In the battle between the two brothers, Anil Ambani-headed Reliance Energy on Tuesday sought to put the Reliance Industries on the defensive claiming that everything was transparent about investments in various energy projects, an issue that was believed to have created the rift between them.
Reliance Energy came out with a press statement about the October 20 board meeting in which it had made a presentation before entire board of the majority shareholder RIL including Chairman and Managing Director Mukesh Ambani.
"This is the first time ever in the history of corporate India that a listed company has called the full board of its majority shareholders 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," REL said in the release.
"The meeting was intended to keep the RIL board fully abreast of the growth strategy and future plans of Reliance Energy ltd," it said in an apparent rejection of reports that unilateral announcement of investments including Rs 11,000 crore (Rs 110 billion) for a power project in Uttar Pradesh by Anil was the major cause for the current battle.
Earlier, Reliance Energy sources had said that the company had informed its major shareholder Reliance India Ltd about all its investment plans totalling about Rs 14,000 crore (Rs 140 billion), including a generation power project in Uttar Pradesh.
The meeting on October 20 was intended to keep the RIL Board informed of the growth strategy and future plans of Reliance Energy Ltd, the communication said.
"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 transmission and trading to the deployment of funds by REL," it added.
REL's response to BSE stock exchange comes in the wake of reported differences between the two brothers over REL's decision to set up a massive over 3,700 MW gas-based power plant in Uttar Pradesh and the company's some other investment plans.
RIL holds over 50 per cent stake in Reliance Energy and has nominated as many as five directors including Anil on the REL Board.
According to Reliance Energy, the RIL board was also given extensive briefing about REL's distribution businesses in Mumbai, Delhi and Orissa as well as the status of upcoming power project at Dhirubhai Ambani Energy City in Uttar Pradesh.
It has been widely reported that unilateral announcement of investments including a Rs 11,000 crore power project at Dadri in UP by REL Chairman and Managing Director Anil Ambani was a major reason behind the battle for control between the two brothers that led to passage of contentious resolutions at Reliance Industry's July 27 board meeting, granting superior power to Chairman Mukesh Ambani.
Prior to being converted as Reliance Energy, BSES had made a presentation for an investment plan of Rs 14,000 crore before the board of RIL, majority shareholder, on January 29, 2004, in the presence of Reliance Chairman and Managing Director Mukesh Ambani, sources had indicated.
Despite repeated attempts, RIL spokesperson could not be contacted for comments.
Mukesh Ambani, after a separate meeting with younger brother Anil just before the meeting of January 29, attended by 12 directors, had proposed to the board an investment/loan of up to Rs 5,000 crore (Rs 50 billion) from RIL in its power companies -- BSES and Reliance Delhi Power Private Limited, sources close to Reliance group said.
In the board meeting on January 29, RIL Chairman Mukesh Ambani 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, Mukesh said at the meeting, according to sources.
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 crore (Rs 30 billion) each for BSES and PDPPL, provided the amount by the two entities did not exceed Rs 5,000 crore in aggregate.
Subsequently Reliance Energy informed RIL that it did not need Rs 5,000 crore appropriated to it as other institutions were keen on putting and scaled it down to Rs 3,500 crore (Rs 35 billion) of which Rs 1,500 crore (Rs 15 billion) has already been transferred.
Asked if Anil Ambani had announced the Dadri project under political influence of Samajwadi Party and his association with UP Chief Minister Mulayam Singh Yadav and Amar Singh, Reliance Energy, sources said: "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 electricity from the project here," he said.
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