Date:25/02/2007 URL: http://www.thehindubusinessline.com/2007/02/25/stories/2007022502440100.htm

Rs 13,500-cr Reliance cracker unit to come up at Jamnagar

Our Bureau

Board approves 12-crore warrants to promoters of the company

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Mumbai Feb.24 The board of Reliance Industries Ltd on Saturday approved a $3-billion (Rs 13,500-crore) cracker project in Jamnagar and a preferential issue of 12 crore warrants to the promoters of the company.

The warrants, exercisable into an equal number of equity shares of RIL, will, on full conversion, raise the promoters' stake (the Chairman, Mr Mukesh Ambani, and others) in the company to 55 per cent, from 50.6 per cent currently.

The paid-up capital of RIL will then increase to Rs 1,513 crore, from Rs 1,393 crore.

The promoters would pay 10 per cent of the price on allotment of the warrants, and the remaining 90 per cent at the time of subscription to equity shares on exercise of rights attached to the warrants within a period of 18 months.

The relevant date (and therefore the price for conversion) for the warrants will be fixed later, once shareholder approval has been obtained, said a spokesperson for Reliance Industries.

At RIL's Friday close of Rs 1,412.8 on BSE, this would cost the promoters Rs 16,900 crore.

"The board's approval to enhance the equity capital of the company by preferential issue of warrants to promoters demonstrates our commitment to value creation at Reliance," said Mr Mukesh Ambani, in a statement. "The substantial enhancement of shareholder funds will take RIL to a higher growth platform by strengthening its capital structure."

"I am really excited about accelerating our investments in all our key businesses — oil & gas, refining, petrochemicals and retailing, by both organic and inorganic growth initiatives."

Analysts noted that RIL was following the industry trend, rather worldwide, of promoters hiking their interests in their businesses.

The Tatas have increased stakes in several group companies in the recent past, they said.

The board on Saturday also approved the appointment of well-known scientist and engineer Dr R.A. Mashelkar as an independent director.

It also confirmed its decision of November 2006 to raise $2 billion (Rs 9,000 crore) for RIL's capital expenditure plan for the oil and gas business through External Commercial Borrowings by way of debt.

RIL is building a 2 MMTPA cracker and petrochemicals complex at its SEZ in Jamnagar. The facility will go on stream by 2010-2011, said the company.

RIL has already unveiled large capital expenditure plans to develop oil and gas fields, mainly in the Krishna-Godavari basin; and to set up a chain of retail stores across the country.