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Reliance merger to create Indian oil major
The Reliance group announced the merger of its two biggest companies on Sunday to create India`s first fully-integrated energy company and propel it to among the world`s top 30 energy firms by profits.
The Reliance group announced the merger of its two biggest companies on Sunday to create India's first fully-integrated energy company and propel it to among the world's top 30 energy firms by profits.
The merger will bring under one umbrella India's largest petrochemicals firm Reliance Industries, which also has sizeable interests in oil and gas exploration, power and telecom, and the country's largest private sector oil refiner, Reliance Petroleum.
The combined market capitalisation of the new entity is $10.06 billion, making it the second-most valuable company in India behind Unilever's Indian subsidiary Hindustan Lever and ahead of software blue chip Wipro.
"We believe size, scale and integration are the key success factors in the global energy industry," Reliance Industries' managing director Anil Ambani told a news conference called to announce the merger. Shareholders in Reliance Petroleum will get one share in Reliance Industries for every 11 they hold in Reliance Petroleum, and the merger will have retrospective effect from April 1, 2001.
If results for the first nine months of the financial year ending March 31 are annualised, the merged entity would have sales of $11.8 billion and a net profit of $800 million, making it India's first private sector company of global size.
Ambani said the integration of the two companies would result in "financial strength and flexibility enabling investments in large acquisitions and growth". ACQUISITIONS TARGETED
Reliance is seen as a major contender for government stakes in State-run refiners Hindustan Petroleum Corporation and Bharat Petroleum Corporation, which are likely to be privatised later this year.
It is also one of the bidders for a 26 per cent stake which the government is selling in Indian Petrochemicals Corporation. Analysts also welcomed the merger announcement. RICH INDIANS
The founders of Reliance, the Ambani family, will hold 34 per cent of the merged entity.
The group was founded four decades ago by Anil Ambani's father Dhirubhai Ambani, now Reliance's chairman. It started off trading textiles, but integrated rapidly into making textiles, yarn and then polymers and fibre intermediates before moving into refining.
Anil, aged 42, and older brother Mukesh, aged 44, are responsible for the day-to-day running of the Reliance empire.
The Ambanis are ranked 138th in Forbes magazine's list of the 500 top billionaires in the world, and have a personal net worth of $2.9 billion, the second richest in India behind Wipro's founder Azim Premji. OTHER BUSINESSES
While the core petroleum and petrochemical businesses have been relatively lacklustre this year, analysts point to some of the other businesses as engines of growth.
Reliance Industries owns 34 per cent of power utility BSEs, which is bidding for collapsed US group Enron's stake in the $2.9-billion Dabhol power project in western India.
Reliance Industries also has a 30 per cent stake in a potentially lucrative oil and gas exploration venture with the State-run Oil and Natural Gas Corporation and BG.
One of its highest profile investments is a 45 per cent stake in Reliance Infocom, an umbrella for the group's activities in telecom and information technology.
Reliance Infocom is building a fibre optic network linking 115 cities at a cost of Rs 25,000 crore as part of its aggressive telecom plan.
Bureau Report
The combined market capitalisation of the new entity is $10.06 billion, making it the second-most valuable company in India behind Unilever's Indian subsidiary Hindustan Lever and ahead of software blue chip Wipro.
"We believe size, scale and integration are the key success factors in the global energy industry," Reliance Industries' managing director Anil Ambani told a news conference called to announce the merger. Shareholders in Reliance Petroleum will get one share in Reliance Industries for every 11 they hold in Reliance Petroleum, and the merger will have retrospective effect from April 1, 2001.
If results for the first nine months of the financial year ending March 31 are annualised, the merged entity would have sales of $11.8 billion and a net profit of $800 million, making it India's first private sector company of global size.
Ambani said the integration of the two companies would result in "financial strength and flexibility enabling investments in large acquisitions and growth". ACQUISITIONS TARGETED
Reliance is seen as a major contender for government stakes in State-run refiners Hindustan Petroleum Corporation and Bharat Petroleum Corporation, which are likely to be privatised later this year.
It is also one of the bidders for a 26 per cent stake which the government is selling in Indian Petrochemicals Corporation. Analysts also welcomed the merger announcement. RICH INDIANS
The founders of Reliance, the Ambani family, will hold 34 per cent of the merged entity.
The group was founded four decades ago by Anil Ambani's father Dhirubhai Ambani, now Reliance's chairman. It started off trading textiles, but integrated rapidly into making textiles, yarn and then polymers and fibre intermediates before moving into refining.
Anil, aged 42, and older brother Mukesh, aged 44, are responsible for the day-to-day running of the Reliance empire.
The Ambanis are ranked 138th in Forbes magazine's list of the 500 top billionaires in the world, and have a personal net worth of $2.9 billion, the second richest in India behind Wipro's founder Azim Premji. OTHER BUSINESSES
While the core petroleum and petrochemical businesses have been relatively lacklustre this year, analysts point to some of the other businesses as engines of growth.
Reliance Industries owns 34 per cent of power utility BSEs, which is bidding for collapsed US group Enron's stake in the $2.9-billion Dabhol power project in western India.
Reliance Industries also has a 30 per cent stake in a potentially lucrative oil and gas exploration venture with the State-run Oil and Natural Gas Corporation and BG.
One of its highest profile investments is a 45 per cent stake in Reliance Infocom, an umbrella for the group's activities in telecom and information technology.
Reliance Infocom is building a fibre optic network linking 115 cities at a cost of Rs 25,000 crore as part of its aggressive telecom plan.
Bureau Report