The Hindu : Business : RIL explains computation

Online edition of India's National Newspaper
Tuesday, Jan 17, 2006

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Business

RIL explains computation

NEW DELHI: Ahead of the carving out of four new entities from Mukesh Ambani-controlled Reliance Industries Ltd. to give effect to the settlement worked out between the Ambani brothers, the flagship company (RIL) on Monday advised its millions of investors on the method of computation of its share value under the new dispensation for the purpose of taxation.

Two days before the special trading session (January 18) for finding out the value of its shares post demerger of communique, energy and capital ventures from it, the company advised that 52 per cent of the cost of acquisition of the combined entity should be apportioned to post-demerger RIL.

This, in other words, would mean that the RIL's value would be considered equal to just a little over half of its present worth after the four new entities come into existence, the record date for which is set at January 25.

Terming the communique as its `public notice' in the interest of investors, it suggested that over 38.7 per cent of the pre-demerger cost of RIL shares will be apportioned to Reliance Communication Ventures, besides another 9.3 per cent for the other three entities that have been given to Anil Ambani as part of the ownership settlement.

"The public notice is issued to inform the shareholders the method of calculation of the cost of acquisition and the date of acquisition of the resulting companies' shares as also of the company shares as per the provisions of the Income-tax Act, 1961, and is based on experts' opinion,'' RIL said in its communique to the BSE. Going by the current price of Rs. 873.10 a share, the cost of acquisition of 100 per cent of RIL shares, which now stands at about Rs. 121,667 crore, will reduce to Rs. 63,000 crore post de-merger. — PTI

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