Shareholders of the Anil Dhirubhai Ambani Group (ADAG) promoted Reliance Infrastructure gave their approval today to the proposal to de-merge and transfer various divisions of the company to separate wholly-owned subsidiaries.
As per the proposal, the 500-Mega watt Dahanu power station will come under a separate subsidiary Reliance Energy Generation Ltd, and Goa and Samalkot power stations under the Reliance Goa and Samalkot Power Ltd respectively. The power transmission division will be under Reliance Power Transmission and power distribution division will go to Reliance Energy. While the toll roads division will become Reliance InfraVentures, the real estate division will become Reliance Property Developers.
A company press release said the de-merger would benefit the respective companies as well as stakeholders as it would create a simplified and transparent business structure, aligning the interest of various stakeholders. It can attribute appropriate risk and valuation to different businesses based on their respective risk-return profile and cash flows.
Further, the de-merger will give a more focused management and optimal financing structure, greater visibility, tax efficiency and possibility of investments by strategic players in different businesses.
Company sources said the Reliance Infrastructure’s board had appointed a committee of whole-time directors to explore de-merger opportunities and the board had approved the final de-merger scheme on February 25.
While the electricity division generated a turnover of Rs 7,183 crore for the financial year ending March 31,2009, the EPC division, which has an order book position of Rs 20,625 crore, had generated revenues of Rs 2437 crore during the period.
On the infrastructure side, the company is executing five road projects in Tamil Nadu and is developing a 66-kilometer road between Gurgaon and Faridabad in Haryana. The company is also developing two metro rail projects in Delhi and Mumbai worth over Rs 5200 crore, besides a business district and a 100-storey tower in Hyderabad. The de-merger is now subject to requisite approvals.
