India's most valuable company Reliance Industries Ltd (RIL), owned by the country's richest man Mukesh Ambani, has taken an important decision. Reliance Industries has announced the formation of a separate company for the Oil-to-Chemical (O2C) business. RIL said that the process of obtaining regulatory approval has started and is expected to be completed by the second quarter of FY22. This move will help him pursue opportunities for growth with strategic partners.
All refining, marketing and petrochemical assets will be transferred to the O2C subsidiary, RIL said. The existing O2C operating team will be transferred to the new subsidiary company with the transfer of business, but there will be no restriction on income reduction or cash flow.
Reliance said that it expects approval from National Company Law Tribunal (NCLT) Mumbai and NCLT Ahmedabad by the second quarter of FY22. Reliance first reported O2C business earnings in the third quarter financial results. The Oil-to-Chemical (O2C) business unit owns Reliance's oil refinery and petrochemical assets and the retail fuel business, but does not have oil and gas producing sectors such as KG-D6 and textile businesses.
Saudi Aramco will help in the deal
This announcement of Reliance will help the company to bring in investors like Saudi Aramco. Along with this, it will also help in finding new opportunities in the O2C business. RIL will give loan to this new subsidiary for 10 years. The company will be given a loan of $ 25 billion to the new subsidiary. With this loan amount, the subsidiary will buy the O2C business. However, loan for O2C business will remain with RIL.