RIL-related entities in rejig mode

Portfolio of Mukesh's biggest investment & trading firm to be moved to new firm

Reliance Ports & Terminals Ltd, one of the 12 entities facing insider trading charges named by the Securities & Exchange Board of India on Thursday, is part of a complex demerger process initiated last year by Mukesh Ambani. Under the demerger, the investment division of the biggest investment and trading company of Ambani is being hived off and merged with another personal company of Ambani — Reliance Industries Holdings Private Ltd.

Just before the demerger, Reliance Ports & Terminals Ltd’s investment division had also taken an impairment of Rs12,300 crore on its balance sheet, documents filed to Gujarat and Bombay High Courts show.

Reliance Ports & Terminals Ltd (RPTL) was formed in 1997 to set up a captive port and terminal facilities for India’s largest company, Reliance Industries. The port started operations in 1999. The net worth of RPTL, owned by Ambani, declined to Rs10,377 crore as on December 31, 2011, from Rs22,566 crore as on June 30, 2011 after the impairment of Rs12,300 crore. The impairment recognised by RPTL was due to losses in long-term investments in various listed and unlisted shares. The company has not filed its annual report to the MCA for the last year.

MERGER MAZE

• Seven unlisted firms — Reliance Ports and Terminal, Reliance Utilities, Relogistics Infra, Reliance Gas Transportation Infra Ltd (RGTIL), Reliance Utilities and Power, Priyash Commercial and Reliance Industries Holding — involved in a complex corporate restructuring process
   
• The process done through five concurrent schemes of arrangements to be approved by high courts
   
• Power plant business of Reliance Utilities hived off to Reliance Power and Utilities
   
• Relogistics Infra merged into Reliance Utilities
   
• Investment activities of RGTIL, Reliance Utilities and Reliance Ports and Terminal demerged into Reliance Industries Holdings
   
• Priyash Commercial, Reliance Ports and Terminal, Reliance Utilities being merged into Reliance Industries Holding

An email to the management of Reliance Industries did not elicit a reply. An insider said the restructuring was aimed at eliminating cross holdings and simplifying the holding structure so the key companies were held by Reliance Industries Holdings Private Ltd. The losses suffered by RPTL were notional, a source directly involved with the development said.

RPTL is not the only company from Ambani’s personal holdings going through a complex merger process. Documents filed to courts show another scheme seeks to merge Relogistics Infrastructure with Reliance Utilities Private Limited, and also provide for the demerger of the investment activities of Reliance Gas Transportation Infrastructure to Reliance Industries Holding Private Limited. The total impairment of investments by Ambani firms, including RPTL’s and Reliance Gas’ investment divisions’, is Rs15,800 crore.

Another demerger scheme seeks to demerge the power plant division of Reliance Utilities Private Limited into Reliance Utilities And Power Private Limited. After restructuring, Reliance Industries Holding will be holding 100 per cent stake in Reliance Ports & Terminal, Reliance Utilities and Power Pvt Ltd, and Reliance Gas & Transportation.

Ambani, in turn, will be the promoter of Reliance Industries Holding Pvt Ltd. After merging the investments of Reliance Ports and Reliance Gas, Reliance Industries Holdings will also be holding 370 million shares in Reliance Industries.