Reliance Petroleum

We recommend a sell in Reliance Petroleum stock from a short-term trading perspective. It is evident from the charts of Reliance Petroleum that it was on an intermediate-term up-trend from its 52-week low of Rs 68 (recorded in early March) till it encountered significant resistance at Rs 150 in late May. After hovering below the long-term key resistance at Rs 150 for a month, the stock failed to break through this resistance. Triggered by negative divergence displayed in the daily and weekly relative strength index, the stock reversed direction. On June 15, the stock conclusively broke through the intermediate-term up-trend-line as well as 21-day moving average by retreating 7 per cent. Volume traded was high during this decline. The daily RSI is declining in the neutral region and weekly RSI is on the brink of entering this region from the bullish zone. We are bearish on the stock from a short-term horizon. We anticipate the stock’s decline to continue until it hits our price target of Rs 122 in the approaching trading sessions. Traders with a short-term perspective can sell the stock while maintaining a stop-loss at Rs 143.

via BL

Reliance Industries, Reliance Petroleum

Reliance Industries, Reliance Petroleum

RIL-RPL merger sealed...swap ratio at 1:16

Reliance Industries Ltd. (RIL) said that its Board of Directors approved a Scheme of Amalgamation of Reliance Petroleum Ltd. (RPL) with the company. The Scheme is subject to necessary approvals of shareholders and creditors and sanctions of the High Courts in Mumbai and Gujarat. The Appointed Date of the amalgamation is April 1. Upon completion of the amalgamation, shareholders of RPL will receive 1 fully paid equity share of Rs10 each of RIL for every 16 fully paid equity shares of Rs10 each of RPL held by them on the record date to be fixed later.

RIL’s equity stake in RPL will rise to 75.4% before the proposed merger as it first buys out Chevron’s 5% equity stake in RPL. After the merger, RIL’s 75.4% equity stake in RPL will be cancelled and hence should not lead to creation of any fresh treasury shares. Based on the recommended merger ratio, RIL will issue 6.92 crore new equity shares to the existing shareholders of RPL. This will result in a 4.4% increase in equity base from Rs15.74bn shares to Rs16.43bn. Consequently, the promoter holding in RIL will reduce from 49.0% to 47.0%.

The merger will unlock significant operational and financial synergies that exist between the two companies, RIL said in a statement. It creates a platform for value-enhancing growth and reinforces the company's position as an integrated global energy company, it added. The merger will enhance value for shareholders of both companies and is EPS accretive, RIL said.

Commenting on the merger, Mukesh Ambani, Chairman and MD, RIL said: "This merger follows Reliance Industries’ philosophy of creating enduring value for all our stakeholders. It is a significant step in our goal to be among the largest global corporations."

Analysts' reaction was mixed to the merger. Some say that the new refining capacity amid shrinking global oil demand will keep refinery utilization rates low and refining margins weak. "As a pure refiner with high gasoline yield, RPL faces near-term downside to its margins," says Goldman Sachs. The market too gave a lukewarm response to the merger ratio, with both the stocks actually falling slightly on the day of the announcement. Over the week, the two stocks slipped further amid a broad decline in the Indian stock market.

Reliance - RPL Merger

Reliance - RPL Merger

Reliance Petroleum

Reliance Petroleum

RIL-RPL Merger

RIL-RPL Merger

Reliance Industries - Reliance Petroleum

Reliance Industries - Reliance Petroleum

BREAKING - RIL-RPL ratio

RIL-RPL swap ratio at 1:16

All eyes on Reliance Industries and Reliance Petroleum

The board of Reliance Industries will meet later today to consider absorbing its Reliance Petroleum unit, giving it direct control of the world's largest refinery complex. Reliance Industries separately said it would buy Chevron Corporation's 5% stake in Reliance Petroleum, valued at $344 million as of the close of trade on Friday, 27 February 2009. Reliance Industries said it would own 75.38% of Reliance Petroleum after buying out Chevron's stake. Mukesh Ambani is chairman of both the Reliance companies.

