| Reliance Petro for Rs 6,000 cr float |
| Our Corporate Bureau / Mumbai January 24, 2006 |
| RIL to invest Rs 3,375 crore in retail. Reliance Industries Limited (RIL) will go in for a public offer after a gap of 13 years. The company today announced that its newly launched subsidiary, Reliance Petroleum, would float a public issue of around Rs 5,000-6,000 crore by the first half of 2006-07. Sources close to the development said the issue, which would be the second largest public offer by a private Indian company after ICICI Bank's Rs 8,000 crore issue late last year, could hit the market as early as April-May. In a parallel development, the RIL board also approved formation of a wholly owned subsidiary to pursue the retailing business. The board has approved the initial phase of setting up of hypermarkets, supermarkets, convenience stores and speciality stores in select cities and towns covering all the geographical regions in the country at an estimated cost of around Rs 3,375 crore. A statement issued by RIL said the proceeds of the public issue would be used to part finance Reliance Petroleum's Rs 27,000 crore refinery project in the special economic zone at Jamnagar in Gujarat. Reliance Petroleum is setting up an export-oriented refinery with a capacity of 27 million tonnes and a 1 million tonne polypropylene plant. The project is expected to start commercial production by the second half of 2008-09. The statement also said the company was planning to explore private placement of equity. It will be funded through a combination of debt and equity. Reliance Petroleum will raise debt of Rs 16,000 crore and equity of Rs 11,000 crore. While the balance equity will come from RIL, the debt is expected to be raised mostly from abroad as it is cheaper. Analysts said the tax incentive applicable to SEZs was another key attraction for implementing the project through Reliance Petroleum. Tax incentives also played a crucial role when RIL announced the merger of Reliance Petroleum with itself in 2002. The RIL stock lost marginally in a weak market today, with the share closing at Rs 701.45 on the Bombay Stock Exchange, 0.27 per cent lower than Friday |
