Reliance Autozone makes its foray in South

Reliance Autozone, the automotive retail arm of Reliance Retail, today launched its first automotive retail outlet in South India with the opening of its store at Tolichowki in the city.

Spread over 2200 sq ft of area, Reliance Autozone store showcases more than 40 leading brands and 1000 products catering from mini segment to premium segment cars.

The main features of the store are wide range of accessories under one roof, personalized service and competitive price positioning.

Reliance Industries proposes 1:1 bonus

The board of Reliance Industries, India's largest private company, Wednesday recommended a dividend of Rs.13 per share and a bonus issue of one new share for each existing one.

The announcement came after the closing bell for Indian equities markets, where the company's scrip, with a paid up value of Rs.10, had ended at Rs.2,099 on the Bombay Stock Exchange (BSE), down 1.57 percent or Rs.33.45 over the previous close.

The bonus issue and the dividend are subject to approvals by the shareholders.

Anil Ambani group says Reliance gas valuation not independent

The Anil Dhirubhai Ambani group Wednesday alleged conflict of interest in naming the two experts who evaluated and validated the overstated capital cost of Krishna-Godavari gas fields, awarded to Mukesh Ambani's Reliance Industries.

Reacting to the comments by the Directorate General of Hydrocarbons Tuesday, the group said both the independent expert P. Gopalakrishnan and global consultancy Mustang Engineering had conflict of interest with the Mukesh Ambani group.

"Gopalakrishnan serves the School of Petroleum Technology. Mukesh Ambani is its first president and chairman of its board of governors," said J.P. Chalasani, chief executive of Reliance Power, which is part of the Anil Ambani group.

"Is Gopalakrishnan independent? Does he have a conflict of interest? Was it disclosed at that point of time? If it was disclosed, the petroleum ministry and the regulator would have taken a different view of engaging him for validation," Chalasani told a press conference here.

Gopalakrishnan was a key expert, appointed by the directorate, who validated the capital expenditure of the Krishna-Godavari gas find.

In the case of Mustang Engineering, Chalasani said it was part of the UK-based John Wood group, which Reliance Industries had proposed to buy in 2006. This agency, he said, was asked to evaluate and make field development plans, along with estimating the cost.

"Mustang has also been advising Reliance Industries on various other projects."

The comments followed remarks by Director General of Hydrocarbons V.K. Sibal on the dispute over Krishna-Godavari gas, for which Reliance Natural Resources of Anil Ambani and his elder brother's Reliance Industries are fighting a bitter legal battle.

Going further, Chalasani said the initial output of the gas from Krishna Godavari basin was estimated at 40 million units a day, and based on that, the capital expenditure was pegged at Rs.12,000 crore (around $2.5 billion).

Subsequently, two years later, when the estimate of gas production was raised to 80 million units a day, the capital expenditure was pegged 268 percent higher at Rs.45,000 crore (nearly $9 billion), said the Anil Ambani group executive.

"Let us go beyond and see the reasonability of this. Normally when you see any production that goes up from 40 million units to 80 million, due to the economy of size, the capital expenditure will not get doubled - it will be more than 100 percent but below 200 percent."

He also questioned the position held by the regulator that inflating the capital expenditure does not benefit any stakeholder - neither the contractor, nor the government.

Contrary to that, Chalasani said, Reliance Industries is entitled to first recover its entire capital expenditure, based on the production-sharing contract, before the government gets any meaningful share of the reserves.

"As a result of higher capital expenditure, the government's share gets reduced and the government's share gets delayed."

NTPC not asked to sign deal with Reliance: Government

The central government Monday said it has not issued any directive to the state-run power major NTPC, formerly National Thermal Power Corp, to sign a gas purchase deal with Reliance Industries Ltd (RIL).

"Government has not issued any instruction to NTPC for signing of gas purchase deal with RIL," Minister of State for Power Bharatsinh Solanki said in a written reply tabled in Rajya Sabha.

