Business
Anil Ambani, others fined Rs 624 crore by Sebi for fund diversion
MUMBAI: Markets regulator Sebi has banned ADAG chairman Anil Ambani, along with 24 entities associated with him, from the securities market for five years and imposed a total fine of Rs 624 crore for diversion of funds from his group company Reliance Home Finance. Ambani, Amit Bapna, Ravindra Sudhalkar and Pinkesh R Shah (all former top executives at RHFL) have also been barred from associating with any listed entity for five years.
“By preponderance of probability, the mastermind behind the fraudulent scheme is the chairman of ADAG – Anil Ambani.It is also apparent that (Bapna, Sudhalkar and Shah), KMPs (key managerial personnel) of the company, played an active role in perpetrating the fraudulent scheme,” Sebi noted.
Sebi’s 222-page investigation report detailed how Ambani and the three former executives had loaned large sums of money to various entities connected to the Anil D Ambani Group (ADAG) that was never paid back.
The Sebi probe, which follows interim directions issued on Feb 11, 2022, completes regulatory action in the case. The report also drew from the observations of PwC (the former statutory auditor of RHFL) and of Grant Thornton (the forensic auditor appointed by Bank of Baroda, the lead bank of the consortium of lenders of RHFL).
Earlier this year, National Financial Regulatory Authority, the regulator for auditors and audit firms of large and listed companies, had banned chartered accountants of two companies related to Reliance Capital and levied a penalty detailing how funds were diverted and the auditors failed in discharging their responsibility.
Sebi’s investigation into the affairs of RHFL was mainly for the company’s operations during the years 2016-17 to 2018-19. The regulator’s report also drew from the observations of PwC (the former statutory auditor of RHFL) and of Grant Thornton (the forensic auditor appointed by Bank of Baroda, the lead bank of the consortium of lenders of RHFL).
Ambani and his associates had used a loan product called general purpose working capital loans (GPC loans) to advance funds to several entities without following proper lending norms. Between FY18 and FY19, GPC loans by RHFL had jumped nearly 9-fold: From Rs 900 crore to Rs 7,900 crore, Sebi quoted from PwC’s letter to RHFL management.
The PwC letter had also mentioned that several of these borrowers had limited or no revenue, negative or limited net worth, no other business than onward lending of loans from RHFL, etc. The letter also pointed out that some of these borrowers were incorporated shortly before disbursement of loans by RHFL. And “in some cases, the loan sanction dates were found to be on the same date as the date of application for loan or even before the dates of applications made by these borrowers”.
PwC had also pointed out to RHFL’s management that some of the borrowers had email domain addresses of Reliance ADA Group, brand name of “Reliance” was appearing in the name of borrower company, directors of such companies were employees of Reliance ADA Group, and multiple borrower companies had same registered address. The auditor asked why these companies should not be classified as group companies.
Soon after, PwC had resigned as RHFL’s statutory auditor, reported its decision to the ministry of corporate affairs and informed Sebi.
In its forensic audit reports, Grant Thornton had pointed out that of about Rs 14,578 crore that RHFL had disbursed to various entities as GPC loans, about Rs 12,488 crore had gone to 47 entities which were suspected to be linked to ADAG Group. Over time some of these loans found their way back to these related entities, often used for ever-greening of the loans. Several of the group companies were involved in these operations that include Reliance Capital (RHFL’s holding company), Reliance Commercial Finance, Reliance Infrastructure, Reliance Big Entertainment, Reliance Broadcast Network and others.
The forensic auditors could not trace back the end use of loans aggregating about Rs 1,935 crore “due to information limitations”, the Sebi report noted. The regulator is in the process of quantifying the illegal gains from this fraudulent operation and “action may be initiated in accordance with the law”, the order said. Ambani and the 24 associated entities have 45 days to pay the penalty.
“By preponderance of probability, the mastermind behind the fraudulent scheme is the chairman of ADAG – Anil Ambani.It is also apparent that (Bapna, Sudhalkar and Shah), KMPs (key managerial personnel) of the company, played an active role in perpetrating the fraudulent scheme,” Sebi noted.
Sebi’s 222-page investigation report detailed how Ambani and the three former executives had loaned large sums of money to various entities connected to the Anil D Ambani Group (ADAG) that was never paid back.
