RIL To Demerge Its Oil-Petchem Business; Expects Approvals By Second Quarter
The hive off will help O2C business to facilitate value creation through strategic partnerships and attract dedicated pools of investor capital
Reliance Industries Limited (RIL) on Tuesday announced it is demerging its oil-to-chemicals (O2C) business into an independent subsidiary. Mukesh Ambani-led conglomerate said it will retain 100 per cent management control of the O2C business.
In a presentation to seek shareholders and creditors approvals, the company said the O2C business spin-off will lead the independent O2C business to focus on opportunities across the value chain, enhance efficiencies through self-sustaining capital structure and a dedicated management team. The hive off will help O2C business to facilitate value creation through strategic partnerships and attract dedicated pools of investor capital.
As per the company, the reorganization will be beneficial to all stakeholders of RIL as the existing O2C operating team will move with transfer of business, there will be no dilution of earnings or any restriction on cash flows and RIL is expected to retain its investment grade international (BBB+/ Baa2), and domestic AAA credit rating.
The oil-to-telecom conglomerate will transfer all refining, marketing and petchem assets to O2C.
As of now, the Securities and Exchange Board (SEBI) and stock exchanges have approved the company proposal of carving out its O2C business, but awaits a nod from its stakeholders and creditors. The Mumbai-headquartered company has also filed approval with National Company Tribunal (NCLT) at Mumbai and Ahmedabad and hopes to get the green signal by the second quarter of financial year 2022, i.e, July-September (2021).
Currently, RIL will have 85.1 per cent stake in Reliance Retail Ventures Limited, 67.3 per cent in Jio Platforms Limited and post the reorganization of O2C, RIL will have 51 per cent stake in Reliance BP Mobility Ltd. and the remaining 49 per cent will be in BP Plc.
The company along with its O2C business aims to achieve net carbon zero by 2035.