InvestorQ : How will the hiving off the oil to chemicals business of Reliance Industries actually work in practice?
Mary Joseph made post

How will the hiving off the oil to chemicals business of Reliance Industries actually work in practice?

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Arusha Ray answered.
9 months ago
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On 23 February, Reliance Industries secured SEBI approval for the conversion of its oil to chemicals (O2C) business into an independent subsidiary. The approval process is expected to be completed by the Sep-21. Morgan Stanley called it the right step towards monetization of value. Here is what the transfer of O2C business will entail.

RIL will transfer its refining, marketing and petrochemical assets to Reliance O2C without dilution of earnings or restriction on cash flows. This is likely to be the first step by RIL to sell a possible 20% stake in Reliance O2C Ltd to an external investor like Saudi Aramco. Back in 2019, the deal with Saudi Aramco was delayed due to the pandemic and the subsequent fall in crude oil prices. Here is what you need to know about the hive off.

· Reliance O2C Ltd will be a 100% owned subsidiary of Reliance Industries with the same existing shareholding pattern viz. promoters - 49.14%, Indian public - 12.54%, FPIs - 24.49% and other investors - 13.83%.

· Reliance O2C Ltd will consist of the oil refining and petchem business of RIL, but exclude oil and gas extraction. Additionally, it will hold 51% in Reliance BP Mobility, 74.9% in Reliance Sibur Elastomers, 100% in Reliance Global Energy Services and Reliance Ethane.

· RIL will continue to exercise management control over Reliance O2C. The NCLT filing was done on 03-Feb and the creditor meetings will be held in Q1FY22. NCLT approvals from Mumbai and Ahmedabad benches for the reorganization are expected by Q2FY22.

· All other business that are currently under RIL, especially the upstream oil and gas extraction business at KG-D6 blocks will continue to be under the RIL banner.

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