Have the Ambanis been claiming as promoter's shares what does not belong to them? A senior Reliance group executive admitted to Business Standard that the 7.50 per cent stake in Reliance Industries held by the Petroleum Trust is not part of the promoters' holdings.

But this shareholding is listed on the Bombay Stock Exchange web site as being part of the promoters' holding.

The senior Reliance group executive said: "The Petroleum Trust's holding should not be considered to be part of the promoters' holding. If the trust's holding is shown to be part of the promoters' holding on the BSE website, that is the responsibility of the BSE. However, if the Reliance Industries annual report says this, I must say that this is a mistake."

• The Reliance ownership issue: Complete Coverage

One outcome of this is that the promoters' holding in Reliance Industries is not 12.63 per cent but 5.13 per cent. The Petroleum Trust's 7.50 per cent will fall in the "persons acting in concert" category.

When contacted, a BSE spokesman said: "We put whatever the company gave us on the website." The Reliance Industries annual report merely states that Reliance Industrial Investments & Holdings, a 100 per cent subsidiary of Reliance Industries, is the "sole beneficiary of (the) Petroleum Trust".

The shareholding pattern of Reliance Industries filed with the BSE and posted on its website at the end of September 2004 lists the 7.50 per cent stake the Petroleum Trust holds as part of the promoters' holding in Reliance Industries.

The promoters held only a 6.51 per cent stake in Reliance Industries at the end of the quarter ended September 2002.

But by the quarter ended December 31, 2002 (that is, after the merger of Reliance Petroleum and Reliance Industries was formalised), the holdings went up to 12.44 per cent, including the block of 7.50 per cent shares in Reliance Industries held by the trust.

The Petroleum Trust was formed on May 2, 2002 by Reliance Industrial Investments & Holdings.

Explaining how the trust got these shares, the filings by Reliance Industries and Reliance Industrial Investments & Holdings with the Registrar of Companies state: "In terms of the scheme of amalgamation of Reliance Petroleum with Reliance Industries, shares of Reliance Industries have been allotted to the trustees of Petroleum Trust against the shareholding of Reliance Industrial Investments & Holdings in the erstwhile Reliance Petroleum."

Before Reliance Petroleum was merged with Reliance Industries, Reliance Industrial Investment & Holdings held 1.151 billion shares in Reliance Petroleum, or 22.13 per cent of its equity.

Following the amalgamation of Reliance Petroleum with Reliance Industries, the shares of Reliance Industries were allotted to the trust. Reliance Industrial Investments & Holdings, being a 100 per cent subsidiary of Reliance Industries, could not hold shares of the parent company, under law.

So the Petroleum Trust was created to house the newly created shares of Reliance Industries after the merger. But since the property belonged to Reliance Industrial Investments & Holdings, it was named the "sole beneficiary," implying that all financial benefits arising out of the ownership of Reliance Industries shares would flow to Reliance Industrial Investments & Holdings.

When the merger was announced in March 2002, Reliance Industries managing director Anil Ambani announced that Reliance Industries would sell 12.2 per cent (the 7.5 per cent held by the trust, plus another 4.5 per cent that belonged to Reliance Industries' associates) -- now worth roughly Rs 8,800 crore (Rs 88 billion) but then worth Rs 5,400 crore (Rs 54 billion)-to strategic investors, financial institutions or overseas via ADRs or GDRs in five years.

He was then quoted as saying: "There will be substantial leverage to fund future investments and acquisitions and other growth opportunities in the domestic and international market. All this will be done without any recourse  to the Reliance Industries balance sheet and the benefits will flow to Reliance shareholders."

The two trustees of the Petroleum Trust-lawyer Vishnubhai B Haribhakti and investment banker Nimesh Kampani-have an unblemished record.  Vishnubhai Haribhakti 's son Sailesh and Kampani declined to comment on any matters relating to the trust, when contacted earlier.

On November 29, Business Standard emailed questions to a Reliance Industries spokesman asking how the Petroleum Trust shares are part of the promoters' holding, as mentioned on the BSE site, because when Reliance Industries and Reliance Petroleum merged, 7.5 per cent of the shares (post merger) held by Reliance Industrial Investments & Holdings Ltd, a 100 per cent Reliance Industries subsidiary (and not a company directly held by the family), were transferred to the Petroleum Trust.

However, Reliance Industries did not reply to the email.

Formerly known as Trishna Investments & Leasings, Reliance Industrial Investments & Holdings makes profits and has investments in Reliance group entities.

According to the details of subsidiary companies furnished in the Reliance Industries annual report of 2003-2004, Reliance Industrial Investments & Holdings reported a net profit of Rs 41.41 crore (Rs 414.1 million) on a total income of Rs 68.61 crore (Rs 686.1 million) and net owned funds of Rs 310.26 crore (Rs 3.102 billion).

Reliance Industrial Investments & Holdings derives its income from its investment book of Rs 1,874.03 crore (Rs 18.740 billion), of which the value of the holdings in Reliance Industries was Rs 1,654.96 crore (Rs 16.549 billion) on March 31, 2004.

Reliance Industrial Investments & Holdings' asset book was funded almost entirely by Reliance Industries. Reliance Industrial Investments & Holding's equity of Rs 147.50 crore (Rs 1.475 billion) was wholly contributed by Reliance Industries.

It had internal reserves of Rs 162.76 crore (Rs 1.627 billion), debt of Rs 721.48 crore (Rs 7.214 billion), raised through two series of debentures-again wholly subscribed by Reliance Industries-and loans of Rs 794.22 crore (Rs 7.942 billion) raised from Reliance Industries, on March 31, 2004.

Not quite a family matter Reliance Industrial Investments & Holdings (RIIH) held a 22.13% stake (1.51 billion shares) in Reliance Petroleum After the 1:11 merger of RPL into Reliance Industries, RIIH was entitled to 1.05 million shares of RIL, amounting to a 7.50% stake RIIH's entitlement was directly issued to the Petroleum Trust on Oct 31, 2002 In the quarter ended December 2002, RIL reported this 7.50% holdings as part of the promoter holdings to the Bombay Stock Exchange RIL now concedes this was a mistake So the promoter holdings now stand at 39.17% and not 46.67% as reported earlier