** RNRL * important (please read)

Mayuresh · #1 13th January 2008, 05:18 PM

IF BELOW ANALYSIS IS TRUE... BETTER SELL RNRL AT THIS LEVEL

How much gas is RIL going to give?

According to initial agreement RIL has to give 28 mmscmd for 17 years.

The rate in the initial agreement was fixed at $2.34 per mmbtu.

This may go up to 40 mmscmd under certain conditions.

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mmscmd is "Million Standard Cubic Meter Per Day".

mmbtu is "Million British Thermal Units".

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Now comes the first uncertainty.

RIL says it cannot supply 28 mmscmd at $2.34 per mmbtu.

This is the main dispute in the court case.

The reasons that RIL gives is

- RIL has only 4.4 trillion cubic feet (TCF) of certified proven reserves (CPR).

So how much is 4.4 TCF?

1 cubic meter = 35.3 cubic feet.

This CPR of RIL reserves = 4400/35.3 billion cubic meter.

= 4400000/35.3 million cubic meter.

= 124645 million cubic meter.

At 28 mmscmd, the reserves will last 4451 days. (12 years).

However, please not that RIL will be supplying to other companies too.

25 mmscmd will be used for RIL's own use and 12 mmscmd is supposed to go to NTPC.

Thus if RIL has an output of 28+25+12 mmscmd = 65 mmscmd, the reserves will get exhausted in 1917 days (little over 5 years).

So if 4.4 TCF figure is correct, there is no way RIL can supply gas to RNRL for 17 years.

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What is RNRL's argument?

RNRL has stated that...

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RNRL has applied for gas distribution licenses for Mumbai and NCR.

However, there is a clause in the RIL - RNRL agreement, which does not allow RNRLto use the gas bought for RIL, for any other purpose, except power generation.

I really don't understand why markets have got excited by RNRL's gas distribution plans. There is no way Mukesh Ambani will permit RIL's gas to be used for gas distribution. Even if RNRL has to distribute gas, it will have buy gas from sources other than RIL.

raghav1366 · #2 14th January 2008, 05:56 AM

the information is more of technical in nature. i believe that the market prize of reliance shares are not linked to profitability i.e. eps of the respective organisations. persons who have a short term outlook i.e. 7 months to one year need not look into your points.

RNRL also has business established links with reliance power ipo and the group money will be moving between one another and i believe that there is no need for panic in any reliance deal for any st investor.

Mayuresh · #3 14th January 2008, 07:00 AM

Dear,

I agree to what u say. But also remember one point that the power genaration plant under the AGAG group sutuated at DADRI is completely driven by the gas supply that Mukesh ambani will provide.

Thus even REL/Reliance power effectively suffers if RIL denies gas supply.

It is true that market is very very optimistic abt reliance (ADAG), but dont forget that any news triger which hints towards RILs denial to gas supply will have a hard impact on AGAG group of shares.

cheers

Quote:

Originally Posted by raghav1366

the information is more of technical in nature. i believe that the market prize of reliance shares are not linked to profitability i.e. eps of the respective organisations. persons who have a short term outlook i.e. 7 months to one year need not look into your points.

RNRL also has business established links with reliance power ipo and the group money will be moving between one another and i believe that there is no need for panic in any reliance deal for any st investor.

nandu · #4 14th January 2008, 08:54 AM

RNRL is not a dumb company looking for RIL to be the only source. ADAG is not that much dumb to raise the stake from 40% to 55%.

Latest news I heard was RNRL will be the source company which will provide coal and other needs to RPower. this is clearly mentioned to SEBI. SEBI delayed the Rpower becoz ADAG was not clear about RNRL , as the supply is only for 2 years ADAG clearly stated, it is in talks with US COal mine which is world No.2 and some australian coal mines for supply of coal uninterruptly for more than 5 years. Apart from that ADAG is supplier of natural gas...I think ADAG is not a begger looking for RIL business alone. ADAG created wealth for his shareholders more than his brother from 16000 to 3 lakh crore.

**** RNRL *** important (please read)

** RNRL * important (please read)