Richest Indian Mukesh Ambani's Reliance Retail, which runs the country's largest chain of neighbourhood supermarket stores and consumer electronics outlets, has been valued at USD 34 billion (Rs 2.4 lakh crore) in a proposed share-swap scheme for shareholders.
Reliance Retail's shareholders have will get one share of its listed parent, Reliance Industries, in exchange for every four shares, according to the scheme of arrangement posted on Reliance Retail's website.
The share-swap values Reliance Retail at about Rs 2.4 lakh crore.
Reliance Retail is an unlisted subsidiary of Reliance Retail Ventures and an indirect subsidiary of oil-to-telecom conglomerate Reliance Industries Ltd (RIL).
RIL's shares ended at Rs 1,515.95 apiece on the BSE, giving the company a market cap of Rs 9.6 lakh crore.
In August, RIL had said that it may list Reliance Retail on the stock exchanges in the next five years. Reliance Retail clocked net sales of Rs 1.3 lakh crore last year and has built a network of 10,901 stores.
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In the scheme of arrangement, Reliance Retail said it had given employees stock options in 2006 and 2007. "On exercise of the RSUs (restricted stock units) by some of the employees, equity shares have been allotted to them."
"The company has been receiving requests from the employees holding equity shares for providing them options for exit and liquidity, including by way of a listing of the equity shares," it said. "The company does not have any plan for listing of its equity shares on the stock exchanges" and so the share swap scheme.
In the proposed scheme, "equity shareholders of the company other than the holding company viz, Reliance Retail Ventures Ltd are being given listed equity shares of Reliance Industries Ltd (the ultimate holding company of the firm) and the corresponding equity share capital held by them in the company is being reduced and cancelled."
Reliance Retail Ventures Ltd holds 99.95 per cent of Reliance Retail. The remaining 0.05 per cent is with employees.
"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," it said.
The company said pursuant to the December 17 order of the Mumbai-bench of the National Company Law Tribunal, a meeting of the equity shareholders of Reliance Retail Ltd is being convened on January 23 for approving the Scheme of Arrangement.
Reliance Retail is mainly engaged in the organised retail spanning across various consumption baskets primarily catering to Indian consumers.
It has been set up to "run, operate business centres, hypermarkets, departmental stores, supermarkets, shopping malls, specialty stores, shopping outlets, convenience stores, wholesale, cash and carry operations, non-store formats, warehouses, distribution centers, collection centers, depots and showrooms".
The firm has been set up to market "all commercial, industrial, scientific, household, food products, consumer goods, consumer durables and other consumer's necessities of every kind, and all other types of general goods, consumables, materials, accessories, commodities and equipment".
In the second quarter ending September 30, 2019, Reliance Retail reported a 27 per cent growth in revenues to Rs 41,202 crore with strong growth across formats. Operating profit grew 66.8 per cent to Rs 2,322 crore, driven by margins improvement. It has 24.5 million square feet of retail store area under operation.
The valuation of Reliance Retail, which is also the top wholesale supplier to small shopkeepers, is double that of Avenue Supermarts Ltd, which runs India's biggest supermarket chain. Tesco is valued at USD 32 billion.
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