Solanki said RIL had been found to be the lowest bidder for NTPC's 17-year contract for supply of gas to its Kawas-II and Gandhar-II power projects.

The power company had issued a letter of intent in June 2004, saying RIL would supply gas at the rate of $2.34 per million metric British thermal units (mmbtu) from the Krishna-Godavari (KG) basin.

But RIL did not come forward to sign the gas sale and purchase agreement (GSPA), and instead sought substantial changes.

"The changes sought by RIL on the accepted draft GSPA would have altered the basic complexion of the contract and were not acceptable to NTPC," Solanki noted.

Despite efforts to persuade RIL, there was no progress made to sign the agreement, he added.

"However, in spite of all the efforts, RIL did not sign the GSPA agreed during the bidding process, instead RIL unilaterally signed a contract which was not in line with the agreed GSPA and that left NTPC with no alternative other than taking legal recourse," the minister said.

Meanwhile, NTPC has asked the power ministry to look into easing its gas shortage at power stations through additional allocation from the gas allotted to the power sector from the KG basin by the empower group of ministers, "without prejudice to NTPC's suit in Bombay High Court".

Reliance's German firm files for insolvency

Trevira, a Germany-based polyester fibre manufacturer acquired by Reliance Industries Ltd (RIL) in 2004, has filed an application in a provincial court in the European country to start insolvency proceedings.

A press release issued here Wednesday by RIL said the application for insolvency proceedings had been filed in the Augsburg court in the state of Bavaria.

"The move follows major efforts by the company to overcome the impact of industrial slowdown in Europe, particularly in the automotive and textile sectors to whom it is an important supplier," the release said.

RIL acquired Trivera in June 2004 for 80 million pounds ($132 million), making the parent company the world's largest fibre and yarn player. It has production units in Germany, Denmark, Poland and Belgium.

"European textile manufacturers are currently facing a considerable drop in demand for their products, while the cost of production and employment is increasing and competition from Asian and Eastern European industries is stronger than ever," it added.

The German subsidiary has also appointed a new chief restructuring officer as its managing director to lead the company through this period.

Reliance Big signs separate deals in Hollywood

Expanding its investments in Hollywood, Reliance Big Entertainment (RBE), media venture of Reliance Anil Dhirubhai Ambani Group (ADAG), has signed two separate deals with Julia Roberts' Red Om Films and Brett Ratner's Rat Entertainment.

Reliance Big has so far established creative partnerships with nine leading production entities in Hollywood.

The initial seven deals, with Nicolas Cage's Saturn Productions, Jim Carrey's JC 23 Entertainment, George Clooney's Smokehouse Productions, Chris Columbus' 1492 Pictures, Tom Hanks' Playtone Productions, Brad Pitt's Plan B Entertainment, and Jay Roach's Everyman Pictures, were announced during the Cannes Film Festival 2008 by RBE Chairman Amit Khanna and President Rajesh Sawhney.

All nine deals provide for the creation of a development silo for each of the production entities and the possibility of Reliance co-financing projects that emanate from these development deals, a company release here said.

For any green lit projects utilising Reliance co-financing, the filmmakers would enjoy full creative and fiscal freedom.

Eight of the partnerships have had development projects approved and there was already a handpicked slate in excess of 20 projects and it was anticipated that most will generate content during 2009.

RBE chairman Amit Khanna commenting on the latest development said, ''These creative partnerships will lead to Reliance co-financing with the majority of the major US Studios as we are totally respectful of the existing first-look deals that each of our partners enjoys.''

Anil Ambani group produces pact copy in court

Part of the much talked about Memorandum of Understanding (MoU) between the Ambani brothers was placed in the Bombay High court Wednesday.

Ram Jethmalani, counsel for Anil Ambani's Reliance Natural Resources Ltd (RNRL), submitted the MoU along with an affidavit to the court.

To which Harish Salve, counsel for Mukesh Ambani's Reliance Industries Ltd (RIL), said he had a right to cross-examine the document.

The two counsels united in saying that the contents of the documents should not be made public.

