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R. Y. Narayanan

COIMBATORE, March 4

THE proposed merger of Reliance Industries (RIL) and Reliance Petroleum (RPL) with retrospective effect from April 1 last year has raised a question mark over the fate of the planned GDR issue by RPL.

According to the public announcement made by RPL in May last year, the board of directors of RPL, at a meeting on March 15 last year, decided to sponsor a GDR programme. The announcement also stated that RIL, the promoter and major shareholder of RPL, had expressed its intention to participate in the GDR programme and bring down its shareholding in RPL from 64 per cent to 51 per cent.

It observed that the ``size, timing and pricing for the GDR offering, in one or more offerings as may be appropriate, will be determined by the lead managers in consultation with the company and will be binding on all shareholders participating in the programme''.

There was a disclaimer clause, though, in the public announcement of the GDR programme which said that RPL or its promoters ``give no assurance that the programme will be completed and shall not be responsible for any consequences arising out non-completion...''.

Speaking to Business Line, Mr K. Annamalai, former President, Coimbatore Stock Exchange (CSX), felt that

while making the announcement of the merger, the company had not given any indication as to whether it was proceeding with the GDR issue for RPL or whether this was being given up in view of the latest merger move.

If the GDR plan was being dropped, then whether any relief would be provided to the RPL shareholders who had deposited their shares for the GDR issue (despite the disclaimer clause) in view of the enormous goodwill enjoyed by the group among the shareholders.

Mr Annamalai also expressed surprise over the fact that the whole process of merger was executed at a very fast pace.

Normally, the stock exchanges should be given a notice of 14 days before a board meeting and the agenda of the meeting also should be specified.

This would have enabled the market to react to the proposal and the stock prices would have found their own levels. But in the present case, the initial merger announcement came after market hours on Friday and the details were made public on Sunday.

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