Mumbai, Jan. 16
Mr Anil Ambani — two of whose group companies have been barred by SEBI from accessing the secondary markets — was at pains to explain that this would not affect his group companies' fund raising or growth plans.
All the group companies “retain full flexibility to raise funds through both debt and equity and to implement their existing and future projects,” he said at a hurriedly called news conference on Sunday.
SEBI, in its consent order issued on Friday, barred Reliance Infrastructure Ltd (R-Infra) and Reliance Natural Resources Ltd (RNRL) from accessing the secondary market until December 2012. Five directors of these companies, including Mr Ambani, have been barred from the secondary market till December 2011.
The ban on these entities is not applicable to instruments such as mutual funds, primary issuances, buy-backs and open offers, said the SEBI order.
There is no burden on the companies and no compromise on the interests of investors and stakeholders. Even the Rs 50-crore settlement fee was paid by the directors in their individual capacities and was no burden on the companies and their shareholders, Mr Ambani said.
On whether the order could constrain him from acquiring a listed entity, Mr Ambani said: “There is no curb on open offers and as such there is no interest in buying and trading of stocks of other companies. Further, Reliance Infra and Reliance Power would emerge as the largest companies in the infrastructure and power segments in 3-5 years. There is no company of scale and size that we plan to acquire in the power sector. But, if we choose to buy a company, we can do so.”
Concern over governance
On how the ban might impact his group's reputation and raise concerns on corporate governance, he asked whether it could be construed that governance of top companies globally were flawed just because they preferred the consent mode.
He said the consent order was the regulator's acceptance of the voluntary submission made by the ADAG group.
On why the submission should include the bar on secondary markets, he said it was in the best interest of the companies. Mr Ambani said there was a lack of understanding of how the consent process worked. The US Securities Exchange Commission settled over 90 per cent of cases through consent orders. Even in India, SEBI has passed over a thousand orders, he claimed.
Legal experts, too, endorsed the consent process rather than the long-drawn out litigation that the group wanted to avoid, said Mr Ambani.
Payment of settlement fee or opting for the process does not imply acceptance of guilt or wrong doing, he said.
To a question on whether the conference was meant to address concerns that the share prices of his group companies might fall on Monday, he said he was not keen on “giving a quote for day trading”.
SEBI had been investigating the entities for alleged dealings either directly or indirectly in the shares of Reliance Communications Ltd by the Anil Ambani group companies using ECB /FCCB proceeds for fraudulent and unfair trade practices under the relevant regulations.
The consent terms shall apply even after these companies undergo any change on account of merger, amalgamation or any other corporate action. A high-powered committee of SEBI found R Infra and RNRL responsible for “misrepresenting the nature of investments in yield management certificates/deposits and the profits and losses thereof” and misusing the framework of SEBI's FII regulations.
R-Infra was down 1.4 per cent on Friday, closing at Rs. 798.290 a share; R-Power (into which RNRL has been merged) was down 1.1 per cent at Rs. 146.90. The consent order was issued after market hours on Friday.Related Stories:
RInfra, RNRL barred from secondary market till Dec 2012
SEBI directive to RNRL, Reliance Infra on inspection of documents
SEBI drops case against Reliance Mutual Fund