In your interest.
Online Personal Finance Magazine
No beating about the bush.
It may be true that on paper, RIL does not hold any stake in any media company, as the minister stated in Rajya Sabha. However, the Reliance group now openly controls Eenadu TV and the Network18 Group
India's largest private sector entity, Reliance Industries Ltd (RIL), owned by billionaire Mukesh Ambani, does not have any direct holding in media houses or companies, listed or unlisted in print, broadcast and production. This is the written reply given by minister of state in the Ministry of Corporate Affairs, RPN Singh in the Rajya Sabha.
However, since the question may not have been asked correctly, the answer is an incomplete one. Earlier, this year, Independent Media Trust, a trust set up by Mr Ambani's flagship RIL agreed to fund promoters of both Network18 Media and Investments (Network18) and TV18 Broadcast (TV18) to subscribe to the rights issue of these companies.
Following the deal, Mr Ambani directly or indirectly controls Eenadu TV and the Network18 Group. That is about 30 channels across entertainment and news segments in English and regional languages.
RIL's deal with Raghav Bahl of TV18 group is one of the most complicated deals of all time. According to a press release, issued by RIL at that time, promoter companies of Network18 and TV18 and the Trust entered into a Term Sheet under which the Trust would be subscribing to the Optionally Convertible Debentures (OCDs) to be issued by the Promoter Companies.
"Reliance will leverage its deep understanding of the Indian markets-consumer insights, technological expertise, and the ability to build & manage scale-to make this a "win-win" partnership. This will create value and be accretive to the shareholders of RIL," the Mukesh Ambani group company said in a press release.
This was the first part of the deal. In the second part, Infotel Broadband Services (Infotel), a unit of RIL, signed a memorandum of understanding with both, TV18 and Network18 for preferential access for distributing all contents of the media group companies through its fourth-generation (4G) broadband network. As per the agreement, RIL would divest part of its interest in Eenadu TV (ETV) channels to TV18.
Earlier, RIL had admitted that the company and its group companies invested Rs2,600 crore in Ushodaya Enterprises, the holding company of ETV channels. As per the deal with Mr Bahl, the Mukesh Ambani group divested its 100% interest in ETV news channels, 50% in entertainment channels and 24.5% interest in Telugu channels to TV18.
About two months ago, Moneylife sent a mail to Nilrab Media Private Ltd, which is one of the trustees in RIL's Independent Media Trust. However, till date neither there is any answer nor there is any reply from Nilrab Media.
More than two decades ago Reliance had made a bid to enter the media by buying the Observer newspaper which it ran half-heartedly and closed down. Anil Ambani, the estranged and debt-strapped younger brother of the RIL chief was leading that effort. The ADAG group controlled by Anil Ambani has large stakes in TV Today and other media companies.
The commercial vehicle manufacturer has roped in cricket superstar Mahendra Singh Dhoni as its brand ambassador while it reports poor quarterly results
Ashok Leyland, the Hinduja group company and commercial vehicle major, has reported a weak March 2012 quarter, with its net profit declining over 13%, year-on-year to Rs258.73 crore, on the back of increased cost of materials which was dearer by 19% for the same time period. Net sales managed to increase only 11% to Rs4,235.82 crore. The company has reported a 16.13% increase in net sales for the year ended 31 March 2012, mostly aided by slightly higher sales realisations. It sold 1,02,009 vehicles during the same time period, an increase of 8.4%, which is less than the average increase of 10% over the last three years. However, its annual net profits were poor, which declined by over 10%, year-on-year, to Rs566.97 crore.
Despite the poor results, it has, for the first time, roped in a celebrity endorsement-none other than star cricketer MS Dhoni. The company hopes this move will give it a much-needed facelift and a boost in its sales, going forward. We do not know whether a celebrity endorser will work well for a segment such as commercial vehicles, since the buyer is usually a corporate and not an individual. Therefore, it remains to be seen whether corporates can identify with the MS Dhoni brand.
According to the company's press release, managing director Vinod K Dasari said, "Mahi's (MS Dhoni) choice was almost automatic for I cannot think of another person befitting the values of Brand Ashok Leyland so well. A true son-of-the-soil, a leader who is focused, straight-thinking, passionate and, most of all, humble, he will lead the numerous initiatives that are on the anvil." He further added, "We believe that all these efforts will help enhance customer profitability to a new level."
