Wednesday, Dec 08, 2004
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By Our Special Correspondent
MUMBAI, DEC. 7. The board of directors of Reliance Energy Ltd (REL) had a meeting with full board of its single largest shareholder, Reliance Industries Ltd (RIL), for a day-long meeting and consultation on October 20, REL revealed it today in a release.
"The meeting was attended by the entire board of RIL, including its Chairman and Managing Director, Mukesh Ambani. All other directors of the two companies were also present. The meeting was intended to keep the RIL board fully abreast of the growth strategy and future plans of REL," the release stated.
"The REL board treated its RIL counterpart to a series of detailed presentations, covering the entire gamut of issues facing the power sector in the country: From opportunities in generation, transmission, distribution and trading to the deployment of funds by REL."
"The RIL board was also given extensive briefing about REL's distribution businesses in Mumbai, Delhi and Orissa and the status of the upcoming power project at Dhirubhai Ambani Energy City in Uttar Pradesh."
RIL holds over 50 per cent stake in Reliance Energy and has nominated as many as five directors, including Chairman and Managing Director, Anil D. Ambani, on the REL board.
"This is the first time ever in the history of corporate India that a listed company has called the full board of its majority shareholder to one of its board meetings. The unprecedented decision is in line with REL's commitment, to uphold the highest standards of transparency and corporate governance in its functioning," it added.
According to sources, prior to being converted as Reliance Energy, BSES had made a presentation for an investment plan of Rs. 14,000 crores before the board of RIL on January 29 in the presence of Chairman Mukesh Ambani. Mr. Mukesh, after a separate meeting with his younger brother, Anil, just before the meeting, attended by 12 directors, had proposed to the board an investment/loan of up to Rs. 5,000 crores from RIL in its power companies BSES and Reliance Delhi Power Private Limited sources close to the Reliance group said.
In the board meeting on January 29, Mr. Mukesh said that BSES, renamed as Reliance Energy in March, and its associate RDPPL, intended to raise long term funds to finance expansion and growth proposals, a presentation for which was made. This would give Reliance an opportunity to increase its investment in power sector, enabling it to maximise returns and thereby enhancing overall shareholder value, Mr. Mukesh said at the meeting, according to sources.
Mr. Anil Ambani, being the interested party, however, did not participate in the discussion even as other directors unanimously resolved to grant up to Rs. 3,000 crores each for BSES and PDPPL provided the amount by the two entities did not exceed Rs. 5,000 crores in the aggregate.
Subsequently, Reliance Energy informed RIL that it did not need Rs. 5,000 crores appropriated to it as other institutions were keen on putting in money and scaled it down to Rs. 3,500 crores of which Rs. 1,500 crores had already been transferred.
Asked if Mr. Anil Ambani had announced the Dadri project under the political influence of Samajvadi Party and his association with the Uttar Pradesh Chief Minister, Mulayam Singh Yadav, and Amar Singh, Reliance Energy sources said that "We need about 3,000 MW annually for distribution in Delhi alone. We are buying this now from the Delhi Government and our contract is coming to an end by March 2007. Although the Dadri project is in Uttar Pradesh but it is very near to Delhi and we will be needing bulk of the electricity from the project here," he said.
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