Oh! Yes, the media-savvy junior Ambani has a knack to narrate bad news in a pleasant way to his shareholders and investors. He extracts the positive news from a related report on any ADAG group issue and uniquely gets through with the message – “all is well”!
Let me rewind your thoughts to May 2010, pertaining to the RIL-RNRL gas supply dispute case. The Supreme Court verdict had rejected RNRL’s claim to natural gas from KG-basin at a concessional rate of $2.34 per mmBtu as against the government approved price of $4.20 per mmBtu. The writing was clearly on the wall that the verdict was in favour of RIL.
However, Anil Ambani had a different way to interpret this Court ruling for the public. This is what he had to say to his shareholders: the court has safeguarded the interests of 25 lakh shareholders of RNRL by issuing guidelines for expeditious finalization of gas supply agreement.
He further added,
“By a majority judgment, the Supreme Court has upheld RNRL’s case that the company petition filed by RNRL as maintainable and has upheld the powers of the court to modify the scheme and make it workable.”
In my opinion, he did his homework very well. He highlighted only the positive aspects of the ruling and tried to convey his shareholders that all is not lost; even though the verdict was largely one-sided in favour of RIL. This was all about the recent past.
Now, coming back to the present, the reputation of ADAG companies are once again under the drubbing – and this time around with respect to the Corporate Governance issues – alleged with violations of regulations for foreign investment and unfair trade practices in securities – at Reliance Infrastructure and RNRL.
Both RNRL and R-Infra are barred, by a recent consent order of SEBI, from accessing the secondary markets until Dec 2012. Further, Anil Ambani and 4 other directors will have to abstain from investing in listed stocks for the whole year. However, they can access instruments such as MF, primary issuances, buy-backs and open offers.
So, how has Junior Ambani interpreted this instance of loose governance in front of his investors? He said that SEBI move will not hit fund raising plans of the ADAG companies, in a statement to soothe investor nerves. All the group companies will retain full flexibility to raise funds through debt and equity and implement their existing and future projects. He sought to slam reports of capital market ‘ban.’
Ask him what gave way to this consent process? Pat came the reply that it is in the best interest of the companies and, thus, endorsed the consent process rather than the long-drawn out litigation process against the regulator.
Well, it definitely does not imply acceptance of guilt or wrong doing as put by Anil Ambani. But, doesn’t it highlight inherent lack of transparency practiced by the group companies? Why, then, stall the diligence process by initiating settlement of charges and not let the regulator delve deeper into the investigation of the facts and the case?
Recently, SEBI had also alleged misrepresentation of revenue in Reliance Communications after a DoT audit had claimed a gap of Rs. 2900 crore in the company’s actual and stated revenues.
Even as I am writing this, ADA Group stocks – Reliance Capital is down 8%, R-Infra slumped by a whopping 10% and Reliance Communications trades lower by 5% on the Indian bourses – have been hammered out of shape by the investors on issues of corporate governance practices.
Doesn’t it call for Anil Ambani to represent facts as it is to the shareholders as the situation demands?