By IANS,
Mumbai : The $34.5-billion Reliance Industries, India’s largest private sector company, Friday announced that it will consider a proposal next week to merge another group company into itself to bring in operational efficiency.
The Mukesh Ambani-controlled Reliance Industries and its oil refining and export-oriented subsidiary Reliance Petroleum, have both informed the stock exchanges of their boards’ agenda to consider the merger.
“The board of directors of the company will consider and recommend the amalgamation on March 2,” the identical statutory filings by the two companies with the stock exchanges said.
The deal is expected to also lead to Reliance Industries acquiring the 5-percent stake that US oil major Chevron holds in the company’s subsidiary, a company official said. “The merger is being considered for achieving operational efficiency.”
Reacting to the announcement, the government said it did not see any immediate issues with the merger proposal. “There should be no legal issues,” Petroleum Minister Murli Deora said in New Delhi.
“The merger will not affect the export-oriented unit status of Reliance Petroleum,” Commerce Secretary G.K. Pillai added.
Reliance Petroleum has claimed an annual crude processing capacity of 580,000 barrels per day, making it the sixth largest refinery in the world. The parent is a Fortune Global 500 company and largest private sector entity in India.
The Reliance group, which also has interests in oil exploration, petrochemicals, life sciences and retail trade, says its petroleum complex at the port town of Jamnagar in Gujarat is the largest grassroots refinery in the world.
The merger was announced after the close of trading hours on Indian bourses, where the Reliance Industries scrip fell 1.97 percent to Rs.1,265.05, while that of Reliance Petroleum also dropped 1.23 percent to Rs.76.20.
Reliance Industries holds a 70.38-percent stake in Reliance Petroleum, while Chevron holds another 5 percent. The rest is widely held, including those by financial institutions and the public.
The promoters of Reliance Industries, which was founded by legendary industrialist, the late Dhuirubhai Ambani, hold a 49.03 percent stake in the company as on Dec 31.