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Mukesh Ambani-led Reliance Industries Ltd (RIL) wants to merge four of its associate companies in real estate with its main property development subsidiary, Reliance Commercial Land and Infrastructure Ltd (RCLIL), under the scheme of amalgamation proposed before the Bombay High Court.
While a company spokesperson declined to comment on the matter, senior executives with top audit firms say the company could do it for various reasons such as getting investors in the main operating company and ensuring cost efficiencies.
"The company might want to get investors in the holding company or move assets to the parent company. It could also be that the smaller companies were not doing any business and the merger could give them cost efficiencies," said a top executive with a global audit firm, who did not want to be identified.
Another executive with another large audit firm, who also requested anonymity, said: "I think, instead of closing the smaller firms, they are merging them with bigger company. It would also help them in listing the company or get investors."
In the petition, the company said it wanted to merge Reliance Hyper Realty Ltd, Reliance Commercial Realty Assets Ltd, Reliance Gen Next Commercials Pvt Ltd and Reliance New Gen Commercials Pvt Ltd with RCLIL.
In 2011, Reliance merged nine of its retail subsidiaries with Reliance Fresh for cost efficiencies.
RCLIL is in the business of developing commercial properties and providing infrastructure support services through its subsidiaries.
The company is yet to release its annual report for FY 2011 and FY2012. Its last available annual report was for FY2010.
According to RIL's 2012 annual report, RCLIL had reserves of Rs 46.9 crore and capital of Rs 1,941 crore. Its assets and liabilities stood at Rs 3,058 crore, while profit before tax and profit after tax was showed as nil.
Reliance Hyper Realty, which makes investments in companies focused in providing real estate solutions for the organised retail and creating and operating retail stores, made a loss of Rs 15.34 lakh in FY2012 against Rs 18.72 lakh in the year before.
Reliance Commercial Realty, which makes investments in companies engaged in selling and leasing of retail spaces and construction of stores, has incurred a loss of Rs 9.9 lakh in FY2012 against Rs 10.3 lakh in the previous year. Reliance Gennext Commercials, which is into development of foreign investment-compliant projects, posted a net profit of Rs 1.98 crore in FY2012, up from Rs 92.37 lakh.
Reliance New Gen Commercials posted a net profit of Rs 1. 21 crore in FY2012 against Rs 19. 20 lakh in FY 2011.