RIL sets July 20 as record date for Reliance Strategic Investments breakup
On July 20, Reliance Industries Limited (RIL) has set the record date to determine the equity shareholders eligible to receive shares of Reliance Strategic Investments Limited (RSIL). This record date is crucial for the purpose of allocating shares to the entitled shareholders under the scheme of arrangement.
According to the scheme, for every one share of Reliance Industries held by an equity shareholder as of the record date, Reliance Strategic Investments will allot one fully paid-up equity share of RSIL. These shares will have a face value of Rs 10 each. In essence, shareholders of Reliance Industries will receive shares of RSIL in proportion to their existing holdings in RIL.
Following the completion of the allocation process, Reliance Strategic Investments Limited (RSIL) will undergo a renaming and be rebranded as Jio Financial Services Limited (JFSL). This name change reflects the strategic focus of RSIL/JFSL on providing financial services within the Reliance group, leveraging the extensive reach and capabilities of Jio, which is a subsidiary of Reliance Industries.
It is important to note that the above information is based on the details provided up until my knowledge cutoff in September 2021. For the most accurate and up-to-date information regarding the scheme and any subsequent developments, it is advisable to refer to official announcements or news sources related to Reliance Industries.
In addition to the appointment of Hitesh Kumar Sethi as the managing director and chief executive officer of the new entity, several other notable appointments have been made to the board of RSIL (the conglomerate).
Rajiv Mehrishi, the former Union Home Secretary of India, has been appointed as an additional director on the board of RSIL. Prior to this appointment, Mehrishi served as the 13th Comptroller and Auditor General of India, a prestigious position responsible for auditing the accounts of the Indian government. His vast experience in public administration and finance makes him a valuable addition to the board.
Another significant addition to the board is Sunil Mehta, the former Managing Director and Chief Executive Officer of Punjab National Bank (PNB). Mehta has also been appointed as an additional director on the board of RSIL. During his tenure at PNB, Mehta played a crucial role in the bank’s restructuring and recovery efforts, particularly in the aftermath of a major financial fraud. His expertise in the banking sector and strategic management will bring valuable insights to the conglomerate.
It is important to note that these appointments as additional directors on the board are subject to the approval of the Reserve Bank of India (RBI). The RBI plays a regulatory role in overseeing and approving appointments in financial institutions in India. The conglomerate must obtain the RBI’s approval before these appointments can be finalized.
These appointments reflect the conglomerate’s efforts to bring on board individuals with diverse backgrounds and extensive experience in finance, administration, and strategic management. The combined expertise of Hitesh Kumar Sethi, Rajiv Mehrishi, and Sunil Mehta will contribute to the conglomerate’s growth and success in the coming years.
On July 7, it was announced that Isha Ambani and Anshuman Thakur have been appointed as non-executive directors of Reliance Retail, a diversified conglomerate. This appointment reflects the company’s commitment to strengthening its leadership team.
In addition, Reliance Retail’s board has approved a reduction of the equity share capital that is held by shareholders other than its promoter and holding company, Reliance Retail Ventures. As a result of this reduction, the shares held by these shareholders will be cancelled and extinguished.
Reliance Retail, a subsidiary of Reliance Industries Limited (RIL), has taken steps to determine the value of the capital reduction. To accomplish this, the company sought valuations from two reputable independent registered valuers. These valuations have helped establish a fair consideration of Rs 1,362 per share that will be paid to the shareholders whose shares are being cancelled and extinguished.
The purpose of this capital reduction and consolidation of ownership is to streamline Reliance Retail’s shareholding structure. By eliminating certain shares and consolidating ownership, the company aims to simplify decision-making processes and enhance operational efficiency. This move can have several benefits for the company and its stakeholders.
Firstly, consolidating ownership can result in a more focused and cohesive management structure. With fewer shareholders and a simplified shareholding pattern, decision-making processes can become more efficient and responsive. This streamlined structure allows for quicker implementation of strategic initiatives and facilitates a more agile approach to business operations.
Secondly, consolidating ownership can lead to enhanced accountability and transparency. With a reduced number of shareholders, it becomes easier to communicate and disseminate information effectively. This can promote better corporate governance practices and ensure that shareholders are well-informed about the company’s activities and performance.
Additionally, consolidation can result in improved financial management and resource allocation. By reducing the number of shareholders and increasing ownership concentration, Reliance Retail can potentially optimize its capital structure and allocate resources more effectively. This can lead to better utilization of funds, increased profitability, and improved financial performance.
Furthermore, a streamlined shareholding structure can also make the company more attractive to potential investors and stakeholders. It can demonstrate a clear and cohesive ownership structure, which can enhance investor confidence and attract strategic partnerships or collaborations. This, in turn, can open up opportunities for future growth and expansion.
Overall, the capital reduction and consolidation of ownership undertaken by Reliance Retail aims to simplify the company’s shareholding structure, improve decision-making processes, enhance operational efficiency, and strengthen corporate governance practices. These efforts are designed to create a more focused, agile, and value-driven organization, benefiting both the company and its stakeholders in the long run.
Macquarie, a foreign broking firm, has previously noted that Jio Financial, a subsidiary of Reliance Retail, is well-positioned compared to other non-banking financial companies (NBFCs) due to its strong financial backing, including a deep-pocketed parent company, an AAA credit rating, a well-capitalized balance sheet, a wide distribution network, and the ability to attract top talent. These factors give Jio Financial a significant advantage in the market.
