The apex court has directed RIL to initiate in six weeks, a re-negotiation with RNRL in terms of the gas sale master agreement so that the rights of RNRL are safeguarded
The Supreme Court has asked both Mukesh and Anil Ambani to renegotiate the terms of their gas sale master agreement in six weeks. Although the apex court did not give any specific verdict, the share price of Reliance Industries Ltd (RIL) rose while that of Reliance Natural Resources Ltd (RNRL) shares tanked.
The three-judge bench headed by Chief Justice KG Balakrishnan, while delivering its verdict on the gas-pricing dispute between the Ambani brothers, said that RIL does not have absolute marketing rights over gas and its prices are subject to approval from the government.
Soon after the Supreme Court ruling, PMS Prasad, executive director, RIL told PTI that the terms of supply would have to be guided by government's pricing and utilisation policy. “The price will be what the government has fixed. Supplies will be subject to government allocating the fuel (to RNRL or its affiliate company) and the tenure of supply will have to be in line with the development plan approved for the Krishna-Godavari (KG) D6 fields," he said.
Terming the Ambani family memorandum of understanding (MoU) as not legally binding, the Supreme Court said the MoU is between two brothers and their mother and its content is unknown to 30 lakh shareholders of RIL-RNRL. In addition, since the MoU has not been made public, it does not fall in the corporate domain, the apex court said.
Justice P Sathasivam said, "Ambani family MoU can be a means of arriving at (a) suitable arrangement but cannot be the sole means for a suitable arrangement.”
Delivering the majority verdict (2:1) of the bench on the four-year gas dispute between RIL and RNRL, Justice Sathasivam said that the production-sharing contract (PSC) overrides all other agreements.
The Supreme Court also held that the petition filed by RNRL before the company court as maintainable, as that court had sanctioned the original demerger scheme.
"We believe that the verdict gives a tacit indication for selling of the gas at $4.2 per million British thermal unit (mmBtu). As far as financial implications of the verdict are concerned, RIL would continue to sell KG D6 gas at government approved price of $4.2/mmBtu, implying no impact on cash flows. Given that our target price of Rs1,220 had factored in an unfavourable outcome for RIL, our fair value of the company would increase by Rs35 on the back of this verdict. More importantly, with uncertainty on the case outcome out of the way, we believe that the company’s fundamentals would be back in focus. We maintain our ‘buy’ recommendation on the stock," said Ambit Capital Pvt Ltd in a note.
Law minister M Veerappa Moily hailed the Supreme Court verdict in the RIL-RNRL gas dispute case as a "vindication of the government's sovereign and constitutional rights" over natural gas resources of the country, reports PTI.
Last year in July, the Bombay High Court had asked RIL to supply 28 million standard cubic metres a day of gas to RNRL at $2.34/mmBtu for 17 years. RIL then moved the Supreme Court alleging that the High Court had erred in deciding quantity, tenure and price of gas supply to the power plants owned by RNRL or its units.
RIL shares closed 2.27% higher at Rs1,033.85 while RNRL shares tumbled 22.82% to Rs52.75 on the Bombay Stock Exchange where the benchmark Sensex ended the day 1.29% down to 16769.11 points.
What is now needed is a totally new idea, even if it’s still embedded in the same shell
One good thing Sprite has done for some years now is to mock at all the nonsense that cold drink ads promise. Everyone knows a cold drink is nothing more than sweetened, flavoured, aerated water, so why create fables around each brand?
Its ‘Seedhi Baat No Bakwaas’ campaign was born out of that concept. And it has served the brand quite well. Not just because younger consumers connect with that thought, but the execution of the idea has been almost always superb. The ads invariably feature two pals. One slim and good-looking, and the other obese and over-smart. Mr Obese Boy tries to impress people, especially women, with silly antics and fails miserably. But Mr Slim Boy only offers thirsty and parched folks some Sprite, and has the last laugh (and the babe). Simple idea and its power lies in that simplicity of thought.
