Reliance Industries is one of the major brands in the Indian market now. Mukesh Ambani on Thursday made a decision to hive off its oil-to-chemical business into a separate division. It is expected to enable the sale of a 20% stake in the unit to Aramco, a Saudi national oil company. The proposal for the same has already been approved by the company’s board. However, it is still left to be agreed to by the national company law tribunal.
“The board at its meeting held today has approved a scheme for the arrangement for transfer of oil-to-chemical business undertaking if the company to Reliance oil-to-chemical business limited as a going concern on slump sale basis for a lump sum consideration equal to the income tax net worth of the oil to the chemical business undertaking as on the appointed date of the scheme. ” RIL said in a filing to the Bombay Stock Exchange.
After the sanction is granted, the oil-to-chemical business of the company will become an independent division consisting of refining, petrochemicals, fuel retail and aviation fuel and bulk wholesale marketing business, named Reliance oil-to-chemical business Limited, just like the digital arm, Jio Platforms. It will also be required to prepare its own financial statements.
Owner, Mukesh Ambani, also declared initial agreements to sell a 20% stake in the oil to chemical business to Saudi Aramco, in August 2019. As a part of the deal Aramco will supply 500,000 barrels of crude oil every day on a long term basis to The Jamnagar Refinery Complex, owned by Reliance.
This accounts for 40% of the refining capacity. It also planned to raise Rs. 53,125 crore via a rights issue, it is the biggest issue in India so far, priced at Rs. 1,257, at a discount of 14% from the closing price of Rs. 1,464.
The giant also recommended a dividend of Rs. 6.50 per equity share of Rs. 10 each for the year ended March 31, 2020.
The company is expected to be done with the capital raising plans, including investment by Facebook in Jio Platforms, upcoming rights issue and the investment by British Petroleum in the financial year 2020, totalling over Rs. 1.04 lakh crore, by April-June quarter of the current financial year.