The Hindu Business Line : RNRL: Reject

Shareholders can ignore the open offer from Anadha Enterprise Pvt. Ltd. and Mr Anil Ambani for acquisition of their holdings in Reliance Natural Resources (RNRL) at Rs 25.65 per share. They can offload their holdings in the market where the stock trades at a small premium to the offer price. Staying invested is an option too but those exercising it should note that the risks are high especially because RNRL is yet to fully commence operations.

Business

RNRL came into being following the family settlement between the Ambani brothers and demerger of the flagship company, Reliance Industries. RNRL's main business is to source natural gas from Reliance Industries and supply it to the power projects of the group companies.

The former has signed a Gas Supply Master Agreement with the latter for the supply of a minimum of 28 million standard cubic metres of gas from the Reliance Industries' KG-Basin Fields.

The biggest risk to shareholders staying with the company is that the business contours are not fully known yet. Though its main business is only to source gas from Reliance Industries, the company may get into other businesses based on the strategic needs of the Anil Dhirubhai Ambani Group (ADAG).

Uncertainties

Besides, there is also some uncertainty over the details of the Gas Supply Master Agreement that the company has signed with the ADAG group disputing the terms. The group claims that the agreement does not reflect the agreed position arrived at between Mr Mukesh Ambani and Mr Anil Ambani as part of the overall settlement.

The agreements constitute the only assets of RNRL and a dispute over them does not lend much confidence about the company's operations. Shareholders may be better off exiting at the best possible price through the market.

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