Mukesh: Cutting edge

Mumbai, March 27: Mukesh Ambani-run Reliance Industries is whittling down the list of investment companies within the group that hold stakes in the over Rs 70,000 crore petroleum-to-petrochemicals behemoth.

Back in December before the demerger took place, there were 92 investment companies ? lumped together under the rubric ‘persons acting in concert’? that held piffling stakes in the company. Unconfirmed reports suggest the list has been almost halved since then.

The clawback has been slow: over the past three months, there have been fairly large inter se share transfers among the investment companies in the group. The stakeholding of the investment companies have risen by 2.02 per cent through these transfers within group companies since January.

On Monday, five more investment companies ? Amur Trading, Kudrat, Ornate, Madhuban Merchandise and Tresta Trading Ltd ? announced they would be buying 7.4 per cent from group companies through block deals.

Reliance Industries also announced that Sanatan Textrade along with Reliance Consolidated Enterprises Pvt Ltd (both are classified as promoters) would acquire up to 4.13 crore shares that constitute 2.97 per cent of RIL’s equity from other group companies which are also classified as promoters.

The twin moves reflect Mukesh Ambani’s intention to not only bring down the number of persons acting in concert (PACs), but also those who have been defined as promoters. When these inter se transfers were first observed more than three months back, the promoter group companies were largely buying shares from the PACs. This had resulted in the number of PACs coming down to 92 from over 100.

The inter se transfers among group companies, RIL has said, would be at 1 per cent above or below the closing prices of the previous day ? evidently because the group does not want to inject any volatility into the scrip during this process of consolidation.

But it also raises a larger question: Is Mukesh Ambani looking to bring down the number of investment companies within the group to a manageable number? It's not known how many investment companies there are in the Reliance group ? some say hundreds. But the slow whittling down of the long list of PACs in Reliance Industries means that some of them could be cast into mere shelf companies. It is also a sign that in this day and age, there's no need to have such a vast maze of investment companies. Although RIL officials did not want to comment on the ongoing process, they said the management wanted to have a simpler and clearer holding structure. They refused to spell out the ideal number of PACs and promoter group companies that the Reliance Industries was looking at.

Observers believe that Mukesh Ambani may be in the process of first consolidating the shareholding structure of RIL by bringing down the number of group companies and then follow it up by raising the promoters’ stake in the petrochemical monolith. Younger scion Anil Ambani, who heads the Anil Dhirubhai Ambani Group, has also been raising his stake in group companies since last year. He too has expressed desire to create what he terms a simpler and a clearer holding structure. But, in the process, he has raised the promoters’ stake in the companies ? especially recently listed Reliance Communications Ventures Ltd (RCoVL) and the unlisted Reliance Infocomm which is due to be merged with RCoVL.

Anil Ambani has also rejigged the shareholding structure in two other entities ? Reliance Telecom and Reliance Communications Infrastructure ? which have become 100 per cent subsidiaries of RCoVL.

Clearly, both Ambani brothers are looking to consolidate their shareholding in the companies and may be trying to cross the 50 per cent threshold. The promoters’ stake in RIL (including that held by persons acting in concert) is just a tad short at around 46 per cent.