The Sebi probe, which follows interim directions issued on Feb 11, 2022, completes regulatory action in the case. The report also drew from the observations of PwC (the former statutory auditor of RHFL) and of Grant Thornton (the forensic auditor appointed by Bank of Baroda, the lead bank of the consortium of lenders of RHFL).
Earlier this year, National Financial Regulatory Authority, the regulator for auditors and audit firms of large and listed companies, had banned chartered accountants of two companies related to Reliance Capital and levied a penalty detailing how funds were diverted and the auditors failed in discharging their responsibility.
Sebi’s investigation into the affairs of RHFL was mainly for the company’s operations during the years 2016-17 to 2018-19. The regulator’s report also drew from the observations of PwC (the former statutory auditor of RHFL) and of Grant Thornton (the forensic auditor appointed by Bank of Baroda, the lead bank of the consortium of lenders of RHFL).
Ambani and his associates had used a loan product called general purpose working capital loans (GPC loans) to advance funds to several entities without following proper lending norms. Between FY18 and FY19, GPC loans by RHFL had jumped nearly 9-fold: From Rs 900 crore to Rs 7,900 crore, Sebi quoted from PwC’s letter to RHFL management.
The PwC letter had also mentioned that several of these borrowers had limited or no revenue, negative or limited net worth, no other business than onward lending of loans from RHFL, etc. The letter also pointed out that some of these borrowers were incorporated shortly before disbursement of loans by RHFL. And “in some cases, the loan sanction dates were found to be on the same date as the date of application for loan or even before the dates of applications made by these borrowers”.
PwC had also pointed out to RHFL’s management that some of the borrowers had email domain addresses of Reliance ADA Group, brand name of “Reliance” was appearing in the name of borrower company, directors of such companies were employees of Reliance ADA Group, and multiple borrower companies had same registered address. The auditor asked why these companies should not be classified as group companies.
Soon after, PwC had resigned as RHFL’s statutory auditor, reported its decision to the ministry of corporate affairs and informed Sebi.
In its forensic audit reports, Grant Thornton had pointed out that of about Rs 14,578 crore that RHFL had disbursed to various entities as GPC loans, about Rs 12,488 crore had gone to 47 entities which were suspected to be linked to ADAG Group. Over time some of these loans found their way back to these related entities, often used for ever-greening of the loans. Several of the group companies were involved in these operations that include Reliance Capital (RHFL’s holding company), Reliance Commercial Finance, Reliance Infrastructure, Reliance Big Entertainment, Reliance Broadcast Network and others.
The forensic auditors could not trace back the end use of loans aggregating about Rs 1,935 crore “due to information limitations”, the Sebi report noted. The regulator is in the process of quantifying the illegal gains from this fraudulent operation and “action may be initiated in accordance with the law”, the order said. Ambani and the 24 associated entities have 45 days to pay the penalty.
NEW DELHI: Indian refiners can leverage their combined consumption to seek better terms for next year’s annual contracts with suppliers, especially Russia, as a gloomy demand outlook subdues oil prices, a senior petroleum ministry official said on Thursday.
“We have seen IEA (International Energy Agency) and all such agencies lowering demand outlook in recent times.But India has emerged as a major (demand) growth centre,” he said, alluding to the growing size of India’s consumption — pegged at about 5 million barrels/day — offers a substantial market for suppliers in a tepid market.
On joint negotiations by the refiners with Russia, the official said “talks” among them “are ongoing”. Indian refiners sign annual contracts with major suppliers for part of their requirement and meet the rest through spot purchase.
The focus on Russia stems from the fact that it has become India’s top oil supplier because of discounts offered in the wake of Western sanctions and a $60 per barrel price cap, imposed after Moscow’s 2022 invasion of Ukraine, curbed markets for the Russian barrels. State-run refiners mostly buy Russian oil through spot tenders.
A similar attempt by state-run refiners to secure better terms from the Middle-East suppliers about 15 years back had come a cropper.
But the official said a contract is more than the price, which follows benchmarks. “For example, one can seek discounts, longer payment credit period, destination flexibility (allowing diversion cargo to another port in India) and other terms,” he said.
Both OPEC, accounting for 40% of globally traded oil, and the IEA have in recent times pruned their 2024 demand growth forecast. In contrast, IEA’s oil market report on India has said the country will contribute a third of the global oil consumption growth through 2030 to overtake China.
