactly comparable because of data being available for only nine months for the fiscal 2011-12, but SEBI has already exceeded the full-year numbers in five years in terms of number of cases taken up for probe.
In terms of completed cases also, the number for nine months appears too small to catch up with the previous full- year numbers -- 82 in 2010-11, 74 in 2009-10, 83 in 2008-09 and more than 100 during six financial years between 2002-03 and 2007-08, barring 81 in 2005-06.
The figures have been disclosed by SEBI in its latest "Handbook of statistics on Indian securities market', which was published on its website yesterday.
The number of completed cases has been higher than 14 every year since 1995-96.
The biggest decline in the number of completed cases seems to have come in the areas of market manipulation, price rigging and insider trading, while some downtrend has been seen in takeovers and public issue related cases also.
On the other hand, SEBI is taking up larger number of cases related to public issues, while not much changes have taken place in cases of market manipulation and price rigging.
Between April 2011 and December 2011, SEBI completed five cases of market manipulation and price rigging, as against 51 in the previous year, 46 in 2009-10, 62 in 2008-09 and 115 in 2007-08.
Just one case of issue related to manipulation was completed last fiscal till December 2011, as against two in 2010-11 and seven in 2009-10. Also, only three cases of insider trading related probe was completed last fiscal, down from 15 in the previous year and 10 prior to that.
In terms of cases taken up, SEBI initiated 59 probes into market manipulation and price rigging till December 2011 last fiscal, as against 56 in the previous year and 44 in 2009-10.
For public issue related manipulation, SEBI took up 14 cases last fiscal, up from six in 2010-11 and two each in the previous two years.


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