Private sector diversified giant Reliance Industries Limited (RIL) is undergoing a business restructuring. As part of this, the oil to chemicals (O2C) division will be split into an independent subsidiary.
The company will sell its stake to a strategic foreign investor such as Saudi Aramco. Thereby planning to add more value to its shareholders.
O2C Business will receive a $ 25 billion (approximately Rs 1.81 lakh crore) loan from its parent company.
Industrial giant Mukesh Ambani has told stock exchanges that it will be able to focus on the opportunities available in the OTC value chain by undertaking a business restructuring.
With this, they are aiming to possibly improve efficiency by raising capital on its own.
The ownership team, which specializes in the company, said it was looking to attract investors, increase its share value, and more
Part of O2C
RIL will acquire a 51 percent stake in O2C refining, petrochemicals plants, and manufacturing units, as well as fuel retail marketing JV, which is set up with British Petroleum.
It also owns subsidiary oil trading companies in Singapore and the UK, as well as Uruguay Petro Marketing.
The Reliance Ethane Pipeline ltd is set up between Gujarat and Maharashtra, will acquire a nearly 75 percent stake in RIL in SIBUR JV.
Reliance, during the regulatory filling at the stock exchange, announced a statement that the promoter group will have a 49.14 percent stake in O2C business after the reshuffle, with no change in the company’s shareholders.
RIL said it has already received the approval of the Securities and Exchange Board of India (SEBI) for stock exchanges.
However, it said it has not yet received clearance from equity shareholders, lenders, IT, and NCLT benches.
Reliance expects Mumbai and Ahmedabad NCLT approvals by 2022. All refining, marketing, and petrochemical assets of the company will be transferred to the new subsidiary.
The company said it would further raise capital through investors following the deal with the world’s largest crude oil exporters Saudi Aramco.
As a holding company
O2C is all stacked up with RIL’s oil refinery, petrochemical assets, and retail energy business.
However, RIL said the KGD6 (Krishna Godavari Dhirubhai 6) fields, which produce oil and gas, and the textile business would not be part of the O2C.
The business restructuring will include the next RIL KG-D6 with oil, gas extraction, production business, financial services, treasury, and textile business. In addition, the group will be a holding company.
Other Businesses
Reliance Retail Ventures manages the retail business of RIL Group. Jio platforms include telecom and digital ventures.
RIL holds an 85.1 percent stake in Reliance Retail and 67.3 percent of stakes in Jio Platforms.
Rs. It is a known fact that the remaining shares have been allotted for global investment, worth Rs 2 lakh crore to Facebook, Google, and others.
RIL will provide a ten-year loan at a floating rate to O2C, which will be set up as a wholly-owned subsidiary.
The loans will be used by O2C to buy assets in the oil and gas sector. RIL expects to get all the approvals for the formation of O2C in the second half of the year i.e., 2021–22.
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