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Related-party transactions: Rs 2.68 trn awaits shareholder nod next week

Tata Motors, similarly, will put proposed RPTs worth upwards of Rs 89,000 crore to a shareholder vote the same day

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Amritha Pillay Mumbai

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Shareholders of industry giants Adani Enterprises, Reliance Industries, and Tata Motors — the latter two are part of the Sensex — will decide on combined related-party transactions of more than Rs 2.68 trillion proposed for this financial year and later.

Related-party transactions for BSE 500 companies touched at least a six-year high of Rs 42.1 trillion in FY23, the Capitaline data shows. 

The Rs 42.1 trillion includes related-party transactions both at balance-sheet and profit-and-loss levels.

Adani Enterprises, Reliance Industries, and Tata Motors have been some of the main non-banking companies to report higher related-party transactions in the past. For FY25, Adani Enterprises is seeking shareholder approval for related-party transactions worth Rs 1.04 trillion, as part of the resolutions at the upcoming annual general meeting (AGM) on Monday.

Tata Motors will put up a proposal for more than Rs 89,000 crore to shareholder vote the same day.

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Shareholder voting for Reliance Industries’ proposed related-party transactions, worth Rs 74,800 crore for FY25, through postal ballot was closed on Thursday, and the results are expected next week.  

Shriram Subramanian, founder and managing director, InGovern, said: “We do not see any unusual rise in related-party transactions other than the new approval regime introduced by the Securities and Exchange Board of India starting April 1, 2022.”

In FY21, before the start of the new approval regime, the value of related-party transactions of BSE-500 companies was Rs 27.8 trillion, rising 52 per cent by FY23. So far, only 85 companies of the BSE500 have reported their annual reports for FY24, and their value of related-party transactions that financial year was Rs 8.7 trillion.

Subramanian said: “We suggest companies put out details, the logic for getting into for such transactions, their independent validation, etc. A related-party transaction not in the ordinary course of business needs to be disclosed in detail and presented to shareholders in a compelling manner.”

Some transactions shareholders will vote for this financial year include one for Rs 36,000 crore to be undertaken over FY24-25 and FY25-26, between Reliance Industries’ subsidiary and that of Jio Financial Services, for selling customer premises equipment/devices and telecom equipment.

Adani Enterprises is seeking shareholder approval for transactions with Adani Power, another listed group entity, for selling and purchasing services and providing financial assistance, with a combined value of up to Rs 10,293 crore.

Tata Motors is seeking approval for a transaction of Rs 13,950 crore between its subsidiaries and Tata Autocomp Systems, a subsidiary of Tata Sons during FY25.

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First Published: Jun 21 2024 | 9:18 PM IST

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