The Name ‘Reliance’ is a misnomer and misplaced here….and not for the first time either !
Reliance breaks Rs 700 on the downside yet again…Two days ago on May 8,2012 to it recorded it’s 52 Week Low of Rs 671 ……this should test conviction of even loyalists
Closing at Rs 695,Reliance’s Market Cap is Rs 227371 crs => @ US $ 42 Billion…it’s now at Rank 2 after TCS which is at Rs 240000 crs => US $ 45 billion
What do we Believe !?…how can you expect us to Rely on ‘Reliance’!?
…it says it erred in estimating Gas Reserves
Reliance has announced that it had overestimated proven gas reserves in the Krishna Godavari Basin…It says that the current estimates are now 6.7% lower at 3.67 trillion cubic feet….Oil Minister,Mr Jaipal Reddy told Parliament two days ago that Reliance’s D6 Block Output will drop to just 20 Million standard cubic meters per day by 2014-15….there is going to be a huge demand and supply gap and this will be met by LNG Imports…Currently LNG consumption is 166 mmscmd which should rise to 356 mmscmd by 2014-15
All Reliance Valuations over the past few years were excitedly based on increasing Gas Output from D6…these are no longer valid as we were valuing gas that Reliance says is not there now !….and I will not be surprised that when in 2014 there is fresh gas pricing negotiated with the Government,Reliance will turnaround and suddenly discover huge gas reserves !
…government has slapped a huge penalty for the lower gas output from KG D 6 Field and accused Reliance of violating the Production Sharing Contract
The Government has slapped a US $ One Billion Penalty on Reliance for lower output from D6 and for wilfully cdrilling less wells than it had committed to in the approved plan and thus having violated the Production Sharing Contract…Reliance has termed this penalty as ‘illegal’ and blames unexpected geological reasons for the lower output that could not have been resolved by drilling more wells
.….fresh 13 year Loan of US $ 2 Billion taken while it is said to be moving towards becoming debt free by next year
Reliance also boasted of having garnered a 13 year loan of US $ 2 Billion on May 7,2012 to fund goods and services from German Suppliers for it’s Petrochemicals Business
A Thought crosses my mind….some time ago there was huge hype of Reliance moving towards Zero Debt by 2013…and then this US $ 2 Billion Fresh Loan….Reliance’s Cash Flows have been buoyed by the huge payment of US $ 7.2 Billion from BP treated as FDI ….Reliance is creating Shale Assets in USA and also applying Funds to Buy Back it’s shares