Though the conversion into equity shares is at the option of the warrant holders, given the steep discount to the market price, the option is likely to be exercised by almost all the investors.

Reliance officials said the conversion price of the warrants is Rs 75 each and with the scrip hovering around the Rs 180 levels the 12 crore warrants attached to the debentures are likely to be entirely converted. The warrants are part of the Rs 300 crore debenture float, with a face value of Rs 50 each, and are convertible into equity shares with a face value of Rs 10 each. The 14 per cent debentures were issued by thecompany in 1994.

The petrochemicals major has an equity base of Rs 933.39 crore, divided into 93.37 crore equity shares, while its authorised capital stands at Rs 1,200 crore (or 120 crore equity shares). This would mean that post-conversion, Reliance's paid-up capital would stand increased to 1,050 crore.

The Rs 300-crore debenture issue is part of the massive Rs 953 crore debenture redemption programme of Reliance for the current financial year. While four of them mature during the fiscal, another Rs 341-crore issue has been redeemed last month.

Essentially, if the warrant conversion programme goes through, the redemption of Rs 953 crore debt will be financed from the fresh capital flow of Rs 900 crore. This will not only reduce the debt component, but also wipe out the interest burden to that extent as the conversion premium alone will fetch Rs 780 crore for the company.