INDIA BUSINESS WORLD - MAY 2006
THE MONTH THAT WAS...

RELIANCE CAP ACQUIRES 1% STAKE IN VIDEOCON

THE Anil Ambani group-owned Reliance Capital has acquired close to 1% in Videocon Industries (VIL), the flagship electronics and oil & gas company of the Videocon group formed by the merger of Videocon International and Videocon Petroleum.

Reliance Capital and its various investments firms have been buying VIL shares from the open market for the past one month, sources close to the development said. About 15 lakh shares have been acquired by Reliance Capital amounting to around Rs 75 crore in VIL, they added. “It is an investment decision made by the Reliance Capital. Since the stake is around 1%, we are not overtly worried about it,” Venugopal Dhoot, CMD said. But the purchases nevertheless has raised eyebrows among the management of the consumer electronics firm.

Sources said the current non-compete clause between the Ambani brothers is yet to be finalised and may not necessarily prevent them from taking interest in high-potential sectors where both may be present.

“We have been investing in many stocks. The investment in VIL is also a part of that,” a senior Reliance Capital official said. On Tuesday, VIL shares fell 1.21% to Rs 494.95 at the Bombay Stock Exchange (BSE). Days after making public its acquisition bid for Daewoo Electronics of South Korea, VIL has gone prospecting for oil in Oman. A consortium that includes VIL, GAIL (India), BPCL, HPCL and Oilex of Australia had been awarded Block 56 in Oman for exploration and further development. The company had announced that the block has the potential reserve in excess of four billion barrels as per the study made by the world famous research firm Fugro Robertson of the UK.

VIL has already a production facility in Oman for the consumer durable business. VIL has also got the E&P contract for Block 56 largely on the strength of our being an existing player in the country. Initially, VIL plans to invest Rs 250 crore for exploration activities.