RNRL is relying on this MoU in its case against RIL to settle the terms of supply of gas from the Krishna-Godavari basin off the Andhra Pradesh coast by RIL to RNRL's power projects.

The MoU records the arrangement between the two brothers as part of the demerger scheme and also notes what needs to be done in future.

The high court has adjourned the hearing of the case till Oct 15.

According to the Anil Ambani group, RIL had contracted to supply 12 million standard cubic metres of gas per day (MMSCMD) to the state-run National Thermal Power Corp (NTPC) at $2.34 per unit, and it was agreed that if the gas was not supplied, it would be sold to RNRL.

RIL had also agreed to supply the next 28 MMSCMD of gas to his company for power and other projects, also at $2.34 million British thermal units (mmbtu), for 17 years, the group said.

"In other words, the supply of gas to Reliance Natural was contracted at the prevailing market price - determined through rigorous process of international competitive bidding and on the same terms and conditions as the NTPC contract," Anil Ambani had said recently.

The earlier interim order, in which the court restrained RIL from selling the gas or from entering into any contract with a third party, has lapsed. RIL was subsequently planning to start production from the basin.

The court had also restrained RIL from entering into contracts to sell the gas from this basin - known in official jargon as KG-D6 gas - with companies other than RNRL and the state-run National Thermal Power Corp (NTPC).

It had also asked the two sides to settle the dispute within four months, but they failed to reach an agreement within the stipulated timeframe.

RNRL has claimed at least half of the 80 million standard cubic metres of gas per day that is envisaged from the fields off the Andhra Pradesh coast - said to be the country's biggest source of hydrocarbons today.

Indo-Asian News Service

Reliance Power acquires coal mines in Indonesia

Anil Ambani promoted Reliance Power Ltd said Friday it has acquired three coal mines in Indonesia with total reserves of two billion metric tonnes.

The acquisition was done by its wholly-owned subsidiary Reliance Coal Resources Pvt Ltd (RCRPL).

"Reliance Coal Resources has acquired 100 percent economic interest in three coal concessions in Indonesia," Reliance Power said in a communique to the Bombay Stock Exchange Friday.

Indo-Asian News Service

Billionaire lists are like maya: Mukesh Ambani

Soon after Forbes named him India's richest resident, Reliance Industries chairman Mukesh Ambani Friday warned that such billionaires' lists were deceptive, while drawing a parallel with maya of Indian philosophy.
Addressing the India Today conclave here, Ambani said there was "much hype" and talk about the number of Indians figuring in the various lists of billionaires and cautioned that they served little purpose.
"This, in my opinion, is a deceptive description. This is like maya of Indian philosophy. It veils your vision that comes in way of knowing your real self," said the chairman of India's largest company by market capitalisation.

"To all those who have aspirations of global leadership, I would like to caution - beware of this view," he said in a rather reflective mood. "I hope the next time you do a cover story on Mukesh Ambani, it will not be the money machine."
Last week Forbes had named Mukesh Ambani the fifth richest person in the world with a net worth of $43 billion, and called him "Asia's richest resident".
The magazine said his fortune was up $22.9 billion since last year, making him the world's second biggest gainer in terms of dollars. His brother, Anil Ambani, was ranked sixth with $42 billion.
The London-based L.N. Mittal, chairman of steel-maker Arcelor-Mittal, was ranked fourth with a net worth of $45 billion
Indo-Asian News Service

Knowledge and human values essential: Mukesh Ambani

India has been familiar with global leadership in the past and has achieved one of the highest growth rates in the world in recent years, Reliance Industries chairperson Mukesh Ambani said Friday while warning against "deceptive descriptions" like the billionaires' lists.
Speaking at the India Today Conclave here, Ambani said that knowledge and human values would count as much as financial strengths, if Indian entrepreneurs were to become world leaders in business.
"Global leadership is not unknown to India and since 1991 India achieved one of the highest growth rates in the world. We have 67 percent of the population that is young - below 35 years of age," said Ambani.

