The Hindu : Front Page : Allocation of Reliance Infocomm shares under scrutiny

Online edition of India's National Newspaper
Wednesday, Mar 16, 2005

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Allocation of Reliance Infocomm shares under scrutiny

By Vinay Kumar

NEW DELHI, MARCH 15. The Government is examining if any law was violated in the allocation of one crore shares of Reliance Infocomm Limited to three unlisted firms at the rate of one rupee each.

``We are looking if any law has been violated in the allocation of shares. The enquiry is not over. At the moment, I am not in a position to say if any law has been violated,'' the Union Finance Minister, P. Chidambaram, said in the Rajya Sabha while replying to supplementaries during question hour.

Mr. Chidambaram said that Reliance Infocomm and its successor company, Reliance Information and Communication Limited, were unlisted companies and, therefore, did not fall under the jurisdiction of the Securities and Exchange Board of India (SEBI) and its regulations.

In his written reply to the question by Jibon Roy (CPI-M) and Sanjay Nirupam who recently quit the Shiv Sena, Mr. Chidambaram said that according to information furnished by the Ministry of Company Affairs, three unlisted companies held shares in an unlisted public limited company Reliance Infocomm Limited.

The shares were acquired by each of the three companies on September 12, 2002, from three persons — K.R. Raja, C.S. Moghe and V.K. Gandhi. The three companies and their shareholdings are: Prerana Auto Private Limited (33 lakh shares), Softnet Traders and Consultants Private Limited (33 lakh shares) and Fairever Traders and Consultants Private Limited (34 lakh shares).

By an order of the High Court of Gujarat on December 16, 2002, Reliance Infocomm Limited was amalgamated with Reliance Information and Communications Limited, another unlisted company. Upon amalgamation, the name was changed to Reliance Infocomm Limited.

The three companies were issued new shares by the amalgamated company in replacement of the old shares held by them. ``From the available balance sheets of the three companies as on March 31, 2004, the price at which the three companies acquired shares in the erstwhile Reliance Infocomm Limited appears to be at Re. 1 a share. When these shares were substituted by new shares issued by the amalgamated company, no further price was paid,'' the Finance Minister said. According to the information provided by National Securities Depository Limited, each of the three companies transferred its entire shareholding in the amalgamated company in favour of Ganesh Infrastructure Fund that appears to be a trust. Since the three companies have filed their balance sheets as on March 31, 2004, they are working companies, the Minister said.

To a query by Mr. Nirupam, the Minister said: ``There are some complaints relating to Reliance Industries, which is a listed company. Those complaints are under examination by the SEBI.''

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