Reliance Industries : Built to succeed

Demerger to Unlock value for Investors

The Reliance Industries stock has been in the limelight for past few weeks.
The shareholders and creditors of Reliance have recently okayed the demerger scheme with overwhelming response.
Under the scheme of arrangement, finalised in broad detail in June this year, Reliance will transfer its holdings in Reliance Capital, Reliance Energy, Reliance Infocomm and Reliance Communications to four new entities promoted and controlled by Anil Ambani. RIL shareholders will get shares in the four entities.

SHAREHOLDING IN DEMERGED ENTITIES
All shareholders of RIL, except the Specified Shareholders', would be issued shares of de-merged undertakings in 1:1 ratio i.e. for each share held in RIL, shareholders would get:
1. One share of Reliance Communications Ventures Ltd. of face value Rs. 5 each fully paid-up
2. One share of Reliance Energy Ventures Limited of face value Rs. 10 each fully paid-up
3. One share of Reliance Capital Ventures Limited of face value Rs. 10 each fully paid-up
4. One share of Global Fuel Management Services Limited of face value Rs. 5 each fully paid-up

The Specified Shareholders i.e. Trustees of Petroleum Trust (holding 7.5% of RIL) and four companies - Reliance Aromatics and Petrochemicals Pvt. Ltd., Reliance Energy and Project Development Pvt. Ltd., Reliance Chemicals Pvt. Ltd. and Reliance Polyolefins Pvt Ltd (collectively holding 4.7% of RIL) hold RIL shares for the economic benefit of RIL shareholders. The Specified Shareholders will not take shares of the resulting companies. The RIL shareholders will get proportionate benefit of this also. As a result thereof, the total number of shares to be issued by each of the resulting companies would be 122 crore as against 139 crore equity shares of RIL.

BENEFITS TO SHAREHOLDERS
The shareholders of RIL would continue to participate in the growth and progress of RIL, which is a global oil, gas, refining and petrochemicals company. They would continue to hold the same number of shares as they currently hold in RIL. In addition to that, they would receive separate shares in the four demerged entities, which will allow them to participate individually as well as collectively in the growth areas of telecom, financial services and coal and gas based energy businesses. The shares of the resulting companies will be listed on the Stock Exchanges in India, where RIL shares are currently listed, thus providing liquidity to all shareholders. This will unlock value for all shareholders as they can participate directly in all the businesses that RIL has nurtured and brought to stature.

Outlook on Reliance
Investment Guru believes that the demerger should unlock the value for the Reliance Industries Sharholders and the total value of their holdings in the demerged entities should be quite higher than the current market price of the Stock. The street is buzzed with expectations that the premium will be in the range of Rs. 200-300 on the stock post demerger.

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