Four years after the Reliance group of industries acquired Indian Petrochemicals Corporation Limited (IPCL) from the government, IPCL is being merged with the group’s flagship company, Reliance Industries Ltd (RIL). The RIL board, led by Mukesh Ambani, is meeting on March 10 to consider the merger proposal. This will be the second mega-merger in the Reliance group after the merger of the Reliance Petroleum Ltd with RIL in 2002.

IPCL came into the Reliance fold in June 2002 when the Union government, as part of its disinvestment programme, divested 26 per cent of its equity shares in favour of Reliance Petroinvestments Ltd (RPIL), a Reliance group company, for Rs 1,440 crore. RPIL acquired an additional 20 per cent equity shares through an open offer in terms of Securities and Exchange Board of India (Sebi) regulations and raised its stake to 46 per cent of the company’s equity capital. The total cost of the acquisition was Rs 2,641.45 crore, including the mandatory open offer that it made at the same price of Rs 231 a share to the public.

The market has been expecting the merger of IPCL with RIL for the last two years. “It is only natural that IPCL is merged with RIL as both have considerable synergies,” said an analyst. However, RIL shares closed 0.77 per cent lower at Rs 1289.35 in a weak stock market while IPCL closed 0.94 per cent lower at Rs 231.65.

Set up by the government on March 22, 1969, with a view to promoting and encouraging the use of plastics in India, IPCL’s business consists of polymers, synthetic fibre, fibre intermediaries, solvents, surfactants, industrial chemicals, catalysts, absorbent and polyesters.

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