Mukesh Ambani-led Reliance Industries on Thursday said it will hive off its oil-to-chemicals (O2C) business into a separate division to enable the sale of 20 per cent stake in the unit to Saudi national oil company Aramco. The RIL's board has approved the proposal, while it needs to get approved by the National Company Law Tribunal.
"The board at its meeting held today has approved a scheme of arrangement for transfer of O2C undertaking of the company to Reliance O2C Limited as a going concern on slump sale basis for a lump sum consideration equal to the income tax net worth of the O2C undertaking as on the appointed date of the scheme," RIL said in a filing to the Bombay Stock Exchange.
Post the approval, the oil-to-chemical business will become a separate vertical (Reliance O2C Limited) with independent balance sheet just like the digital arm, Jio Platforms.
"O2C division of the company comprises of entire oil-to-chemicals business consisting of refining, petrochemicals, fuel retail and aviation fuel (majority interest only) and bulk wholesale marketing businesses together with its assets and liabilities," RIL said.
Billionaire Mukesh Ambani had in August last year announced initial agreements to sell a 20 per cent stake in the oil-to-chemical business to the Saudi Aramco. Also, a 49 per cent interest in fuel retailing business was sold to UK's BP plc for Rs 7,000 crore.
As part of the August deal, Saudi Aramco will supply 500,000 barrels per day of crude on a long-term basis to RIL's Jamnagar refinery complex (40 per cent of the refining capacity).
Meanwhile, the RIL's board also approved a plan to raise Rs 53,125 crore via rights issue. It is said to be the biggest rights issue in India so far. The rights issue is priced at Rs 1,257, a discount of Rs 207 or 14 per cent from the today closing price of Rs 1,464. One equity share can be subscribed for every 15 equity shares held by eligible shareholders as on the record date.
The board was also informed that the company expected to complete the capital raising programme totalling over 1.04 lakh crore by April-June quarter of the current financial year. This includes the investment by Facebook in Jio Platforms, the upcoming rights issue and the previous investment by British Petroleum in FY20.
RIL's board also recommended a dividend of Rs 6.50 per equity share of Rs 10 each for the financial year ended March 31, 2020.