Reliance Industries Ltd (RIL), the country’s largest private company by market capitalisation, is planing to resume the sale of treasury shares held by its Petroleum Trust.
The trust would be offloading around 40 million of the 120 million shares (3.68 per cent stake) it holds in the next few days, informed sources.
The share’s closing price today was Rs 982, down 0.6 per cent on the Bombay Stock Exchange. The stock has witnessed a sharp fall from Rs 1,080 in the past few weeks.
The company is also likely to offload the entire lot of treasury shares in the next few months, said analysts. The sole beneficiary of the trust is Reliance Industrial Investments and Holdings Ltd, a wholly-owned subsidiary of RIL. The trust had got these treasury shares at Rs 79 each (adjusted price after bonus), when IPCL was merged with RIL in 2006.
If the entire stock is sold before March 2011, there would be a huge tax saving, given a likely change in rules. In the new Direct Tax Code, likely to take effect next year, long-term capital gains are proposed to be taxed at 15 per cent.
RIL refused to comment, simply saying, “The shares would not be sold tomorrow.” The company had raised Rs 9,300 crore in three earlier rounds of treasury share sales, between January 2009 and January 2010.
Market players say the current deal is likely to be between Rs 950 and Rs 980 per share and insurance giant Life Insurance Corporation (LIC) is likely to participate. In the previous deals, too, LIC was one of the biggest buyers, at around Rs 1,035 per share, paying Rs 2,600 crore in all.
The stock has been a drag on the markets (it has a 12.77 per cent weightage in the BSE benchmark, the Sensex) for the past couple of months due to reports of this treasury share sale, say analysts. While the Sensex has risen 23 per cent since the May low last year, the RIL stock has fallen 15 per cent in the same period. The markets had started moving up since May 2009, after the return of the Congress-led United Progressive Alliance government to power.