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India's largest private firm, Reliance Industries Ltd (RIL) on Monday (March 2) merged with its refinery subsidiary Reliance Petroleum Ltd (RPL). The merger will create one of the largest refineries in the world with a total refining capacity of 1.24 million barrels of crude a day. As per the agreement, RIL has offered one share for every 16 held in Reliance Petroleum (RPL). The RIL-RPL merger is one of the largest mergers in the country.
The merger will come into effect from April 1, 2009, after which RIL will enter the list of 50 leading companies of the world in terms of profitability. According to a company statement, in order to buy back the petroleum unit, RIL will issue 69.2 million new shares to shareholders of RPL. After the merger comes into effect, RIL will have 3.7 million shareholders. According to chief financial officer of RIL, Alok Agarwal, no fresh stock will be created and RIL's holding in RPL will be cancelled.
Agarwal also added that the merger will enable RIL to handle much bigger projects which were not taken earlier. The merger will make possible the sourcing of crude oil for the integrated refinery complex. In addition to these, it will help in marketing of fuels such as gasoline and diesel globally.
