Reliance and RPL to merge

Reliance Industries Ltd (RIL) plans to merge its group firm Reliance Petroleum Ltd (RPL) with itself. RIL has offered one share for every 16 held in RPL to merge its refinery subsidiary. RIL will issue 69.2 million new shares to shareholders of RPL in order to buy back the company and will have 3.7 million shareholders after the merger. RIL's equity capital will rise to Rs 1,643 crore and the promoter's holdings will fall by 2 per cent to 47 per cent, said company officials. According to Alok Agarwal, chief financial officer, RIL, no fresh treasury stock would be created and the parent's holding in the petroleum unit would be cancelled and almost 200 million existing treasury shares would continue. RIL's absorption of RPL will be tax neutral for both the entities. "This merger is not about tax benefits. As far as taxation is concerned, the SEZ refinery is a separate undertaking. Both refineries will retain their tax benefits," Agarwal said. He also said that the merger would give RIL the ability to take on projects much larger than done before. RIL has set April 1, 2008 for the mergers to take place. The takeover is subject to approvals by the High Courts at Mumbai and Ahmedabad.