Shares of Reliance Industries Ltd (RIL) were up 4 per cent at Rs 2,150 on the BSE in intra-day trade on Thursday, having gained 6 per cent in the past two trading days after the company announced the proposal to hive off its oil-to-chemical (O2C) business into an independent unit. The stock was trading at its highest level since October 21, 2020. It had hit a record high of Rs 2,369 in September last year. RIL in a presentation on Tuesday, February 23, announced the initiation of the formal process of carving out the O2C business into a wholly-owned independent subsidiary. The management reorganised the refining and petrochemical businesses into O2C to facilitate holistic and agile decision making, pursue attractive opportunities for growth with strategic partnerships, and drive its downstream business.
Synopsis
The format is quite similar to the Jio Platforms structure wherein the proceeds from stake sales were used to deleverage the consolidated balance sheet.
Agencies Reliance is seeking to achieve a net carbon-zero status for its operations by 2035.
Reliance Industries’ move to carve out a separate unit for its oil to chemicals (O2C) empire could help draw strategic and financial investors to a future alternative-energy revenue stream, with India’s most valuable company seeking to replicate its monetisation playbook for consumer sectors to unlock value in the legacy businesses.
The proposed financial details of the carve-out are as follows.
Reliance to spin off oil-to-chemicals business with USD 25 bn loan
The carving out of Reliance O2C Limited (O2C) will enable the focused pursuit of opportunities across the oil-to-chemicals value chain, improve efficiencies through self-sustaining capital structure and a dedicated management team, and attract dedicated pools of investor capital, according to a company presentation filed with the stock exchanges.
Mukesh Ambani
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Billionaire Mukesh Ambani s Reliance Industries announced the contours of spinning-off its oil refining, fuel marketing and petrochemical (oil-to-chemical) business into an independent unit with a USD 25 billion loan from the parent, as it looks to unlock value by settling stakes to global investors like Saudi Aramco.