Top RIL officials appear before CBI court

Chennai : Top officials of Reliance Industries Ltd (RIL), including Manoj Modi and Shankar Adawal, on Tuesday appeared before a special CBI Court in Chennai in connection with a case relating to alleged masking of international calls as local by erstwhile Reliance Infocomm Ltd, reports PTI.

The court later adjourned the case to 8th September. The case, in which Reliance Infocomm and its then top officials were alleged to have caused revenue losses to the exchequer by masking of calls, relates to a time when the company was part of unified Reliance Industries group led by Mukesh Ambani.

Reliance Infocomm was rechristened as Reliance Communications Ltd after it was transferred from Mukesh to younger brother Anil Ambani as part of family settlement in 2005.

Mr Modi, a top lieutenant of RIL chief Mukesh Ambani, and five officials of erstwhile Reliance Infocomm, were summoned by the Additional Chief Metropolitan Magistrate to appear before the court on 3rd August.

"CBI has filed the case against Reliance Infocomm ... The cases were adjourned to September 8," Senior Advocate B Kumar representing Reliance Infocomm told reporters.    

To a query whether all those summoned, including Manoj Modi who was a director of Reliance Infocomm and Akhil Gupta, the then chief executive for business development were present, he said, "They did appear".

Shankar Adaval, president for corporate affairs, Pankaj Pawar, head of regulatory, and two other officials KR Raja and BD Khurana were also present for the hearing, he said.

"There is no loss cost and every cost has been repaid," he said on whether there was any loss to the exchequer.

In its FIR registered in August 2006, CBI had named Reliance Infocomm, represented by then board of directors, Mr Modi, Mr Gupta, Mr Adaval, Mr Panwar and unknown others.

The chargesheet said the accused persons intentionally tampered with the working of the telegraph network of the company and presented calls directly in the local network with a dishonest intention of defrauding the central government.

It may be recalled that Reliance Infocomm had under protest paid a fine of Rs150 crore imposed by telecom tribunal TDSAT in 2005 in this connection.

According to CBI, the company had masked incoming international calls as local ones through one of the three gateways- Chennai, Kolkata and Mumbai. The calls were put on the Public System Telephone Network as local.    

According to the chargesheet, the company transmitted over 7.52 crore minutes of international long distance calls with manipulated CLI during May 2004 to September 2004, evading Access Deficit Charges to the tune of Rs32 crore.


What makes gold finance companies shine bright?

The yellow metal’s phenomenal jump in valuation, steady interest rates and instant sanctions of loans, aided by the receding stigma of borrowing are driving more and more people to take this loan route

The loans-against-gold business has achieved much traction in recent years and players in the industry are reaping rich rewards for their efforts. NBFCs, especially, have witnessed exponential growth riding on the gold wave. Prominent among these are players like Muthoot Finance, Muthoot Fincorp (the two entities are separate) and Manappuram Finance. The organised gold loan market in India grew at a Compounded Annual Growth Rate (CAGR) of around 38% in between 2002 and 2009 (according to ICRA Management Consulting Services) and is expected to grow at an annual rate of 35%-40% over the next three years. What is behind these phenomenal growth rates?

It has a lot to do with the fact that more and more Indians are shedding their inhibitions about borrowing against gold and the phenomenal rise in the value of the yellow metal over the past few years that makes gold owners feel richer.

Traditionally, taking a loan against gold was thought of as a measure of last resort, when one was in dire need of emergency funds. The attitude prevented people from making good use of their jewellery and ornaments. However, according to gold loan companies, that notion is fast fading from the minds of the public and more people are now open to the idea of borrowing against gold. Gold finance companies are now trying to convince Indians that pledging gold is actually a smart decision and not just a last resort.

The record surge in gold prices in the past two-three years has helped create fortunes for these NBFCs. Buoyed by the high valuations on their gold holdings, Indian households, both urban and rural, are looking to raise money against them.

DK Joshi, chief economist at CRISIL said, "Gold is a captive resource for the people. So why not leverage it when you can? Although borrowing against gold still remains a measure of last resort, people are learning to take some risk and extract value from it."

Kuljeet Kataria, head-commodities, Motilal Oswal Financial Services believes, "People are now borrowing more against gold given the uncertainty in overall markets. Over the past five years, gold prices have moved to another zone altogether. Gold finance companies have found earning opportunities from this lucrative business."

Atul Shah, head-commodities, Emkay Global Financial Services agrees that gold valuations have helped spruce up demand for such loans. "Gold prices have seen 20%-25% appreciation over the past few years. Companies that are lending against gold also have a safety of margin due to this price rise." 

Interest rates on gold loans are competitive when compared to personal loans, since such loans are only for the short term and offer collateral for the lender. Typically, rates charged vary between 12%-14%, depending upon the purity of the gold. The loan amount sanctioned depends upon the weight of the pledged gold, and can go as high as Rs15 lakh.

What makes gold loans more accessible to the public is the speed of processing of the loan request and the minimal documentation required. Whereas a regular loan can take up to a week for approval, NBFCs like Muthoot Finance and Manappuram Finance sanction gold loans within 30 minutes.

