Mukesh Ambani's Reliance Industries Limited has received approval from the Securities and Exchange Board of India (SEBI) and the stock exchanges to demerge its oil to chemical (O2C) business into an independent company. RIL now needs approval from equity shareholders, creditors, regulatory and I-T department and the National Company Law Tribunals (NCLTs). In a notification, RIL has said it expects to get all the approvals by the fiscal year-end.
After the demerger, holding company RIL will have upstream exploration and production business, financial services, treasury and textile business, while RIL O2C Ltd will have an oil-to-chemical business comprising refining and petrochemicals, fuel retail, and control over global subsidiaries of RIL.
Reliance O2C Ltd will be the largest and most complex single-site refinery at Jamnagar with 1.4 MMBPD crude refining capacity. It will have a vertically integrated portfolio across the petrochemicals value chain among the lowest cost positions and global top 10 rankings in key products, said RIL.
The company has said the new entity will carry forward the ongoing talks with Saudi Aramco for one of the largest downstream transactions in India. Besides, it will comprise a 51:49 fuel retail joint venture, the largest FDI in India's fuel retail sector.
RIL has said the independent growth of the company will enable the focused approach towards opportunities across the O2C value chain. It will enhance efficiencies through self-sustaining capital structure and a dedicated management team, it said, adding the demerger will facilitate value creation through strategic partnerships and attract dedicated pools of investors.
Notably, from the April-December period of the current financial year, RIL's O2C business reported a revenue worth Rs 2.18 lakh crore. The company's operating profit in this period stood at Rs 26,763 crore. The total assets of the new entity as of Q3 are worth Rs 3.6 lakh crore, around 28 per cent of RIL's total assets.
RIL's share rose over 2% in early trade and touched an intraday high of Rs 2,049.95, rising 2.12% on the BSE.