Reliance Industries has proposed allowing shareholders of the unlisted Reliance Retail to exchange their shares for RIL shares. Under the proposed arrangement, Reliance Retail shareholders will get one share of RIL in exchange for four shares of Reliance Retail, according to RIL website. Reliance Retail is a subsidiary of Reliance Retail Ventures Limited and an indirect subsidiary of Reliance Industries Limited.
The swap ratio values the retail business of RIL at about ₹2.5 lakh crore. Reliance Industries shares were flat at ₹1544.65 apiece in early trade today, giving the company a market cap of about ₹9.8 lakh crore.
"The company had implemented two schemes namely Reliance Retail Employees’ Restricted Stock Unit Plan 2006 and 2007 under which Restricted Stock Units (“RSUs") have been allotted to eligible employees. On exercise of the RSUs by some of the employees, equity shares have been allotted to them," RIL said.
"The company has been receiving requests from the employees holding equity shares for providing them options for exit and liquidity, including by way of listing of the equity shares," RIL said.
Reliance Retail shares are not listed on any stock exchanges.
Under the scheme proposed by RIL, equity shareholders of Reliance Retail will be given listed equity shares of Reliance Industries and the corresponding equity share capital held by them in the Reliance Retail will be reduced and cancelled.
"This scheme enables the specified shareholders to continue to participate in the growth of retail business (the business of the company), as hitherto since the company is an indirect subsidiary of Reliance Industries," RIL said.
"Since, the scheme does not contemplate any outflow of funds/assets of the Company, the aggregate of ‘equity and other equity’ of the company pre and post implementation of the scheme will remain the same and unaltered," RIL said.
For the second quarter ending September 2019, Reliance Retail reported 27% growth in revenues to ₹41,202 crore with strong growth across format, as against ₹32,436 crore in the corresponding period of the previous year. Operating profit grew by 66.8% to ₹2,322 crore, driven by margins improving to 110 bps to 4.9%. During the quarter, Reliance Retail added 337 stores taking the total store count to 10,901 stores, with area under operations of 24.5 million square foot.
Meanwhile, the NCLAT has dismissed petitions filed by the Income Tax Department, which raised objection over the approval granted to Reliance Jio Infocomm scheme to hive off its fiber and tower business into two separate units.
The Ahmedabad-bench of National Company Law Tribunal (NCLT) had earlier this year granted permission to the composite scheme of arrangement, through which two companies were proposed to be demerged -- Jio Digital Fibre Pvt Ltd and Reliance Jio Infratel Pvt Ltd.
This was opposed by the IT department by challenging it before the National Company Law Appellate Tribunal (NCLAT). (With Agency Inputs)