Reliance Industries Ltd has initiated the process of carving out its oil-to-chemicals (O2C) operations into an independent unit with a $25 billion loan from the parent company. The company plans to complete the process by second quarter of FY22.
This O2C unit will be funded by interest-bearing loan from Reliance Industries Ltd (RIL), which will be an “efficient mechanism to upstream cash, including any potential capital receipts in the arm, the company said in a regulatory filing on Tuesday.”
With this unit, the company intends to rope in Saudi national oil company Aramco by selling up to 20 per cent equity.
As per the filing, share holding will remain the same with the promoter group holding 49.14 per cent, domestic individual investors (public) holding a 12.54 per cent, foreign institutional investors (public) holding a 24.49 per cent and others holding the remaining 13.83 per cent.
Further down in the organisational chain, the new O2C subsidiary will hold a 51 per cent stake in Reliance BP Mobility, while BP will hold the remaining 49 per cent stake. It will also hold a 74.9 per cent stake in Reliance Sibur Elastomers Pvt Ltd, while Sibur will hold the remaining 25.1 per cent stake.
The subsidiary will hold the entire 100 per cent stake in Reliance Global Energy Services Singapore (Pte) Ltd, Reliance Global Energy Services Ltd (UK) and Reliance Ethane Pipeline Ltd.
Apart from the O2C subsidiary, RIL will continue to hold 85.1 per cent stake in its other subsidiary Reliance Retail Ventures Ltd. It will also hold 67.3 per cent in Jio Platforms Ltd while having interest in oil and gas and other segments through separate verticals:
RIL said that its O2C Scheme has become effective from January 1, 2021 and required regulatory approval from SEBI and stock exchanges has already been received. It also needs approvals from shareholders and creditors, regulatory authorities and Income-Tax Authority, and National Company Law Tribunal’s (NCLT) Mumbai and Ahmedabad benches.
It said that the scheme for reorganisation has been filed with NCLT on February 3, 2021; Shareholder and creditor meeting will be held in Q1 FY22; and the company Expects to receive order from NCLT Mumbai and NCLT Ahmedabad by Q2 FY22.
In the last financial year, company’s O2C unit contributed more than 60 per cent to group’s revenue that has been lately pivoting toward consumer businesses.
This move to create a dedicated unit will help Mukesh Ambani to attract more investors and helped to expedite a proposed stake sale to Saudi Aramco.