Reliance Power, RNRL merger to happen in 90 days

Excerpts from Markets Midday on CNBC-TV18 Watch the full show »

The boards of Reliance Natural Resources and Reliance Power have approved the merger. RNRL shareholders will get one Reliance Power share for every four held.

Commenting on the rationale behind the deal, JP Chalasani, CEO, Reliance Power, said the synergies between RNRL and Reliance Power will benefit both shareholders. "RNRL shareholders will now benefits from the growth in Reliance Power. The merger assures gas supply to Reliance Power. It will also get access to an additional 2,000 MW capacity."

He said the valuation was done in consultation with KPMG and that the merger is expected to happen in 90 days.

Here is a verbatim transcript of the exclusive interview with JP Chalasani on CNBC-TV18. Also watch the accompanying video.

Q: If you look at it from an asset point of view, how much do you think could be attributed to the Gas Supply Master Agreement (GSMA) itself when you were valuing RNRL and how much could have been attributed to the coal bed methane and the other assets of RNRL?

A: I won't be able to say how much for each as it's an independent valuation done by KPMG, taking into consideration various aspects of that business is one. Second thing is taking into consideration the market price, the business discounted cash flow (DCF) as well as the book value, which includes as you said the GSMA includes the coal bed methane (CBM) blocks, includes the shipping business and various aspects.