NBFCs continue to dominate this category of lending. Manappuram Finance has nearly Rs2,600 crore as assets under management (AUM) as on March 2010 while Muthoot Finance has an asset base of around Rs9,000 crore. Manappuram is the only gold finance NBFC currently listed. These NBFCs took roots in Kerala, from where they expanded into Tamil Nadu, Andhra Pradesh and Karnataka and are now all over the country, especially eastern India. But south India continues to account for 85%-90% of the gold loan market in India.

Some prominent banks in the country have also entered the business of gold loans, though not in the same aggressive manner. Among the private banks, HDFC Bank, ICICI Bank and Lakshmi Vilas Bank have an exposure to gold loans. Among the government banks, Central Bank of India, Indian Overseas Bank, Development Credit Bank, State Bank of Indore, State Bank of Hyderabad and Syndicate Bank are prominent players.

However, organised lenders like banks and NBFCs still have a long way to go before they break ground against the local moneylenders and pawnbrokers who still hold sway in local markets. Consider this: the unorganised sector still accounts for 75% of the overall gold loan market in India, while the rural population holds over 60% of the country's gold stockpile. So, although India as a whole currently holds around 15,000 tonnes of gold, a sizeable chunk of it remains out of the domain of the organised sector, which can otherwise bring it into the mainstream financial system.




7 years ago

service is best only from moneylenders. they provide atm service 2 us . i prefer pawn brokers only

R Balakrishnan

7 years ago

What is the biggest worry in this is the safety of the gold that is pledged with these NBFC's etc., When gold prices are rising, are we sure that they are not selling/trading on it? What checks does the RBI have to ensure that these companies are solid enough? This is one instance, where the borrower is on the wrong side of the fence, since the NBFC is sitting on a security worth much more. I hope we do not have a scandal in the making from one of these 'gold' loan companies.



In Reply to R Balakrishnan 7 years ago

Well said.We are never proactive but only reactive.Let the fraud happen.Then only the TV channels will have hot news and forensic auditors will have a tidy sum.God bless the country.

Now, even official merchandise for the Commonwealth Games is under a cloud

Merchandising items like T-shirts, mugs, coins and perfumes were supposed to be in stores by July. However, these items have yet to see the light of day.  

The upcoming Commonwealth Games (CWG) to be held in New Delhi seems to be mired in many controversies. Allegations are flying thick and fast on stadia not being constructed on time, equipment being hired for astronomical rates and huge amounts of money being siphoned to shell companies in the UK.

Now it appears that the Organising Committee (OC) of the CWG has been dragging its feet on releasing the official merchandise for the sporting event.  

If you were looking for metal coins with CWG logos, or T-shirts with the mascot Shera, or for that matter even a branded CWG mug, you will be in for a surprise. Merchandising sponsor Premier Brands has been informed to put these items in deep freeze till 6th August. Obviously, this could severely dent the revenues that the organisers hope to make from these merchandising items, which normally sell like hot cakes before any big-ticket sporting event.

Moneylife spoke to an official from Premier Brands, who informed us that it has been informed by the OC to delay its merchandising launch to 6th August. "They (the OC) have said that they are not satisfied with the merchandising products and asked us to launch the product from 6th August," an official from Premier Brands admitted, preferring anonymity.

The first phase of sales of merchandising items was to begin from the second week of July, with sales vans and a store at the OC headquarters being the points of purchase.

The OC could have raked it in from the sale of official merchandise. Just as an example, even in a non-soccer playing nation like the US, sales of official FIFA World Cup merchandise crossed $35 million.  

A CWG official told Moneylife that the merchandise would be ready in stores only by 6th August. However, he was not willing to answer any other queries. Lalit Bhanot, CWG's official spokesperson, was not so forthcoming. At first, he said that our call was not audible. When we called again, his phone was switched off.

Early marketing of these merchandising items would have created the much-needed hype and awareness which the CWG sorely needs.

In fact, piracy has been rampant, thanks to the apathy on the part of the OC. Several merchants were selling unofficial branded products with the mascot printed on them. In July, the OC released an advertisement affirming its copyright over the CWG logo and threatened legal action against those found selling its merchandise.

There are various brand properties related to the games that can be leveraged by an official licensee - the 'Delhi 2010' logo, the 2010 CWG mascot (Shera), games based on the event, pictograms, other signature elements and the CWG 'Team India' logo.

This is but one of the many controversies which are threatening to derail the games. The report from the Central Vigilance Commission (CVC) has cast a long shadow on the OC - the anti-corruption watchdog has pointed out the poor quality of construction material and grant of work to disqualified agencies in several CWG projects.

Allegations are also being made by a few sections of the media that the OC allegedly awarded a contract to a British company without following proper procedures, a charge that is being denied by the organising authorities.

On top of all this, a number of athletes have said that they would rather stay away from the CWG. The list includes stalwarts like Jamaican sprinters Usain Bolt, Shelly Ann Fraser and Asafa Powell; tennis aces Lleyton Hewitt (Australia) and Andy Murray (Britain) and British cyclist Chris Hoy.

So will the show go on? One can only wait and hope.


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