Decoding Reliance Industries Limited proposed Demerger Scheme

Salient features to know  

1. Reliance Industries Limited (RIL) is proposing demerger in coming months with its Financial Services unit Reliance Strategic Investments Limited (RSIL) which is Currently Non deposit taking systematically important NBFC and wholly owned subsidiary of RIL.

2. According to proposed scheme, demerger will be through a Share swap arrangement  and  RIL shareholders would get 1 share of Reliance Strategic Investments Limited.

3. Pursuant to this demerger,  Reliance Strategic Investments Limited  (RSIL) would get ownership of Reliance Industrial Investments and Holdings Limited (RIIHL) which is currently financial services undertaking of RIL.

4. RSIL would get listed on stock exchange in September 2023 and its name would be changed to Jio Financial Services Limited after the proposed demerger.

5. The board of directors on 21^st October, 2022 had already approved the above scheme and the company would hold meeting of creditors and shareholders meeting on 2^nd May 2023 for approving the said scheme.

6. Further, the proposed scheme would be subject to various approvals and permissions from NCLT, SEBI, RBI, stock exchanges, Competition Commission of India.

7. KV Kamath and Manish Singh, former ICICI Bank Non- Executive Chairman and ICICI bank officer would be appointed in proposed new entity Jio Financial services Limited as Chairman and team member.

Objectives behind Demerger

• Reliance Industries Limited is going for above demerger move for further expansion and growth of its financial services sector.
• To dominate and become a market leader in financial services business and create a strong competition for existing business players in financial services.
• To attract more investors, strategic partners and stakeholders in their business.
• The proposed demerger is expected to provide more better opportunities, value and higher leverage for its shareholders.

Future predictions

Business analysts have made below predictions of the proposed demerger:

• It would prove as a big competition to existing financial service players including Paytm , Bajaj Finance, Phone Pe.
• According to share analysis of RSIL in Reliance Industries, it is expected to become 5^th largest financial services company.
• It would provide more better opportunities for consumers and investors in terms of low cost and more better advantages.
• It is expected to provide a great boost to economy in coming months.