Ril Leaves Bses With Three Options On Relationship

Reliance Industries has formally communicated to the BSES board leaving it with three options to decide on the future course of relationship. The petrochemicals major emerged as the single largest shareholder in BSES with 26.68 per cent stake following its open offer last month. The BSES board now has to decide on whether it will allow in Reliance with just board representation, or whether Reliance will be allowed to participate in the management of the company, or take full management control. It has also made it clear that it will abide by the decision of the BSES board, sources involved with the ongoing discussions told Business Standard. When contacted, a Reliance spokesperson declined to comment on the issue. It is learnt that the BSES board is meeting in the first week of September to take a view on the issue. As financial institutions are the largest block of shareholders with around 35 per cent stake, the BSES board will seek advice from the institutions. While mere board representation will not give Reliance management control, it will enable the company to have some say in board decisions. On the other hand, management participation would imply sharing of day-to-day affairs of the company. The fate of Reliance's request could eventually be determined by the financial institutions "" LIC, GIC and UTI. "Although technically it is the BSES management which has to decide on the issue, it is really the FIs who hold the key," industry sources said. The three institutions did not sell a single share during the open offer as they found the offer price of Rs 255 per share "unattractive". In May this year, the Reliance group announced an open offer for an additional 20 cent stake in BSES. The offer was prompted by the fact that it held 14.82 per cent and the acquisition of any additional stake in the company would have resulted in it crossing the 15 per cent threshold limit under the takeover code. Initially, the offer was made at Rs 234 per share. Later on it hiked the price to Rs 255 per share as FIs found the price initial unattractive. FIs did not sell even at this price and the Reliance group managed to mop up a little over 11 per cent from the open offer.