Reliance: The final split and beyond

Rex Mathew
18 January 2006

After creating headlines for many months, the Reliance group split is finally coming to a formal close. A closer look at the details of the de-merger scheme and what the future holds for RIL shareholders.

The feud between the Ambani brothers and the de-merger announcement that followed were the most significant corporate development the country has seen in many years. The country's single largest private enterprise with a market capitalisation of over Rs1.2 lakh crore is being split into two distinct groups.

Elder brother Mukesh continues to control the core petrochemical, refining and exploration businesses which remain under the post-demerger Reliance Industries, while Younger brother Anil will now lord over telecom, financial services and the power utility businesses, which are being spun-off from the parent group.

Splitting the pie

As widely known by now, Reliance Industries is being de-merged into five companies including the post-demerger Reliance Industries, which retain the refining, petrochemicals and energy exploration businesses. The four new companies —are Reliance Communication Ventures, Reliance Energy Ventures, Reliance Capital Ventures and Reliance Natural Resources (earlier known as Global Fuel Management).

Reliance Communication Ventures holds around 66 per cent stake, both direct and indirect, in Reliance Infocomm – the largest CDMA mobile operator in the country. Reliance Energy Ventures would hold around 45 per cent of power utility company Reliance Energy while Reliance Capital Ventures would hold around 29 per cent in Reliance Capital. Reliance Natural Resources would source natural gas from RIL and supply to companies like Reliance Energy.