However, this route has been on air for a long time now, and a degree of predictability has set in. In order to inject some freshness into the campaign, for their new TVC, Coca Cola, the makers of Sprite, have taken the lads out of the urban setting, and have landed them into a deep forest where they run into some cannibalisque African tribals. Mr Obese Boy tries to pally up with the angsty chieftain, by attempting to ape the mannerisms of the locals. And he only manages to piss him off. Mr Slim Boy does what he does best: he offers Sprite to the chieftain, who soon cools down, and in turn offers a couple of tribal chicks to the boy as prize, as Mr Obese Boy gets readied to be cooked.
Funny? Well, okay, if you insist. Refreshing? Naaah! I think Sprite is overdoing what began as a good brand property. The Obese Boy-Slim Boy gag has run out of steam. Taking them out of the concrete jungles and flying them into real ones makes little difference. As the joke is the same, the plot is the same, the boys are the same, I think the ad agency in this case has gone lazy, and is perhaps not accepting that all good things come with an expiry date. And what is now needed is a totally new idea, even if it’s still embedded in the ‘Seedhi Baat No Bakwaas’ shell. And they need to do it fast before the brand tires out in the consumers’ minds.
Hopefully, at their next meeting, if the ad agency guys again land up with another boy gag, the client will say to them: “Seedhi Baat No Bakwaas. Clear hai?”
5th May, 2010: Moneylife Foundation on Wednesday organised an interactive discussion on real estate titled ‘Real Estate: Trends, Issues & Consequences’ jointly conducted by industry experts Pranay Vakil, Chairman, Knight Frank (India) Pvt Ltd and Pankaj Kapoor, Managing Director, Liases Foras.
Speaking on the occasion, Pranay Vakil said, “One of the major reasons why the prices are high today is infrastructure. Nobody wants to travel long distances for work. Title insurance is another major issue in this industry.”
He also spoke on what he learnt from the short recession, “Liquidity is vital. Developers realised this when sales volumes declined drastically due to the liquidity crunch. The slowdown gave customers ample choice as affordable housing came into the industry in a big way. Investors are ‘fair-weather friends’, Sell ‘ready’ products during a slowdown; contracts can be broken; healthy growth can be sustained by a gradual increase in prices; high-value transactions hyped by the media are not the ‘real’ market and the need is to innovate sales strategy.”
Mr Kapoor said, “Are we heading towards another asset bubble? Are the prices affordable? What is wrong with the valuation and where is affordable housing? The government is responsible for hiking prices.”
He added, “We need a regulator for this industry to grow and curb wrong practices.”
The workshop saw participation from several investors, research analysts and industry experts. The event witnessed a healthy exchange of ideas between the participants.
Ms Kavita Hurry, CEO, ING Vysya Mutual Fund asked the speakers to highlight three major issues in the sector.
“Three most important things we need in real-estate as a priority are—rental housing, all over the world there is organised rental housing. Here you are left at the mercy of the broker who does not know anything. Secondly, infrastructure— the government cannot be a provider, it can be a facilitator. Thirdly, all these need funds, so get foreign parties excited about India,” said Mr Vakil.
Mr Kapoor said, “We need to address the congestion issue in the island city. If we move five buildings from the island city to Bandra, there will be a whole shift in the crowd. If we can shift Mantralaya, BSE or the Income-Tax office, there will be a difference. There are three-four magnets which draw the crowd there.
Everyone knows about it but there is no intension to do that because they are sitting in luxurious places. We need to add more connectivity. We need a complete master plan for Mumbai to reduce the congestion. We need a regulator, and urban planning.”
Other industry experts also voiced their opinion. Raymond Dastur, Vice President, real-estate, Shapoorji Pallonji said, “The government has to play an important role to facilitate housing which is affordable. We need the regulator who will facilitate the business.”
“FDI has already come into the city and we still have to see the results. There needs to be more transparency for FDI to flow into this country and more strict laws so that foreign players are also convinced while investing,” said Jesal Saghvi, executive vice president, Westbrook (India) Advisors Ltd.
The consensus among the audience was that there is a dire need for a citizen action forum to make higher authorities listen.
Pictures of the event