He said India must regain its leadership in science, technology and innovation, especially in the knowledge-driven global economy of today.
Giving a historical perspective, he said India had come a long way since the 17th century, during Mughal emperor Aurangzeb's reign, when its share in world output was 22 percent and the tax revenues were 14 times that of Europe.
"Nothing in a country or a company is inevitable," he said, while referring to the fact that the Reliance group was created in just one generation by his late father Dhirubhai Ambani to become India's largest private sector company.
He said economic powers all over the world were shifting to the private sector and asked the business community to develop a "one world" vision, even as the country's demographics were in its favour in terms of working population.
"Developing countries would dictate and the power is shifting to many," he said at the session, entitled "What Does It Take To Be A Global Business Leader?" He said governments were becoming facilitators with power shifting to many.

Ambani said dharma, moksha and karma (righteousness, salvation and duty) were important goals for individuals and that needed to be carried forward to the issue of leadership as well.

"The world is becoming apprehensive of all businesses that did not have their foundations in moral and human values," he said, adding business leaders were great men and they needed to act as trustees of the society's wealth.

He said the combined income of the world's 500 richest people exceeded that of the 416 million poorest, and added poverty was the main cause for the current global turmoil and chaos.

Ambani began his address with a warning that the much-hyped billionaires' lists, which sought to assess the prosperity of the rich and the famous, were deceptive and drew a parallel with maya of Indian philosophy.

"This, in my opinion, is a deceptive description. This is like maya of Indian philosophy. It veils your vision that comes in way of knowing your real self," said the chairman of India's largest company by market capitalisation.

"To all those who have aspirations of global leadership, I would like to caution - beware of such titillating illusions," he said in a reflective mood. "I hope the next time you do a cover story on Mukesh Ambani, it will not be on the money machine."

Last week Forbes had named Mukesh Ambani the fifth richest person in the world with a net worth of $43 billion, and called him "Asia's richest resident".

The magazine said his fortune was up $22.9 billion since last year, making him the world's second biggest gainer in terms of dollars. His brother, Anil Ambani, was ranked sixth with $42 billion.

The London-based L.N. Mittal, who is also chairman of steel-maker Arcelor-Mittal and holds an Indian passport, was ranked fourth with a net worth of $45 billion.

Indo-Asian News Service

Mukesh Ambani on cover of Newsweek

Mukesh Ambani, Chairman of Reliance Industries, says he will trigger a second green revolution in the country -- with synergies between farming and energy -- by involving his group in agriculture in a big way.

In an interview with Newsweek magazine, he says his company's involvement with the farm sector "has the potential to change the world" and adds that he views India's billion-plus population not as a problem but as billion-plus customers.

Here are some excerpts from the interview that was printed in the Newsweek edition that hit the stands on Monday:

Q: You say India's competitive advantages are globalisation, democracy, the ability to adapt to technology, and demography. Starting with democracy, doesn't it slow growth?

A: Sure, but increased aspirations are also driving growth. Politicians used to tell me: 'We sell dreams to people that we knew we'd never be able to fulfil'. Today, the mindset of these politicians has changed. They genuinely believe we have an opportunity to substantially alleviate poverty by 2030.

Q: How does technology fit in?

A: We are using new technologies in meaningful ways. To build our new refinery in 60 per cent of the time it took to build our first, we are training 20,000 people in a new generation of welding technology in six months. This is where demographics come in. We have 650 million people who are below their early 30s, while the US and Europe face a shortage of skilled workers.

A billion people used to mean lots of problems. Today I see a billion people as a billion potential consumers, an opportunity to generate value for them and to make a return for myself.

Q: How do you motivate poor farmers to join your new farm-to-retail network?

A: We will work with farmers to get them to increase their productivity and produce the right products of the right quality. This also requires a major investment in technology because there are minimum import standards [overseas]. We are also creating something that is totally missing in India: an efficient distribution system, linked to supermarkets across the world. This will generate up to one million new jobs and make us the largest private-sector employer in India.

Q: What drives you?