Meanwhile, Reliance Industries reportedly expects losses of Rs 4005 crore from sale of gas from its D-6 block in 2008/09, according to its submissions in the Bombay High Court. However, it expects profit of Rs 962 crore in 2009/10. Reliance expects to double production to 80 million metric standard cubic meters per day by December, from 40 million metric standard cubic meter per day when it starts production this month.

Sterlite Industries, part of the London-based Vedanta Group, has reportedly put in a fresh bid to acquire US copper miner Asarco LLC for $1.5 billion, much lower than $2.6 billion it offered last year.

Hero Honda Motors reported a 24% jump in its total sale for the month of February 2009, at 3,29,055 units, as compared to 2,65,431 units in February 2008.

TVS Motor Company's two-wheeler sales for February 2009 rose 13% to 1,07,301 units from 95,235 units in February 2008. Its exports grew 32% to 16,583 units in February 2009 over February 2008. Meanwhile, TVS group firms, including TVS Motor, are reportedly planning to raise Rs 200 crore by selling land in the southern city of Chennai.

Thailand's ThaiBev has reportedly initiated talks with liquor maker United Spirits, even as the latter is negotiating a minority stake sale to Diageo Plc.

Tech Mahindra may reportedly tie up with a private equity firm to launch a bid for beleagured Satyam Computer Services.

The board of Dewan Housing Finance Corporation will meet on 6 March 2009 to consider raising funds via a rights issue of shares.

Reliance Industries - RPL Merger impact

The Reliance Industries board will meet on Monday to consider the merger of Reliance Petroleum with the mothership, which will catapult the merged entity into the list of the world's top 50 profitable companies. DNA Money looks at what it means:
18:1 SWAP RATIO?

Historically every company that Reliance Industries Ltd has floated has been folded into the mothership at some stage. This way, the promoters have always been able to increase their stake in the mothership.

The merger ratio, therefore, is more likely to favour RIL than RPL. Again, speaking of history, RIL has set the swap ratios for earlier mergers at a CAGR of 8-10% from IPO price. RPL's IPO (in April 2006) was priced at Rs 60. The RPL share price on Friday was Rs 76 (exactly at 8% CAGR). A 10% CAGR would mean a share price of Rs 80. Given this, the swap should at best be around 18:1, said Kunal Bhakta, director, Foster Capital Ventures.

THIN ARBITRAGE FOR TRADERS
Basically, whenever a merger is announced and the swap ratio becomes public, the shares of the company that will cease to exist typically trades at a discount to the implied swap ratio. The arbitrage opportunity in the extinguishing company's share depends on liquidity.

"On Monday morning , initially both stocks will react positively in the region of 2-4% because there will always be two schools of thought in terms of which company will benefit more," said Bhakta. He expects discount (arbitrage window) will be around 2.5% to 3%. "Even if it touches 4%, it will come back to those levels converging with time, tangoing the process or sequence of merger," Bhatka said.

MERGER BY APRIL END
The first step for RIL will be to seek legal sanction for the merger. The high court will hear the application in a week at the earliest. The court is then expected to ask RIL to get approval from shareholder. A notice for an extraordinary general meeting will have to be sent 21 days before it is held as per Companies' Act. So net-net, the merger could be consummated legally by April-end, said analysts.

EARNINGS & REFINING CYCLE
RPL's cash flows are seen helping RIL's capital expenditure plans because RPL is more efficiently structured in terms of cash flows, analysts said. However, while the deal would bring much-needed liquidity in the short term, it also makes RIL less attractive to those who do not want to invest in a cyclical, commoditised business.

RIL already earns two-thirds of its revenues from refining, an industry that is facing a multi-year cyclical downturn. This merger would double RIL's refining capacity, thereby making its non-refining revenues negligible.

This will tie RIL's fortunes more closely to the refining cycle, which is globally entering a stage of depression. On the positive side, there will be a huge contribution to RIL's bottomline from sale of Krishna Godavari gas. The company, which pays only a 11% minimum alternate tax, can now use the depreciation from RPL plant to lower the profit of the combined entity and save on tax.

