The Hindu Business Line : Reliance Energy, Reliance Capital clarify on demerger

On Tuesday, both Reliance Energy and Reliance Capital ended up having to explain themselves to their constituents through stock exchange notices. They said that their boards have "neither considered nor made any announcement relating to any scheme of demerger."

Stock market participants said the normal expectation during M&A activities was that all the involved companies have their board meetings before the announcement of demerger ratios, which are price-sensitive information.

Instead, details of the Reliance demerger have emerged in a strange sequence. That Reliance's financial, telecom and power businesses would be demerged was first announced at the AGM of Reliance Industries Ltd (RIL). On the same day, Mr Anil Ambani, Chairman of the "new Reliance group" ADA Enterprises, announced the demerger ratios for the individual companies in his group. The very next day, RIL distanced itself from these details, telling the stock exchanges that its board had not yet considered the ratios. And, late in the night that same day (and long after trading had closed), the board of RIL announced the demerger ratios, not very different from what Mr Anil Ambani had announced.

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