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CORPORATE WAR

Reliance Ind. Ltd


Vs
Reliance Natural Resources Ltd.

Prof. Rajendra Singh Pardeshi.


Asst. Professor (Marketing Mgmt.)
+91 9420796119
HISTORY
 In 2005 after death of Dhirubhai Ambani,
Reliance group was devided among
Mukesh & Anil Ambani.
 Mother Kokilaben then Initiated an
agreement between Mukesh lead
Reliance Ind. Ltd. And Anil lead
Reliance Natural Resources ltd.
The Family Agreement

 R. I. L . should give 28
mmscd(million metric standard cubic
meters) of gas per day at the rate
of 2.34 $ / mmbtu(million metric
british thermal unit). For 17 years
period.
The Dispute

* R. I. L . Not following terms &


conditions of the agreement.


 * R.N.R.L. filed a sue in Mumbai high


court.
The Judgement

* On 15th June,2009 Mumbai high court


judge that family agreement bet R. I.


L & RNRL is valid & ordered both the
cos. To make legal agreement on line
with family agreement within 45
days.

The Appeal

* R.I.L. made appeal in the Supreme


court of India against Mumbai high


court order.

Value & Importance of Gas
wells.


* There are total 18 gas wells in KGD-6 block where R.I.L. is
working under.


 * Value of Gas stores in only D-1 & D-3 wells is @ Rs1.92
Lacks Crores.
 * If this Gas is utilized ,entire economy of the country will
be improved inside out.

 * This gas will be substitute for the Imported ‘Nafta’ and


will reduce the cost of prod. Of Fertilizers resulting in
reduced prices of fertilizers. Govt. has to spend less on
subsidies.
Government Intervention

 *Government has already submitted an application in


Supreme court mentioning that Gas is a National
Property and it ownership can’t be shared privately
according to section 297 of constitution of India.

 * Government has challenged the family agreement .


 * Government also has objection to the section in


family agreement which says that out of present &
future productions 40 % of the Gas should be given to
RNRL


Government Permission
 * Government has given permission of Gas
Production to RIL on production sharing contract.
According to that contract Govt. has share in profits
earned through sale of gas. As the profit is related
with selling price govt. has full right to check each &
every sale deed of gas made by RIL.

 * Therefore Government has challenged the Mumbai


high court judgment in the Supreme court of India.
 RIL also has challenged the high court judgment in
Supreme court of India with separate petition.


What is Actual Price of
Gas ?
 * Price fixed through Tenders invited by
RIL :
 4.33 $/MMBTU (year 2007)

 * Price fixed after Govt. Intervention :


 4.2 $ / MMBTU

 * Note : This Price has to be Reviewed

 after every 5 years



Interim Judgment of H.C. in
Jan. 2009
* According to price fixed by govt., Mumbai High
court has given Interim order RIL has been
permitted to sale the gas according to
preferential order decided by govt.
1. Fertilizer cos.
2. Petrochemical plants.
3. Steel plants.
4. Gas based Electricity prod. Cos.
5. Oil Refineries.
6.
7.

Present Production of Gas by
RIL
 * Present production : 31 MMSCD

 * By Dec. 2009 : 80 MMSCD


 * MMSCD = Million Metric Standard Cubic


Meters per Day
What RNRL says
 * RNRL is disagree with govt fixed price
(4.2 $).
 * RNRL says that Govt. role is limited to
see how to protect govt. profits only.
 * RNRL argue that Rate of 2.34 $ has got
its own background.
 * Delay in commissioning Dadri plant of
RNRL is due to breach of contract by RIL.
 * RIL has artificially raised the cost of
production of Gas.
Background of 2.34 $ Rate
 * In 2003 NTPC called Global tenders for
their Kawas & Gandhar Projects.
 * RIL has submitted the tender with 2.34 $
Rate which was lowest one.
 * NTPC asked RIL to supply 12 MMSCD @
2.34$.(at that time Reliance group was not
divided)
 * This is the base on which family
agreement was made accdg. To RNRL.
What RIL Says
 * Rate of 2.34$ is not acceptable to RIL due to
increase in cost of production by 100% .
 * If the gas is supplied @ 2.34$ ,incurred loss
to RIL will be Rs.19000 Crores.
 * Family agreement is not sanctioned by
 Share holders & Board of directors of RIL.
 * Accdg. To Gas utilization policy of Govt.
supply of gas is done to projects which has
started operations but Dadri project of RNRL
is on Paper only.
 * RIL has started the plant in 6 ½ years
 * Minimum period of starting Gas prod. Plant
is 6 years as per records.
RNRL’s Campaign against RIL
& ONG Ministry.
 * RNRL attacked RIL & Oil and Natural Gas
ministry through media campaign mentioning
following points in the advertisements.
 * RIL managed govt. to accept 4.2$ rate.
 * How can cost of project increased to
Rs.45000 Cr. From Rs. 12000Cr. With Increase
in production from 40 MMSCD to 80 MMSCD.
 * Govt. will get Income of Rs.500 Cr. But the
RIL will earn Profit of Rs. 50,000 Cr.
 * ONG Ministry is supporting RIL ,therefore
 entire project should be audited through
Independent International committee of
Experts.
Reactions to RNRL’s Campaign.
 * Govt. has objected to the campaign and
said It is unfortunate.
 * Govt. claims that total earning from this
project will be Rs. 84000 Cr.
 * Hon. Prime minister appealed Ambani
brothers to solve the entire matter through
discussions.
 * RIL also objected the campaign saying
that the campaign advertisement is a
effort to Influence the court case.
Reactions of Gas based
electricity generation
companies.
 * Torrent power – Gujarat; Gautmi power;
Konasimi power ; wemagiri power ; Lanko
power – A.P. has jointly filed a petition in
Supreme court saying that they are
purchasing the Gas from RIL @ 4.2 $
rate ,now if RNRL will get the gas @2.34$
rate RNRL will get unfair advantage and
there will not be healthy competition in
energy sector.
Reactions of Fertilizer &
Steel companies.
 * Fertilizer & Steel Production companies
had made agreement regarding supply of
gas for 5 years with RIL .

 * They asked govt. to assure uninterrupted


gas supply for the period of agreement
irrelevant of court order.
THANK YOU !
PROF. RAJENDRA SINGH PARDESHI
ASST. PROFESSOR – MARKETING DEPT.
IBMRD,
AHMEDNAGAR.
9420796119
kavirajthakur@yahoo.co.in
www.ibmrd.org

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