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THE RIL ² RNRL SAGA
By @ $2. Others Estimated .34 per mmbtu for the next 17 years.000 crore over 15 years.20 per mmbtu.THE DISPUTE Gas Contract for supply of 28 mmscmd of gas per day. are charged $4. RIL (Mukesh) to RNRL (Anil). loss to RIL ² 42.
2$. If RIL sells gas at 2.34$ instead of valuation price of 4.µ ´ . govt will lose 20000 crore in NPV termsµ ANIL:µRIL contracted to supply 28 mmscmd of gas for 17 years @ 2. but a bankable agreement. It is deliberately citing Govt policies on pricing and allocation. We don·t want gas now.WHAT THEY SAY ´ MUKESH:´RIL cannot contravene Govt pricing & utilisation policy.34 mmbtu.
RIL called for price quotes from existing power and fertilizer companies capable of consuming gas when available.000 crore. Is capex rise from Rs 12. Term sheets were put up and later agreed to by EGOM.000 crore rigged? : No gold plating on the capital expenditure on gas fields. The actual expenditure was subject to three audits including the CAG.GOVERNMENT¶S TAKE ´ ´ Is the price of 4.000 to Rs 45. The DGH appointed consultants valued it at 45. .20$ per mmbtu right? : Pricing was arrived at scientifically.
20 /mmbtu.000 crore in NPV terms).34$.7bn. the NPV of the Govt·s share over 15 years will be $ 8.34? : if 80 mmscmd is sold at $4. If 40 mmscmd is sold at 2.MUKESH¶S TAKE ´ Will govt lose if gas is sold at $2. .8bn at a discount of 6%. the govt will earn just $4. (loss of 20.
ANIL¶S TAKE ´ Why isn·t ´My Respected Elder Brotherµ providing GAS to me ? : Whatever the reason. Croniesµ . I have no idea what it is Corporate Greed. Personal vendetta. Chamchas. Misguided advice from the 3 Cs : ´Chelas.
as the royalty is calculated on the valuation price only. Will govt lose? No matter what the sales price.688 crore. The consultants hired were biased towards Mukesh. PSC allows it to recover all costs an govt share gets diluted. govt will gain Rs 70.vis global prices. Why pricing is in dollars while costs. Profit from petroleum is also based on the valuation price. other. 483 crore whatever the price.20 per mmbtu right? : Price of 4. CAG does not audit private companies.2$ is fixed and no indexation is available vis ²a.795 crore. Hence total of Rs 70. ´ ´ .ANIL¶S ALLEGATIONS ´ Is the price of $4. revenue and subsidies are in rupees. one being a faculty of institute run by mukesh. a direct consultant. Govt royalty for the relevant 40 mmscmd will be Rs 12. 483 crore. so profit will be Rs 57. Is capex rise rigged? : Gold plating will benefit RIL.
Imagine where India would be! ´ ´ . Wish all political leaders were so duty bound.WHY DID GOVT INTERVENE? ´ The dispute is a private one ² no need for govt to poke its nose. He saw it as his ´duty to ensure safety of sovereign assetsµ. the petroleum minister had to intervene as he was ´concerned only about protecting what belongs to the people of Indiaµ. But ´as a custodian of the natural resourcesµ.
4. EPS will become negative in 2012. 2. Earns 2. but pays taxes based on 4. Ril earns @4. Loss of 500mn to 1bn annually. . 3. but as it will produce 80mmscmd.2$.mmbtu.600 crores in FY 2010.2$ from others. Revenues are same as in 2.IMPACTS OF COURT VERDICT SCENARIOS FOR RIL 1.2/mmbtu for its gas. Reliance pays a tax of 34% post 2 years for E & P. Expected profits Rs 5. it would still be profitable.34$ from NTPC and RNRL and 4. E&P in profit over 2010-2015.
34$. all its projects will get delayed. The landed cost may be 5.7 mmbtu. but is expected to come up in only another 30 months.IMPACTS OF COURT VERDICT SCENARIOS FOR RNRL 1. The 7.5 to 6. the valuation of the business will be affected negatively. In case the landed cost of gas increases from 5. . 2.5$/mmbtu.000MW Dadri plant has requisite clearances. Beneficial to reliance Power. In case it does not get gas at 2.
and many other business and legal purposes. Valuation is used by financial market participants to determine the price they are willing to pay or receive to consummate a sale of a business. allocate business purchase price among business assets. the same valuation tools are often used by business appraisers to resolve disputes related to estate and gift taxation. Business valuation is a process and a set of procedures used to estimate the economic value of an owner·s interest in a business. divorce litigation.KEY TERMS ´ cost at customer's site + freight + Insurance + customs charges if any + clearing agent's charges if any = Your landed cost. In addition to estimating the selling price of a business. establish a formula for estimating the value of partners' ownership interest for buy-sell agreements. ´ .
NOW U DECIDE Who·s right : Mota Bhai or Nana Bhai? ´ Is the Govt. What matters is profit. . In business. Nobody·s Wrong. justified in its stand? After all its ´Their Moneyµ. Nobody·s right. ´ Because ultimately : Business of Business is Business.
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