RIL – RPL Merger. Why is nobody questioning it? 1

When Satyam-Maytas happened, everybody on the street was on their feet crying foul. But the same people are now silent spectators to the merger of Reliance Petroleum (RPL) with Reliance Industries (RIL). What has caused this difference in attitude towards to similiar events – both are trying to merger with promoter held companies with the same reason – improve earnings…

In fact, in this case, RPL shareholders must protest since they are being merged with a company that is seeing falling revenues and has seen bad performance over the last few quarters. But why is everybody silent. Even the most critial revenue of this Merger Proposal was quite damp. Nothing like what we saw during Satyam-Maytas.

RIL has been doing this for long. In fact, it mergered with itself the 1st RPL in 2002 and within 4 years in 2006 we saw a new company with the same name and in the same industry being floated and that too came with an IPO to get public money.

In both the RPLs cases, the merger has been backdated. How is this being allowed?

The new refinery under RPL is a SEZ and still this merger is being allowed. What stops RIL to source all it’s raw materials and other requirements in the name of SEZ refinery and use it in it’s other refinery? It will save on taxes (exciseduty & service tax) on all products sourced within India. Great way to save on cost…

RIL always seems to get away with whatever it does. Be it closing down all it’s Petrol Bunks when the price rose and not facing any penal action (ironically even Essar kept some of it’s Bunks open during that tough period for pvt. marketers, Shell had most of it’s Bunks open). Is there no clause in the licensing agreement that a company must not close it’s Bunks and if it does so, it will loose it’s license? May be rules are always bent (read: written) for/by RIL.

Interestingly, Economic Times reported in Mid-February that RIL was making less disclosures. Read the Article in this link.

One comment on “RIL – RPL Merger. Why is nobody questioning it?

  1. Anand Mar 3,2009 18:33

    Reliance is a group I admire. Not for its ethics but for its ability to think big and implement it boldly. It is no secret that Reliance in many occasions subverted rules (well established) to suit itself. Given the fact that it is largest corporate gives it unfettered access to the powers that be (political, bureaucratic, media etc). This helps in a lot of ways. You and me can keep on asking but things will not change or improve. Corporate Governance is just a pipe dream. But you must understand one thing, in private sector the only motive is profits. Everything else is secondary. “How do I get to fill my personal coffers” is what drives most individual business. But to cover it up they use the standard response of “shareholder value creation”

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