The Hindu Business Line : `IPCL stock sale: Reliance Capital loss Rs 1,000 cr'

A DAY after Reliance Capital Ltd (RCL) announced that it sold 23 per cent stake in Indian Petrochemicals Corporation Ltd (IPCL) held by Reliance Petroinvestments Ltd to Reliance Pharmaceutical Pvt Ltd and Reliance Nutraceutical Pvt Ltd at par value (Rs 160 per share), Mr Amitabh Jhunjhunwala (Director - RCL) on Tuesday said the resultant loss to RCL was at least Rs 1,000 crore.

Mr Jhunjhunwala said IPCL results reflected the intrinsic value of RCL's 23 per cent IPCL stake to be substantially higher than Rs 231 a share paid three years back. Therefore, the sale of RCL's strategic stake in IPCL at par value was indefensible, he said. Loss of fair value for RCL was a minimum of Rs 1,000 crore, he added.

According to him, the `related party transaction' is in breach of fiduciary responsibilities towards RCL's minority investors. The transaction could involve substantial regulatory issues vis-à-vis SEBI (Prohibition of Insider Trading) Regulations, SEBI Takeover Code and Listing agreements of the NSE and BSE, he said.

However, a source in Reliance Industries said the company had decided against buying IPCL shares from the Government at Rs 195 a share last year as it was felt that the cost was too high. At that time, Mr Jhunjhunwala was the RIL Treasurer, he pointed out.

Moreover, there was the issue of interest cost on Rs 2,579 crore borrowed by Reliance Petroinvestments from RIL for three years, he said. In the final reckoning, all this would get reflected in the Reliance Industries balance sheet, he said.

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