SEZ & TAX HOLIDAYS
The merger is unlikely to have any impact on the tax holidays enjoyed by RPL, since they are bestowed upon the refining unit operating inside the special economic zone, rather than on RPL as a company. The tax benefits are expected to continue without any change. However, it will have an indirect beneficial impact due to the transfer of depreciation of RPL's plants to RIL's profit & loss accounts.

via DNA

Seven years later...RIL to merge with RPL again

Seven years ago, it was the largest ever merger in the history of corporate India. Reliance Petroleum (RPL) merged with Reliance Industries (RIL). The ratio then was one share of RIL for every 11 shares of RPL. History repeats itself as the board of RIL will meet on March 2 , to consider and recommend the amalgamation of its unit RPL with itself. RPL said its board would meet on March 2 and consider and recommend the amalgamation. Chevron holds a 5% stake in RPL while RIL owns 70.38% of RPL. This weekend market will speculate on the possible ratios.

Reliance Industries, Reliance Petroleum

Reliance Industries, Reliance Petroleum

Reliance Petroleum, India Economy, India Valuations

Reliance Petroleum, India Economy, India Valuations

RPL refinery goes on stream

Reliance Petroleum Ltd. (RPL) announced the commissioning of its greenfield refinery in a Special Economic Zone (SEZ) at Jamnagar. It commenced its crude processing on December 25. With a crude oil processing capacity of 580,000 barrels of oil per day, the company ranks as the 6th largest refinery in the world and is also amongst the world’s most complex refineries. US-based oil major Chevron holds a 5% stake in RPL.

The secondary processing units are now under synchronization and commissioning, RPL said, adding that the entire refinery complex is expected to attain full capacity shortly. The commissioning of the RPL refinery catapults Reliance Industries Ltd. (RIL) into the league of the largest refiners globally, both in terms of complex refining capacity and earnings potential.

With the completion of the RPL refinery, Jamnagar has emerged as the ‘Refining Hub of the World’ with the largest refining complex with an aggregate refining capacity of 1.24 million barrels of oil per day in any single location in the world. The RPL refinery has been completed in 36 months from concept to commissioning.

The plant’s completion comes as refining margins, or the profit from turning a barrel of oil into fuels, have shrunk as products such as gasoline and naphtha trade below the price of crude. Energy consumption has fallen sharply due to the global economic downturn, prompting several refiners to delay new projects. But, RPL may be better placed than others, with a strategic Middle East crude supply and strength in capacity and complexity.

Reliance Petroleum commissions Jamnagar refinery

Reliance Petroleum on Thursday announced commissioning of its only-for-exports oil refinery in a Special Economic Zone at Jamnagar in Gujarat.

The commissioning of the 580,000 barrels per day (29 million tons a year) capacity refinery by RPL, a unit of Mukesh Ambani-run Reliance Industries, will make Jamnagar the biggest oil refining hub in the world.

"RPL commenced its crude processing on Thursday. The secondary processing units are now under synchronization and commissioning," a company press statement said.

"The entire refinery complex is expected to attain full capacity shortly," it said but did not give a specific date.

The new unit has come up adjacent to Reliance's existing 660,000 bpd (33 million tons a year) mostly-for-exports refinery at Jamnagar.

"RPL refinery has been completed in 36 months from concept to commissioning, which is a new benchmark for building a grass-root refinery of this scale and complexity," the statement said.

Company's Chairman Mukesh Ambani said: "Commissioning this large and complex refinery in record time... yet again demonstrates the strength of our project management skills."

"We, at Reliance, continue to be committed to the long term potential of the refining sector. We will leverage our competitive advantages of scale, complexity and capability to process a wide range of crude oils and flexibility to produce high quality transportation fuels," he said.

RPL, in which the US energy major Chevron Corp hold five per cent stake, will produce petrol and diesel complaint to Euro-IV emission norms.

via PTI

Reliance Petroleum

Reliance Petroleum

Reliance Petroleum

Reliance Petroleum

Reliance Petroleum

Reliance Petroleum

Reliance Petroleum

Reliance Petroleum

Petroleum Refining

Petroleum Refining