RELIANCE-RPL merger: Swap ratio fixed at 1:16

Mukesh Ambani-controlled Reliance Industries Limited (RIL) and Reliance Petroleum Limited (RPL) have been merged into one entity. According to a release issued by Reliance to the BSE, the company's board approved a Scheme of Amalgamation("the Scheme") of Reliance Petroleum Ltd (RPL) (the "Transferor Company") with the company under the provisions of Sections 391 to 394 of the Companies Act, 1956.

The merger ratio is slightly in favour of RPL, and RIL said the merger will be effective from April 1, 2008. The boards have decided the swap ratio at 1:16, which implies that RPL shareholders will get one RIL share for every 16 shares held in RPL. RIL has decided to extinguish its treasury stock.

The merged company, Agarwal added, will be able to use cash flow in a better manner. He said the company sees significant cash flow from RPL in the first year of operations. He also doesn’t see additional depreciation benefits from RPL. Back in 2002, when RPL was merged with RIL, the swap ratio was fixed at 1:11, that is for every one share of RIL, 11 RPL shares.