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Monday, Jul 22, 2002

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`RPL public issue funds used for paying call money'

Ambarish Mukherjee

NEW DELHI, July 21

THE funds raised by Reliance Petroleum Ltd (RPL) through its public issue in 1993-94 were routed through privately-owned Ambani companies for paying call money of H-series debentures of Reliance Industries Ltd (RIL), according to an inspection report on the company ordered by the Department of Company Affairs (DCA). The report further states that apart from paying call money for RIL's debentures, RPL's public issue funds were also used for repaying overdraft facilities availed from Citibank, by routing the funds through the Ambani companies.

The DCA, on the basis of various complaints raised by the Bahujan Samaj Party member of Lok Sabha, Mr Raashid Alvi, related to misuse of RPL's public issue funds and circulation of more than one set of annual accounts, had ordered a full-fledged inspection of RPL and limited inspection of five other group companies, namely Reliance Industries Ltd (RIL), Lavanya Holdings and Tradings Private Ltd (LHTPL), Reliance Industrial Infrastructure Ltd (RIIL), Reliance Filaments Ltd (RFL) and Reliance Enterprise Ltd (REL).

According to the findings of the inspection report, though RPL did not deploy any funds directly with any privately-owned Ambani company, it gave Rs 175 crore to LTHPL for procurement of project materials for refinery project at Jamnagar.

LHTPL, in its turn, "deployed these funds with 65 private limited companies, which was initially advanced towards procurement of project materials and later on for purchase of various securities," the investigating officials said in their report and added that out of these 65 companies, "Ambanis were interested in four companies to whom Rs 23.80 crore was given."

The four companies in which the Ambani family members were interested as shareholders, according to the report, are Clarion Investment & Trading Private Ltd, Fiery Investments & Leasing Private Ltd, Orson Trading Private Ltd and Sanatan Textrade Private Ltd.

The funds worth Rs 23.80 crore were transferred to these four companies by LTHPL between March 1994 and October 1998 which used them for repaying an overdraft taken from Citibank and paying for call money for RIL debentures.

While the funds were once again routed back to LHTPL from these four privately-owned Ambani companies as and when required, the LHTPL held on to these funds for three more years before it actually started supplying project material from January 1997.

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`RPL public issue funds used for paying call money'

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