Reliance India company

Reliance was founded by the Indian industrialist Dhirubhai Ambani in 1966. Ambani has been a pioneer in introducing financial instruments like fully convertible debentures to the Indian stock markets. Ambani was one of the first entrepreneurs to draw retail investors to the stock markets. Critics allege that the rise of Reliance Industries to the top slot in terms of market capitalization is largely due to Dhirubhai's ability to manipulate the levers of a controlled economy to his advantage. Though the company's petrochemicals, refining, and oil and gas-related operations form the core of its business, however, other segment of the company includes textile, retail business, telecommunications and special economic zone (SEZ) development. After severe differences between the founder's two sons, Mukesh Ambani and Anil Ambani, the group was divided between them in 2006. In September 2008, Reliance Industries was the only Indian firm featured in the Forbes's list of "world's 100 most respected companies"

Reliance Petroleum Reliance Petroleum Limited ) was set up by Reliance Industries Limited (RIL), one of India's largest private sector companies based in Mumbai. Currently, RPL is subsidiary of RIL, and has interests in the downstream oil business. RPL also benefits from a strategic alliance with Chevron Indi a Holdings Pte Limited, Singapore, a wholly owned subsidiary of Chevron Corporation USA (Chevron), which currently holds a 5% equity stake in the Company

Needs Creates one-fourth of the worlds total complex refining capacity * Becomes the world's single-largest refining hub * Becomes the world's 17th largest refining company * Becomes the worlds fifth largest polypropylene producer * Derives synergies from combined operations crude sourcing, product placement, supply chain optimisation * Acquires flexibility in operations planning, higher utilisation of combined cash flows

Reasons
y

y y

The merger would help in sourcing crude oil for the integrated refinery complex and aid marketing of fuels such as gasoline and diesel globally at a time when demand was slumping. The merger would unlock significant operational and financial synergies that existed between RIL and RPL. There would be further gains from reduced operating cost arising from synergies of combined operations

Ril wanted to become the worlds largest producer of ultra clean fuels at a single location. The merger would give RIL the ability to take on projects much larger than done before. RIL shares could rise by about Rs 50 or cross Rs 1,300.

y y

Pre- Condition y

RIL s 33 million tonne per annum (mtpa) refinery at Jamnagar together with the newly built 29 mtpa export oriented SEZ refinery of RPL would make it the largest refining company in India
The company would not take the risk of taking large project. And also could not diversify the business

Post condition y Tax benefits to both companies and SEZ refinery was an separate undertaking. The book value of Ril were 700 and of Rpl Rs 30

y
y

The company continued its commercial relations with Chevron though both agreed to discontinue the equity participation. As per the agreement, Chevron was supposed to sign crude supply and product off-take agreement with RIL. But it did not happen as they wanted to exit from the investment in refining.