A: In my father's language: "To create something out of nothing." That possibility exists in India even in old-world sectors like agriculture.

Q: Is this an agrarian revolution?

A: Absolutely. Reliance is involving itself in agriculture in a big way. This will help to create a second green revolution at a time when energy and agro are converging. Oil is now at $70 a barrel, [but it's] a finite asset. We need a fallback position. We are looking for more gas and oil but we are also trying to grow our own energy. We think this has the potential to change the world.

Q: How disruptive and dispiriting was the feud with your brother?

A: Fundamentally we had different approaches. My view is to give everyone the space to grow in his own way. When you see restructuring or separations in a family [firm], value has almost always been destroyed. This is the first case where value has been enhanced. In that way it has been a win-win ending.

Reliance re-launches Vimal brand of fabrics

Reliance Industries on Friday re-launched its famous brand of fabrics, Vimal, along with the opening its first exclusive showroom in Ahmedabad, the city where the company and its first textile unit was born.
More showrooms

According to Anand Parekh, President, Textile Business, 23 other such exclusive showrooms will be opened within a year besides having about 200 franchise shops to market the Vimal brand of fabrics. After Ahmedabad, the next in the line for opening the exclusive showrooms would be Mumbai, Bangalore, Chennai and Kochi in the first phase, he said.

Mr. Parekh said for the first time, the company would be producing readymade garments, to begin with only in the menswear, and intended to launch manufacturing of automotive furnishing fabrics, particularly seat covers and roof-lining, from its own products of fabrics and polyester yarn. He said with many automobile companies coming to India, automotive fabrics were in high demand and Reliance wanted to cut a lion’s share in it in the global market.

Its exclusive showrooms would also have, for the first time, readymade apparel for men designed in the Italian fashion, inspired by the thoughts and guidance of the Italy’s well-known fashion designer and president of the “made in Italy” committee, Maurizio Bonas.

Reliance woos mom & pops with franchisee plan

Sporadic protests against retail biggies in recent months have driven Reliance Retail to tweak its business model a little, to ensure the enterprise isn't derailed before it has really taken off. Under the new scheme of things, it plans to partner local kiranas in smaller outlets, understandably as a pacifist ploy, while going it alone at the higher end of the retail spectrum - the hypermarts.
Jai Bendre, head-marketing, food business, Reliance Retail admitted as much in a recent brand summit. However, while conceding that the company was working on a plan to integrate small retail stores in the overall retail system, she refused to give away further details.

Sources, though, said Reliance Retail has started inviting retailers and individuals to become franchisees. As per the plan, the company will select and revamp the retail outlets, which would then be run on a revenue sharing model by the small retailers.

The company will go for the franchisee model in almost all product categories, including cosmetics, jewellery, watches, books and toys. The outlets will sell both Reliance and other brands.

Retail sector analysts believe such a move augurs well for the company. "It gets ready infrastructure and can eventually buy out these stores, when the dust has settled," said an analyst, preferring anonymity.

From the point of view of a small retailer, taking a franchisee offers an opportunity to both upgrade his store and increase business by stocking more brands.

All the same, not everyone's convinced.

Viren Shah, joint secretary, Federation of Retail Traders Welfare Association said some 20,000 small and medium kirana stores in Mumbai would form area-wise associations to collectively purchase goods, extend credit facilities and negate the big retailers' advantage over them by passing on the discounts derived from collective purchase of goods.

"We are looking at forming 30-50 associations, each having anywhere between 100 and 1,500 kirana stores in that area. Each retailer will have to spend Rs 400 per sq ft to standarise the interiors. Talks are already on and we will have our first meeting after Diwali. Hopefully, by early next year, we will have our action plan ready," said Shah.

Mohan Gurnani, chairman, Federation of Associations of Maharastra (FAM), though, chose to differ.

"Revenue sharing model is a good thing. Look, we are not against big malls or retailers. We are against displacement of lakhs of people dependent on the business model of the small retail," said Gurnani.
Credit: Sify.com