RIL pens demerger buyout cost

Reliance Industries (RIL) today issued a guidance on the cost of acquisition of Reliance shares for various de-merged entities for the purpose of tax computation by shareholders.

According to the guidance, the pre-demerger acquisition cost of the company has been apportioned at Reliance Industries (52 per cent), Reliance Communication Ventures (38.7 per cent), Reliance Energy Ventures (7.3 per cent), Reliance Capital Ventures (1.3 per cent) and Reliance Natural Resources (0.7 per cent).

According to the scheme of arrangement, the assets and liabilities of the demerged entities have been transferred to the resulting companies at book value as on August 31, 2005.

The method for calculation of acquisition cost and the date of acquisition of resulting companies is done based on the provisions of the Income Tax Act, 1961, and is based on experts' opinion.

The record date for the issue of shares has been fixed on January 25. Reliance shares will be traded on ex-benefit basis from January 18 and the price discovery will happen in a special trading session organised by the stocks exchanges that morning before the regular market opens. Reliance Industries ended weak today at Rs 873, down 1.36 per cent.

The company further said, "It has been advised as per Section 47 of the Income Tax Act, 1961, the issue of shares by the resulting company, in a scheme of demerger to the shareholders of the demerged company in consideration of demerger of the undertaking, will not be regarded as transfer.

Accordingly, date of acquisition of shares of the resulting companies will be deemed to be the date when the equity shares of the company were acquired."

THE SCHEME

Pre-demerger acquisition cost of the company has been apportioned at Reliance Industries (52 %), Reliance Communication Ventures (38.7%), Reliance Energy Ventures (7.3 %), Reliance Capital Ventures (1.3 %) and Reliance Natural Resources (0.7 %)

ASSETS and liabilities of the demerged entities have been transferred to the resulting companies at book value as on August 31, 2005