Anil to float two holding firms by March

RCVL and GFMS to be listed by March next year.

Anil Ambani, chairman of Anil Dhirubhai Ambani Enterprises, today announced formation of two holding companies, Reliance Communication Ventures Ltd (RCVL) and Global Fuel Management Services Ltd (GFMS), to pave the way for the demerger of the Reliance business empire. Both the companies will be listed by March next year.

RCVL is the proposed holding company of the telecom business which includes Reliance Infocomm, Reliance Communications Infrastructure, Reliance Telecom and Flag Telecom.

Reliance Industries' 65.9 per cent stake in Reliance Infocomm and 35.2 per cent stake in Reliance Telecom will be transferred to RCVL. The market cap of RCVL was expected to be about Rs 25,000 crore, Ambani said.

GFMS is the proposed holding company to house supply of natural gas from Reliance Industries. The gas will be utilised for the group's power generation projects aggregating over 11,000 Mw in Uttar Pradesh and Maharashtra. Both the companies will have paid-up equity capital of Rs 611 crore each. The face value of shares in these two companies will be Rs 5 apiece.

"These two companies along with Reliance Energy Ltd and Reliance Capital Ltd will be demerged from Reliance Industries Ltd and then listed separately," Ambani told a hurriedly called press conference-cum-analysts meet.

He also mentioned that Reliance Capital and Reliance Energy would be listed overseas to ensure that the Reliance Industries' GDR shareholders received their rightful share in the demerged entities.

Ambani said for every 100 shares held in Reliance Industries, shareholders would get about five Reliance Capital shares, seven Reliance Energy shares and 100 shares each of both RCVL and GFMS.

The listing of RCVL and GFMS and the distribution of the shares of ADAE companies to the shareholders of Reliance Industries will be completed by March 31, 2006. Once listed, all the companies will have a combined shareholder base of 7 million.

With the proposed listing of the holding company of the telecommunication business RCVL, Ambani ruled out the possibility of Reliance Infocomm going public.

After re-organisation, ADAE will hold 50.5 per cent stake in Reliance Capital, 26.4 per cent in Reliance Energy and 37 per cent each in GFMS and RCVL.

At present, it holds 0.3 per cent in Reliance Capital and 6.1 per cent in Reliance Energy. The retail shareholders' stake in Reliance Capital will come down to 22.6 per cent from 29 per cent post demerger.

But their stake in Reliance Energy will go up to 17.4 per cent from the current level of 6.7 per cent. They will hold 19.2 per cent each in GFMS and RCVL.

Anil Ambani said he and his brother Mukesh had signed a "non-compete" clause but declined to give details of the arrangement.

What's in store for investors

FOR EVERY 100 shares held in Reliance Industries, shareholders will get about five Reliance Capital shares, seven Reliance Energy shares and 100 shares each of Reliance Communication Ventures and Global Fuel Management Services