RCIL arms book Rs 98cr profit from ONGC stake sale

HSBC Global and Templeton buy 13.4 million shares in block deal.

Smart Entrepreneur Solutions and Smart Infosolutions, subsidiaries of Reliance Communications Infrastructure Ltd (RCIL), jointly sold 8.6 million shares of ONGC in early trade on the Bombay Stock Exchange (BSE) at Rs 865 a share yesterday.

The sale helped the subsidiaries of RCIL "" the holding company of Reliance Infocomm "" net a profit of Rs 98.90 crore in less than a year of investing in ONGC's public offer.

Stock market sources said two foreign funds, HSBC Global and Templeton, bought the ONGC shares in a block deal from the two RCIL subsidiaries which had subscribed to 13.4 million shares at Rs 750 apiece.

However, it was not clear whether these two firms still hold ONGC shares after the block deal. Stock market sources said these two firms offloaded a considerable chunk of their holding in ONGC soon after the listing of the shares. "Their holding in ONGC seems to have been exhausted," they added. Sources in the Reliance group remained noncommittal on the issue.

Soon after the block deal, the ONGC share price plunged to Rs 845.10 after touching a high of Rs 867.40 in early trading hours. The ONGC scrip ended 0.94 per cent lower at Rs 856.30 with total traded volume of 10.4 million shares on the BSE alone. The 8.6 million shares work out to nearly 0.6 per cent of ONGC's equity.

Smart Entrepreneur Solutions and Smart Infosolutions were caught in a major controversy two months ago on the source of the Rs 1,600 crore investment in the ONGC issue, and another Rs 1,500 crore in TCS.

In order to douse the controversy, Reliance Industries came out with a statement in mid-December 2004, saying RCIL provided funds to these two firms from its own sources.

"Reliance Industries will benefit from any gains RCIL makes from these investments in the future," the media statement then added.

Reliance Industries owns a 45 per cent stake in RCIL while another 45 per cent is owned by a slew of private companies owned by Reliance Industries Chairman and Managing Director Mukesh Ambani. The remaining 10 per cent is said to be held by employees' trusts.