Besides, creating a Rs 50,000 crore entity, the merger will help R Power to access gas, and enable it to achieve the goal of 37,000mw of capacity within next one decade.


Shareholders of Reliance Power (R Power) and Reliance Natural Resources Limited (RNRL) have today approved the merger of both entities after the boards of the respective companies had approved the same on July 4. RNRL was born out of demerger of Dhirubhai Ambani's Reliance empire five years ago. The purpose of creation of RNRL was for sourcing, supply and transportation of fuels, primarily natural gas.

As a part of the arrangement, RNRL shareholders will get one share of R Power for every four shares held, leading to 15% dilution (41 crore shares) for the latter.  The merger ratio looks favourable based on the book value (RNRL Rs 12 and R Power Rs 60) as both companies do not have a previous operating history and the projects are still under execution, say analysts.

Besides, creating a Rs 50,000 crore entity, the merger will help R Power to access gas (mainly from the gas deal signed with Reliance Industries) for proposed 10,000mw projects, and enable it to achieve the goal of 37,000mw of capacity within next one decade. 

Moreover, it can also have access to RNRL’s four coal bed methane blocks (45% interest) having an estimated resources of about 193 billion cubic metres and one oil and gas block (10 per cent share) in Mizoram with a reserve potential of up to 28 billion cubic metre.

While RPower is up 1.7% at Rs 159 in trade today, RNRL has firmed up 2.2% at Rs 40 compared to Sensex’s rise of 1.8%.