For the first time in two years, benchmark Brent crude dropped below $70 per barrel last week as fear of oversupply grew amid poor show by the major economies, especially China, the world’s second-largest oil consumer. On Thursday, however, Brent rebounded to hover just below $75, buoyed by the US interest cut.
“We have seen IEA (International Energy Agency) and all such agencies lowering demand outlook in recent times.But India has emerged as a major (demand) growth centre,” he said, alluding to the growing size of India’s consumption — pegged at about 5 million barrels/day — offers a substantial market for suppliers in a tepid market.
On joint negotiations by the refiners with Russia, the official said “talks” among them “are ongoing”. Indian refiners sign annual contracts with major suppliers for part of their requirement and meet the rest through spot purchase.
The focus on Russia stems from the fact that it has become India’s top oil supplier because of discounts offered in the wake of Western sanctions and a $60 per barrel price cap, imposed after Moscow’s 2022 invasion of Ukraine, curbed markets for the Russian barrels. State-run refiners mostly buy Russian oil through spot tenders.
A similar attempt by state-run refiners to secure better terms from the Middle-East suppliers about 15 years back had come a cropper.
But the official said a contract is more than the price, which follows benchmarks. “For example, one can seek discounts, longer payment credit period, destination flexibility (allowing diversion cargo to another port in India) and other terms,” he said.
Both OPEC, accounting for 40% of globally traded oil, and the IEA have in recent times pruned their 2024 demand growth forecast. In contrast, IEA’s oil market report on India has said the country will contribute a third of the global oil consumption growth through 2030 to overtake China.
For the first time in two years, benchmark Brent crude dropped below $70 per barrel last week as fear of oversupply grew amid poor show by the major economies, especially China, the world’s second-largest oil consumer. On Thursday, however, Brent rebounded to hover just below $75, buoyed by the US interest cut.
Applications for US unemployment benefits fell to the lowest level since May, indicating the job market remains healthy despite a slowdown in hiring.
Initial claims decreased by 12,000 to 219,000 in the week ended September 14, according to Labor Department data released Thursday. That was below all estimates in a Bloomberg survey of economists. The period also corresponds with the so-called reference week when the survey is conducted for the September employment report.
Continuing claims, a proxy for the number of people receiving benefits, also dropped in the previous week, to the lowest in three months.
The four-week moving average, a metric that helps smooth out volatility in the data, fell to 227,500, the lowest since June.
What Bloomberg economics says…
“Initial jobless claims declined more than expected in the survey week for September’s employment report, due in part to difficulty adjusting the data around a major holiday like Labor Day. Claims tend to be depressed in holiday-shortened weeks, then rebound the following week — so the current data have limited value as a guide to September’s payroll print,” said Eliza Winger.
Claims for unemployment benefits have remained subdued in recent months even as labor demand cooled. The US central bank’s decision to lower interest rates by a half percentage point this week reflected policymakers’ intention to maintain what Federal Reserve Chair Jerome Powell described as “still a solid” labor market.
“We’re trying to achieve a situation where we restore price stability without the kind of painful increase in unemployment that has come sometimes with disinflation,” Powell said during a press conference Wednesday following the rate-cut announcement.
Initial claims, before adjustment for seasonal factors, rose by 6,436 to 184,845. Texas, New York and California saw the largest increases. Applications in Massachusetts fell by the most since the end of April.
Initial claims decreased by 12,000 to 219,000 in the week ended September 14, according to Labor Department data released Thursday. That was below all estimates in a Bloomberg survey of economists. The period also corresponds with the so-called reference week when the survey is conducted for the September employment report.
Continuing claims, a proxy for the number of people receiving benefits, also dropped in the previous week, to the lowest in three months.
The four-week moving average, a metric that helps smooth out volatility in the data, fell to 227,500, the lowest since June.
What Bloomberg economics says…
“Initial jobless claims declined more than expected in the survey week for September’s employment report, due in part to difficulty adjusting the data around a major holiday like Labor Day. Claims tend to be depressed in holiday-shortened weeks, then rebound the following week — so the current data have limited value as a guide to September’s payroll print,” said Eliza Winger.
Claims for unemployment benefits have remained subdued in recent months even as labor demand cooled. The US central bank’s decision to lower interest rates by a half percentage point this week reflected policymakers’ intention to maintain what Federal Reserve Chair Jerome Powell described as “still a solid” labor market.
