Reliance Industries (RIL), India’s largest company by market capitalisation plans to merge its group firm Reliance Petroleum (RPL) with itself. Both RIL and RPL are to hold separate board meetings on March 2 to consider the merger. If the latest merger is approved by the boards, the m-cap of the combined entity will be Rs 2,33,000 crore.
RIL’s existing refinery was earlier under a separate company, also named Reliance Petroleum. This company, which started operations in FY01, was merged with RIL with effect from March 2002.
The merger would catapult RIL among the world’s 50 most profitable companies; top 10 non-state owned refining companies; top 15 independent upstream companies and the fifth-largest producer of poly-propylene. The combined entity will have 1.24 million barrels per day (bpd) refining capacity.
Analysts said the merger could have been triggered by operational and tax benefits. RIL would save on transfer pricing on use of K-G Basin gas and other related products. It would also save on taxes to be paid arising out of the transfer resulting in about $1-1.5 for every barrel of crude processed. The savings would occur at a time when refining margins were under pressure because of a slump in oil prices, analysts added. The move was seen as bailout for the troubled RPL, which was facing difficult market conditions and would not be profitable for another two to three years.
02-Mar-09 
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