RIL share price up by 2% post announcement of demerger of O2C business


LAST UPDATED: Feb. 23, 2021, 3:37 p.m.

New Delhi (Anish Yande): Shares of Reliance Industries surged by 2 percent on Tuesday’s trading session following the announcement of a demerger of its oil-to-chemicals (O2C) business. Reliance Industries would be converting the business into an independent subsidiary by the second quarter of the upcoming fiscal. Reliance Industries is planning a deal with the Saudi oil company Aramco.

Details of the deal between Reliance and Aramco:

Under the demerger of the business, a new firm,  Reliance O2C Ltd, would be established. The firm would help Reliance Industries sell a stake of 20 percent in the unit to Saudi oil company Aramco. The newly formed Reliance O2C Ltd would be a wholly-owned subsidiary of Reliance Industries.

Reliance O2C Ltd would hold a stake of 51 percent in Reliance BP Mobility and BP would hold the rest of the stake at 49 percent. 

The shareholding structure of the company would stay the same post the finalization of the deal. The promoter group would hold a stake of 49.14 percent, domestic individual investors (public) would hold a stake of 12.54 percent. Foreign institutional investors would hold a 24.49 percent stake.  Other investors would retain a 13.83 percent stake. 

The O2C firm would hold a stake of 74.9 percent stake in Reliance Sibur Elastomers. Reliance O2C Ltd would be holding a 100 percent stake in Reliance Global Energy Services Ltd and Energy Services Singapore (Pte) Ltd and Reliance Ethane Pipeline Ltd.

RIL to improve production through deal:

In 2019, the deal reached the discussions phase when Mukesh Ambani announced talks for the sale of a 20 percent stake in the oil-to-chemical business. The oil-to-chemical business constitutes a sale of refineries in Gujarat and petrochemical assets to Aramco. 

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The deal was delayed by the Covid-19 pandemic and was finalized through a notification issued on February 23, 2021.

Reliance Industries has stated that the demerger would facilitate enhanced production and value creation through strategic partnerships.

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