“We’re trying to achieve a situation where we restore price stability without the kind of painful increase in unemployment that has come sometimes with disinflation,” Powell said during a press conference Wednesday following the rate-cut announcement.
Initial claims, before adjustment for seasonal factors, rose by 6,436 to 184,845. Texas, New York and California saw the largest increases. Applications in Massachusetts fell by the most since the end of April.
Business
Stock market today: BSE Sensex hits fresh lifetime high, goes above 83,600; Nifty50 above 25,550
Stock market today: BSE Sensex and Nifty50, the Indian equity benchmark indices, surged in trade on Friday to hit lifetime highs following a more than expected 50 basis points rate cut by the US Federal Reserve. While BSE Sensex climbed above 83,600, Nifty50 was above 25,550. At 9:20 AM, BSE Sensex was trading at 83,636.77, up 689 points or 0.83%. Nifty50 was at 25,571.70, up 194 points or 0.77%.
Siddhartha Khemka, Head of Research, Wealth Management at Motilal Oswal, says, “A 25bps rate cut is already discounted and can lead to profit booking in the market.However, a 50bps rate cut by the Fed could bring some cheer to market sentiments. Also, Fed commentary will be important as it will give clarity on the quantum and duration of the rate cut cycle. We expect the market to remain volatile in the near term with rate-sensitive sectors in focus.”
Nagaraj Shetti of HDFC Securities noted that the short-term trend of Nifty remains positive with range-bound action, and any dips to the support levels of 25,200-25,100 could present a buying opportunity. A decisive move above 25,500 levels might propel Nifty towards higher targets.
In the global markets, U.S. stocks closed with modest losses on Wednesday after the Federal Reserve cut interest rates by 50 basis points, exceeding expectations. The S&P 500 futures rose 0.5%, while Japan’s Topix gained 2%, and Australia’s S&P/ASX 200 rose 0.2%. Euro Stoxx 50 futures also climbed 0.7%.
In the forex market, the euro, Japanese yen, and offshore yuan experienced slight declines against the US dollar. Oil prices fell in Asian trading on Thursday following the larger-than-expected Federal Reserve interest rate cut, which raised concerns about the U.S. economy.
Several stocks are in the F&O ban period today, including Balrampur Chini Mills, Hindustan Copper, GNFC, RBL Bank, PNB, Bandhan Bank, Biocon, Birlasoft, LIC Housing Finance, and Granules. Foreign portfolio investors turned net buyers with Rs 1154 crore, while domestic institutional investors bought shares worth Rs 152 crore. The net long position of FIIs increased from Rs 2.2 lakh crore on Tuesday to Rs 2.37 lakh crore on Wednesday.
Siddhartha Khemka, Head of Research, Wealth Management at Motilal Oswal, says, “A 25bps rate cut is already discounted and can lead to profit booking in the market.However, a 50bps rate cut by the Fed could bring some cheer to market sentiments. Also, Fed commentary will be important as it will give clarity on the quantum and duration of the rate cut cycle. We expect the market to remain volatile in the near term with rate-sensitive sectors in focus.”
Nagaraj Shetti of HDFC Securities noted that the short-term trend of Nifty remains positive with range-bound action, and any dips to the support levels of 25,200-25,100 could present a buying opportunity. A decisive move above 25,500 levels might propel Nifty towards higher targets.
In the global markets, U.S. stocks closed with modest losses on Wednesday after the Federal Reserve cut interest rates by 50 basis points, exceeding expectations. The S&P 500 futures rose 0.5%, while Japan’s Topix gained 2%, and Australia’s S&P/ASX 200 rose 0.2%. Euro Stoxx 50 futures also climbed 0.7%.
In the forex market, the euro, Japanese yen, and offshore yuan experienced slight declines against the US dollar. Oil prices fell in Asian trading on Thursday following the larger-than-expected Federal Reserve interest rate cut, which raised concerns about the U.S. economy.
Several stocks are in the F&O ban period today, including Balrampur Chini Mills, Hindustan Copper, GNFC, RBL Bank, PNB, Bandhan Bank, Biocon, Birlasoft, LIC Housing Finance, and Granules. Foreign portfolio investors turned net buyers with Rs 1154 crore, while domestic institutional investors bought shares worth Rs 152 crore. The net long position of FIIs increased from Rs 2.2 lakh crore on Tuesday to Rs 2.37 lakh crore on Wednesday.
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