Forming an independent company for the O2C business is aimed at value unlocking through strategic partnerships, such as a potential investment by Saudi Aramco, and attracting dedicated pools of investor capital.
will transfer all its refining, marketing, and petrochemical assets to the 100% subsidiary, RIL O2C.
“RIL standalone entity will have all existing segments other than O2C business,” the Mukesh Ambani-led company said in a presentation.
RIL said the “new RIL” will incubate new growth platforms through adoption of new and transformative technologies in collaboration models.
RIL said that it has filed the proposal for carving out the O2C business with National Company Law Tribunal (NCLT) at Mumbai and Ahmedabad and expects approvals by the second quarter of 2021-22. It has already received approvals from the Securities and Exchange Board of India and the stock exchanges. The company will now seek approvals from shareholders and creditors.
RIL pegs the consolidated O2C revenue, annualized based on the nine months of FY21, at $40 billion, accounting for 60% of the total. The company said that the operating profit, also annualised on the basis of nine months ended December, at $ 4.9 billion, accounting for close to 40% of the total operating profit.
RIL first announced that it is in talks with Saudi Aramco to sell a stake in its O2C business in August 2019. Subsequently, the company announced a detailed plan to create a separate entity for the business in September 2020.
ET reported exclusively on Friday that the company is finalising the demerger plan, and talks with Saudi Aramco are back on track.
RIL said that the consideration for O2C assets that will be transferred to the subsidiary will be funded by interest bearing loan from the parent worth $ 25 billion. Total equity invested in RIL O2C stood at $ 12 billion as on the appointed date for the formation of the subsidiary on January 1.
Reliance O2C will have a refining capacity of 1.4 million barrels per day, petrochemical production capacity of 38.4 million ton, and will house nine manufacturing units in India and three in Malaysia. RIL’s 51% stake in the fuel retail business with BP will also be a part of the new subsidiary.
