The Reliance Industries Limited, recently opened the subscription of its rights issue worth Rs. 53,125 Crore. The ongoing rights issue is open for subscription from...
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The Reliance Industries Limited, recently opened the subscription of its rights issue worth Rs. 53,125 Crore. The ongoing rights issue is open for subscription from 20th May to 3rd June 2020 and here is all you need to know to apply.
Understanding what a rights issue is
A company may resort to various means of raising capital while pursuing expansion goals, attempting to achieve a debt-free status or building new assets. One such means is a rights issue. This involves offering existing shareholders the chance to subscribe to an additional amount of shares at a discounted price. The proportion of the number of shares issued to each existing shareholder varies based on their present holdings. In the case of Reliance Industries Rights Issue, the proportion issued is 1:15. This means, if you currently hold 15 shares of Reliance Industries Limited, you are eligible to bid for 1 share in the ongoing rights issue. In case you are an existing shareholder, eligible to subscribe to the right issue, you can choose to subscribe to or relinquish the rights. Additionally, as a third option you can also sell these rights, once they are credited to your account, to another investor just as you sell other holdings. You can add reliance Industries Limited to your watchlist on the Upstox Platform by searching for RIL-RE.
Eligibility for subscribing to the Reliance Industries Limited Rights issue
In order to be eligible for this rights issue, you should have bought Reliance Industries Limited shares before 14th May, as 14th May is the record date to the right issue.. You will also have received a rights application form on the email id linked to your Demat account. Additionally, Rights entitlement will be credited to your Demat account in the form of temporary securities.
Applying for the Reliance Industries Limited rights issue made simple
Amidst the ongoing lockdown scenario, SEBI has permitted minor modifications in applying for the rights issue. This means you can exercise these rights by visiting the RTA website to apply for these rights and make the payment too.
Here are the details you will need to apply:
DP ID
Client ID
PAN number
Bank account number
To find your DP ID and Client ID,
1)Login to the Upstox Pro Mobile app with your credentials
2)Click the icon with three lines on the top left corner
3)Click on your name at top left of the page
4)You will see your account details listed on a screen similar to the one below
Note down the depository name and your Demat account number.
The first 8 digits of your 16 digit Demat account number is your DP ID and last 8 digits is your Client ID. Your DP Name is RKSV securities India Private Limited.
Once you have these details ready, you can follow these steps:
1) Visit https://rights.kfintech.com/
2) Click on ‘Apply for Right Issue’
3) Select the depository that you have an account with or select whether you have physical shares
4) Fill in your DP ID, client ID and the Captcha code
5) Click on ‘Submit’
6) On the next page, register your mobile number and your email ID
7) Pay for your order using UPI or NEFT
In case you still own physical shares despite opening a Demat account, select ‘Demat Account number Information registration’ and follow the instructions on the screen.
Important dates to keep in mind for the Reliance rights issue
Along with the opening and closing date of the issue, here are a few other dates to make note of.
10th June – allotment of rights
11th June – credit to Demat account
12th June – listing
What to do if you don’t want to apply to the Reliance rights issue
The ratio of allotment to the rights issue is 1:15. So if you hold 90 shares of Reliance, you are eligible to get 6 additional shares from the rights issue. The current market price of Reliance is Rs 1454.75. So the value of those 6 shares as of today is Rs. 8,728.5 (1454.75 x 6).
Reliance has fixed the price of the rights issue at Rs 1257 per share. Hence the price of those 6 shares would become Rs 7,542 post the issue.
This would result in a loss of Rs 1186.5 as intrinsic value on those 6 additional shares.
Hence, in case you do not wish to apply for the rights issue, it is advisable for you to sell the quantity of shares allotted to you via the issue on or before 29th May, to ensure that you do not lose the premium you hold with the current market price.
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