Reliance Retail, the Reliance Industries Ltd (RIL) arm, on Friday said it will reduce the equity share capital which is held by shareholders other than its promoter and holding company.

The holding company of Reliance Retail is Reliance Retail Ventures Ltd (RRVL).

“The board of directors of the company at its meeting held on July 4, 2023, has approved a proposal to reduce the equity share capital to the extent held by shareholders other than its promoter and holding company, namely, Reliance Retail Ventures Ltd.

“Upon such reduction, these shares held by such shareholders shall stand cancelled and extinguished,’’ RIL said in a regulatory filing that was made after market hours on Friday.

It disclosed that a consideration of Rs 1,362 per share, determined on the basis of valuation obtained from two reputed independent registered valuers, would be paid towards capital reduction.

The capital reduction plan will make Reliance Retail a 100 per cent subsidiary of RRVL. RIL expects that this would enable it to more “efficiently structure businesses’’.

RRVL holds 99.91 per cent of the share capital of the company while 0.09 per cent, around 78.65 lakh equity shares, are held by the identified shareholders.

It is learnt that Reliance Retail had issued ESOPs which were converted into shares by some of the employees after the vesting period. The employees subsequently sold the shares which are now trading in the grey market.

It is felt that the value of these shares being traded in the grey market, which is volatile, does not reflect their fair price and therefore the decision was taken to reduce such shares.

Moreover, RIL has plans to list RRVL at a later date and in such conditions, having a 100 per cent stake would be useful.

At present, Reliance Retail’s equity shares are not listed, hence the valuation was determined by two independent registered valuers appointed by the company — Ernst & Young Merchant Banking Services and BDO Valuation Advisory.

Ernst & Young had valued Reliance Retail at Rs 884.03 per share, while BDO Valuation Advisory has put the price of Rs 849.08 per share. The consideration of Rs 1,362 per share is at a premium to that determined by the two valuers.

RIL also said in the regulatory filing that it will be sending a notice to such shareholders informing them about its intention to reduce the equity share capital to the extent of the shares held by them.