The Competition Commission of India has given its nod for the proposed merger of various Anil Ambani-led Reliance Group subsidiaries into Reliance Infrastructure Ltd (RInfra).
The combination is being undertaken to reduce the administrative costs, removing multiple-layer inefficiencies and to achieve operational and management efficiency.
The competition watchdog has approved the proposed combination relating to the merger of Reliance Energy Ltd, Reliance Energy Generation Ltd, Reliance Goa and Samalkot Ltd, Reliance Infraventures Ltd, Reliance Property Developers Ltd into RInfra.
It has also cleared the demerger of container business undertaking of Reliance Infrastructure Engineers Pvt Ltd (RIEPL) into RInfra.
‘No competition concerns'
“As per the details provided in the notice, it is observed that for financial year 2010-11, the turnover of REL, REGL, RGSPL, RIVL, RPDL and RIEPL from business operations is either nil or negligible.
“It also observed that the companies are directly or indirectly wholly-owned subsidiaries of RInfra and the ultimate control over activities carried by them before and after the combinations remains with RInfra. The proposed combination is not likely to give adverse competition concerns in India,” the order said.
RInfra is a public listed company and is engaged in the business of generation, transmission and distribution of electricity. It also undertakes engineering, procurement and construction contracts for power stations. It is also stated to be engaged in the developing projects through various special purpose vehicle in the infrastructure sector.
The CCI had received a notice that Reliance Infraventures Ltd holds investments in the group companies and as on March 31, 2011, RIVL holds investment of Rs 601.47 crore including investment of Rs 535 crore in the preference shares of Sonata Investments Ltd. However, in its response parties to the combination said Sonata was not a group company.