Reliance Industries proposes demerger of oil-to-chemicals business

Picture Supply : PTI (FILE)

RIL proposes to carve out its oil-to-chemicals enterprise right into a separate wholly-owned subsidiary

Reliance Industries Ltd (RIL) proposes to carve out its oil-to-chemicals (O2C) enterprise right into a separate wholly-owned subsidiary by second quarter of FY22. The method would end in formation of a brand new agency — Reliance O2C Ltd — the place the corporate intends to rope in Saudi nationwide oil firm Aramco by promoting as much as 20 per cent fairness.

In a late night time submitting at bourses, RIL mentioned that the proposed reorganisation of its O2C enterprise won’t end in any change shareholding construction within the firm. The share holding will stay the identical with the promoter group holding 49.14 per cent, home particular person buyers (public) holding a 12.54 per cent, international institutional buyers (public) holding a 24.49 per cent and others holding the remaining 13.83 per cent.

Additional down within the organisational chain, the brand new O2C subsidiary will maintain a 51 per cent stake in Reliance BP Mobility, whereas BP will maintain the remaining 49 per cent stake. It’s going to additionally maintain a 74.9 per cent stake in Reliance Sibur Elastomers Pvt Ltd, whereas Sibur will maintain the remaining 25.1 per cent stake.

The subsidiary will maintain your complete 100 per cent stake in Reliance World Power Providers Singapore (Pte) Ltd, Reliance World Power Providers Ltd (UK) and Reliance Ethane Pipeline Ltd.

Other than the O2C subsidiary, RIL will proceed to carry 85.1 per cent stake in its different subsidiary Reliance Retail Ventures Ltd. It’s going to additionally maintain 67.3 per cent in Jio Platforms Ltd whereas having curiosity in oil and gasoline and different segments via separate verticals:

RIL mentioned that its O2C Scheme has grow to be efficient from January 1, 2021 and required regulatory approval from SEBI and inventory exchanges has already been obtained. It additionally wants approvals from shareholders and collectors, regulatory authorities and Revenue-Tax Authority, and Nationwide Firm Regulation Tribunal’s (NCLT) Mumbai and Ahmedabad benches.

It mentioned that the scheme for reorganisation has been filed with NCLT on February 3, 2021; Shareholder and creditor assembly will probably be held in Q1 FY22; and the corporate Expects to obtain order from NCLT Mumbai and NCLT Ahmedabad by Q2 FY22.

Following the reorganisation, the administration management of O2C will proceed to relaxation with RIL. No dilution of earnings or any restriction on money flows is predicted, whereas RIL is predicted to retain its investment- grade worldwide (BBB+/ Baa2) and home AAA credit score scores, RIL mentioned in its submitting.

The reorganisation creates an unbiased, international scale progress engine for RIL, with sturdy money circulation technology potential, and there will probably be no affect on RIL’s consolidated financials, RIL mentioned:

Consideration for O2C belongings funded by interest- bearing mortgage from RIL to O2C. The O2C present steadiness sheet exhibits a mortgage of $25 billion prolonged by RIL in its books. O2C to pay floating fee curiosity linked to 1-year SBI MCLR fee.

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