New Delhi - Reliance Petroleum Ltd was to merge with its parent company Reliance Industries Ltd, India's biggest private sector company, a company statement announced Monday.

The board of the two companies unanimously approved the merger under which Reliance Petroleum shareholders would be offered one share of Reliance Industries for every 16 Reliance Petroleum shares, the release said.

The merger would take effect from April 1 after necessary approvals by shareholders and courts and would make Reliance Industries one of the world's top 10 private sector refining companies, it added.

"This merger follows Reliance Industries' philosophy of creating value for our stakeholders. It is a significant step in our goal to be among the largest global corporations," Reliance Industries chairman and managing director Mukesh Ambani said.

Reliance Industries shares in the Bombay Stock Exchange dropped by 1.62 per cent by noon, while those of Reliance Petroleum gained marginally by 0.15 per cent.

The merger would enhance value for shareholders of both companies, besides gains from reducing operating costs through synergies, the release said.

Analysts said the merger was aimed at both operational and tax benefits at a time when refining margins were under pressure because of a slump in oil prices.

Reliance Petroleum opened its latest refinery with a capacity of producing 580,000 barrels a day in Jamnagar in the western Gujarat state in December.

Reliance Industries, which had a net worth of 20.3 billion dollars as of March 31, 2008, earlier announced it would buy a 5-per-cent stake held by United States-based Chevron Corporation in Reliance Petroleum for an undisclosed amount. (dpa)