Much of its business remains cyclical, which means truckers buy in good times and remain passive during economic hardships. This means the company becomes vulnerable to economic cycles. Most of the trucks are financed by vehicle loans which are linked to interest rates. In a high interest rate regime, vehicle sales get affected and Ashok Leyland was no exception as its sales grew only 11% which was less that the pace of increase in expenses which grew 19%. Therefore it has been trying to target newer segments, such as defence and exports.
To tackle uneven economic cycles, Ashok Leyland has started a slew of initiatives and new product innovations to aggressively gain market share and become one of the strongest players in the commercial vehicle business.
The company unveiled DOST, which marked its entry into the robustly growing LCV (light commercial vehicle) market in joint venture with Nissan Motor Company. With a payload capacity of 1.25 tonnes, DOST enters the small commercial vehicle (SCV) market which is witnessing a perceptible upward shift in terms of features, performance and payload.
The defence segment, which has seen increased spend over the years, is another target segment for the company. For this, it has launched the Super Stallion, an 8x8 High Mobility Vehicle (HMV), and with that, the expansion of its range of logistics vehicles catered towards the defence sector. It is also aiming to export more vehicles abroad.
It hopes that its share of non-cyclical revenue will be 50% over the next few years.
Last year, it had announced bonus shares for its shareholders. Free shares were given to shareholders for each single one held, thus doubling its share capital to Rs26.607 crore.
The minister for state for finance told parliament that LIC made a profit on PSU investments until 31 March 2012. It has certainly racked up big losses since then
Namo Narain Meena, the minister of state for finance, told the Rajya Sabha in response to a question that Life Insurance Corporation of India (LIC) has made a profit on its investments in public sector undertakings. Let’s look at how wafer-thin this profit was and what has happened since.
According to Press Trust of India (PTI) release, the minister said, “the book value of the total outstanding investment as on 31 March 2012, was Rs59,116.36 crore and its market value was Rs59,851.16 crore.” This means that even on that day, the investment was barely above water with a notional capital appreciation of barely Rs730 crore on this massive portfolio.
Now here’s what has happened since. The Public Sector Unit (PSU) index of the Bombay Stock Exchange (BSE) has fallen sharply by 5.36%, from 31 March 2012 till 8 May 2012. If the value of LIC’s PSU holding has fallen by around 5%— it would have been Rs 56,641.34 crore on 8th may. The PSU index was 6,711.27 on 11th May, which, if subtracted from the 31st March market value, LIC’s holding would be approximately Rs54,937.97 crore.
The Rajya Sabha question is especially pertinent in view of the widely held perception that LIC suffered losses in the ONGC disinvestment. During March, the government had raised Rs12,767 crore through auctioning of Oil and Natural Gas Corporation (ONGC) shares, and LIC had subscribed to a huge chunk of the issue. While the ONGC share sale was subscribed 98.30%, LIC had picked up over 84% of the shares on offer. This move has been controversial and attracted a lot of flak from the investment community.
Mr Meena said, “the amount of money invested by LIC in ONGC till 31 March 2012, is Rs20,493.60 crore. The value of this investment as on 31 March 2012, is Rs21,752.91 crore.” Which means that the value of ONGC shares held by LIC were barely above water even on 31st March. The share price had dropped 3.44% until 8 May 2012 on which the minister answered the parliament question and the investment value further fell to Rs21,004.21 crore by then. This means that the value of ONGC shares held by LIC would be around Rs20,723.45 crore on 11th May, if one were to deduct 4.73% from the 31st March market value.
The balance sheet of LIC, as of March 2011, stood at a whopping Rs12.82 lakh crore. But market circles point out that PSU stocks and ONGC are not the only questionable investments made by LIC. It also has a huge exposure to private sector entities in aviation, power generation & distribution and telecom, which have been seeking repeated restructuring of their loans.
There are frequent allegations that LIC buys and sells the shares of private sector companies in a manner that benefits their promoters. Questions about the sale and purchase of Reliance Industries’ shares have been making the rounds of the email circuit and there are demands that LIC must be forced to disclose all big ticket purchases which are directly from entities connected to corporate houses.