Reliance Cap sheds IPCL holding

23% stake transferred at par to group firms.

Reliance Capital has sold its 23 per cent stake in Indian Petrochemicals Corporation Ltd (IPCL).

This stake was held through its 50 per cent holding in Reliance Petroinvestments Ltd, a Reliance group company, which in turn holds a 46 per cent stake in IPCL. Reliance Industries Ltd (RIL) holds the other 50 per cent in Reliance Petroinvestments.

At today's market capitalisation of IPCL, the value of the 23 per cent stake is Rs 921.61 crore.

Simultaneously, sources close to RIL said the RIL holding in Reliance General Insurance had been transferred to Reliance Capital at par value. It was not immediately clear how much the RIL stake in the insurance company is.

A Reliance Capital press release later in the evening explained: "The net asset value of Reliance Petroinvestments share was less than its par value since it had invested in the shares of IPCL at Rs 231 per share against the present market value of Rs 160 per share. Reliance Capital, therefore, decided to sell these shares at par to the companies Reliance Pharmaceutical and Reliance Nutraceutical."

Amitabh Jhunjhunwala, a close associate of Anil Ambani and a member of the Reliance Capital board, voiced his dissent at the board meeting and said the company had not disclosed to either the Reliance Capital board or IPCL or the stock exchanges that the shares had been sold, when this stake was sold, at what price and to whom.

The Reliance Capital press release said the company had sold these shares "at par" to Reliance Pharmaceutical and Reliance Nutraceutical "whose ultimate economic benefit accrues to RIL".

The press release also added, "Reliance Capital shareholders have not lost in this transaction."

A source close to RIL said Reliance Pharmaceutical and Reliance Nutraceutical were RIL group shell companies.

A senior Bombay Stock Exchange (BSE) executive refused to comment on whether the non-disclosure of this deal to the exchanges would amount to Reliance Capital having violated the listing norms.

The Reliance Capital statement explained that the company had invested Rs 4.44 crore in the equity of Reliance Petroinvestments. RIL, through its wholly-owned subsidiary, had also invested Rs 4.44 crore in the equity of this company.

Reliance Petroinvestments invested Rs 2,639 crore to buy 112 million shares of IPCL at Rs 131 per share. It had borrowed Rs 2,579 crore from RIL for this purpose.