Courts' nod for recast of Mukesh's personal firms

A complex restructuring plan among Mukesh Ambani's personal companies has finally been cleared by the Bombay and Gujarat high courts, which will see Reliance Industries Holdings Pvt Ltd emerge as Ambani's main personal holding company, with annual revenue of Rs 9,000 crore (Rs 90 billion) and combined profits of Rs 6,000 crore (Rs 60 billion) for the last financial year.

Reliance Industries Holdings will now directly own stakes in Reliance Ports & Terminals, Reliance Gas and Transportation and Reliance Utilities and Power.

The three companies have strong operational linkages with Reliance Industries.

Because of the contractual nature of Reliance Utilities and Reliance Gas and Reliance Ports, the cash flow of these companies are expected to be close to Rs 3,500 crore (Rs 35 billion) to Rs 4,000 crore (Rs 40 billion).

The external debt of the merged entity will be around Rs 23,700 crore (Rs 237 billion), court documents show.

With the clearance of the high courts for the restructuring proposal, analysts say it will now

be easy for Ambani to seek a buyer for his gas pipeline company.

The green nod for the restructuring from both Gujarat and Bombay high courts came by December 2012.

Last year, Ambani had already sounded off investment bankers to seek a buyer for his gas pipeline company, Reliance Gas and Transportation, which has a close to Rs 10,000-crore (Rs 100-billion) valuation.

The sale was delayed as the restructuring exercise was pending in both the Gujarat and Bombay high courts and over valuation issues.

The regional director of the Ministry of Corporate Affairs had asked Reliance Gas & Transportation to seek clearance from the oil ministry and from regulator, the Petroleum and Natural Gas Regulatory Board, as the company had licenses from the ministry to operate the pipeline which connects its KG-D6 gas fields with Gujarat, documents filed with the courts show.

An email sent to a Reliance spokesperson did not elicit any response.

But insiders say the restructuring was aimed at eliminating cross-holdings and simplifying the holding structure so that these companies are held by Reliance Industries Holding.