Shareholder interest not hurt, says RIL
By Our Corporate Bureau | 06 Jan 2005
Mumbai: Reliance Industries Ltd (RIL) yesterday refuted allegations that four of its associate companies acquired its shares in a manner that the economic benefits of this holding accrued to the promoters, and not to its shareholders.
"Economic benefits of RIL shares held by these four companies have always been for the benefit of RIL shareholders and remain so. This fact has been reiterated by RIL a number of times," RIL said in a media statement.
The statement was in response to reports that referred to financial transactions in which RIL lent money to four associate companies, mostly without interest, and on easy repayment terms. The associates, according to these reports, had the right to convert the loans into equity, but RIL had no such option.
The four associate companies — Reliance Polyolefins, Reliance Aromatics and Petrochemicals, Reliance Energy and Project Development, and Reliance Chemicals — used the money lent by RIL to buy shares in Reliance Petroleum.
After the petroleum company's merger with Reliance Industries, the associates owned 4.7 per cent of Reliance Industries' stock, now valued at Rs3,500 crore.
According to sources in the office of RIL chairman and managing director Mukesh Ambani, these associate companies had actually raised Rs2,225 crore from Reliance Ventures, which is a wholly-owned subsidiary of RIL, to acquire Reliance Petroleum shares.