Sat, 03 Jul 2010 14:59:55 GMT

RNRL to merge with R-Power

Mumbai: The Anil Dhirubhai Ambani Group (ADAG) has decided to merge Reliance Natural Resources Ltd (RNRL), its gas trading subsidiary, with Reliance Power.


The company in 2009-10 had a turnover of Rs 298 crore, with net profit of Rs 73 crore.

It was also planning to enter distribution of gas to retail consumers in cities, using the share of gas available from KG D-6.

However, on May 7, 2010, the Supreme Court ruled that RNRL could not be allowed to trade natural gas, as natural gas was a national property. "Post the Supreme Court verdict, RNRL has no locus stand in the case. Considering both the companies are still under execution, the share-swap deal could be of 5:1 (RNRL-RPower) based on book value of the company," said S P Tulsian, a Mumbai-based independent investment analyst.

The combined entity of RPower and RNRL will have a market capitalisation of Rs 52,374.89 crore, according to the share prices on Friday. Reliance Power has a market capitalisation of Rs 41,979.95 crore and RNRL, Rs 10,394.94 crore. "At present it does not make legal or commercial sense for RNRL to exist. RNRL's existence becomes aquestion mark. It makes sense to merge it with R-Power, which will set up the power plant," said H L Ranina, a corporate Lawyer.

RNRL was formed in 2000 as a gas trading company for Reliance Industries. It was later given to Anil Ambani as part of a family de-merger between the Ambani brothers in December 2005.

Sources said the merger process would take a few months as both are listed companies and would require approval of shareholders of the two.


Source: Business Standard

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