Is merging of RPL with RIL a fair corporate practice? Is it good for investors of both the companies?

The merger at this point of time is nothing but cheating the Reliance Petroleum share holders. It is clear that the one who gain from this is the Company management and not  RIL and RPL share holders.

Many invested in Rel Petroleum considering its growth potential and appreciation of the share value.Independantly,  RPL shares would have gone up in spite of low oil price and global economic crisis,  whereas RIL share is likely to fall with general weakening of the share market.

RIL had used up the investors money to build the RPL plant and when revenue seen coming, RIL do not want to pass it on to the investors. So the management is telling lot of cock-and-bull stories to hoodwink the share holders of RPL.

To expain with an example how those who have bought the shares at higher level with this view would be losing much of their hard earned money due to this unethic merger.

A person purchased 2400 RPL shares at Rs. 180/- as per the recommendation of the analysts and media hype about the potential of RPL which in fact was fully justified.

Investment in RPL Rs.432000. Expected value at a nominal 15% growth in long term  = Rs. 496800.  Expected long term gain= Rs. 64800

After proposed merger of 16:1, the number of RIL shares will become 150.

Due to dilution of RIL value in issung additionals shares to aquire RPL shares and above and all due to loss of faith and negative sentiments caused by this merger, it will not be surprising if RIL share price  fall to Rs. 600/- levels in near future. It is certain that company will be ony too happy to buy back RIL shares at such low market value..

This will reduce the investors money to Rs. 90000/-  

Loss to the investor 432000-90000 = Rs. 342000/-

Look at the scope of divident. Both RIL and RPL are Rs. 10/- shares.

In the case of dividents at Rs. 1 per share, the investor will now get only Rs. 150 instead of Rs. 2400.  

Is it not distressing to see that some companies are taking advantage of the nation's good will by expoiting national resources to amass personal wealth?  

India has enough potential to grow and would have progressed faster but for the unbridled greed of the Industrialists whose main buisiness has become manipulation of money market, insted of managing  their companies profitably for the benefit of them and the country.  

God save the poor retail investors.

Even I doesn’t see RIL-RPL merger news a reason to cheer for shareholders of Reliance Industries. This step will disappoint shareholders of Reliance Petroleum. One can see the price correcting to about Rs 70 because ultimately everything depends on the conversion ratio, which is likely to hover between 18:1 and 24:1.....