The Hindu Business Line : Reliance plans to merge IPCL with itself

Working synergy
Mukesh Ambani recently hiked stake in RIL by 5 %
RIL currently holds 46 pc in IPCL
IPCL clocked 40 per cent growth in Q3 net

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Mumbai March 7 Reliance Industries Ltd proposes to merge group company Indian Petrochemical Corporation Ltd (IPCL) with itself.

Both RIL and IPCL on Wednesday informed the stock exchanges that their boards would meet on March 10 to consider the proposal to amalgamate IPCL with Reliance.

There were whispers in the market of an announcement on the merger of IPCL with Reliance after Mr Mukesh Ambani recently hiked his stake in RIL by five per cent through a preferential issue of warrants.

An IPCL merger with RIL would have brought down Mr Ambani's stake in RIL.

According to analysts, the merger was on the cards and it was just the question of a formal decision.

The merger ratio will be announced after the board meeting on Saturday, said a company official.

RIL holds 46 per cent equity in IPCL through its investment company, Reliance Petro Investments.

Institutional investors hold 30 per cent and the rest is with the public. According to analysts, an important issue will be whether the 46 per cent equity held by RIL will be extinguished or vested in a trust as it was done in the case of the erstwhile Reliance Petroleum Ltd, when it was merged with RIL.

Analysts see working synergy in the merger, as both RIL and IPCL produce petrochemicals.

IPCL reported 40 per cent growth in net profit to Rs 405 crore for the quarter ended December 2006, from Rs 289 crore in the corresponding previous period.

RIL shares fell 0.77 per cent to Rs 1,289.35 on the BSE from Tuesday's close of Rs 1,299.40.

IPCL also went down by 0.94 per cent to Rs 231.65 from Rs 233.85.

IPCL currently has about 9,000 employees.