Reliance Industries proposes independent subsidiary for O2C business

Reliance Industries has proposed to reorganize the company's O2C (oil to chemicals) business. The company has initiated the process of carving-out O2C Business into an independent subsidiary.

Rationale for O2C business reorganization -
1. Independent growth company enables focused pursuit of opportunities across O2C value chain
2. Enhanced efficiencies through self-sustaining capital structure and dedicated management team
3. Facilitates value creation through strategic partnerships and attract dedicated pools of investor capital
4. Reorganization will be beneficial to all stakeholders of RIL
Management control of O2C continues with RIL
Existing O2C operating team moves with transfer of business
No dilution of earnings or any restriction on cash flows
RIL is expected to retain its investment grade international (BBB+/ Baa2), and domestic AAA credit ratings

 

The O2C subsidiary will comprise the refining and petrochemicals business of Reliance Industries including Reliance BP Mobility (fuel retail subsidiary 51% owned by O2C and 49% by BP); Reliance Global Energy Services (Singapore) and Reliance Global Energy Services (UK) (both 100% trading subsidiaries); Reliance Ethane Pipeline (100% subsidiary Dahej - Nagothane Pipeline); and Reliance Sibur Elastomers (74.9% JV company with Sibur at Jamnagar).

O2C to also comprise of following subsidiaries being transferred outside of O2C Scheme -
RIL USA, Inc (trading subsidiary)
Recron (Malaysia) Sdn. Bhd. (manufacturers polyesters and textiles in Malaysia)
RP Chemicals (Malaysia) Sdn. Bhd. (Manufactures PTA in Malaysia)
Reliance Petro Marketing (Packed LPG and Lubricants business in India)

The O2C scheme becomes effective 01 January 2021 (appointed date) subject to approval shareholders, creditors, regulatory authorities, and NCLT Mumbai and Ahmedabad. The approval process has already commenced and is expected to be completed in Q2 FY22.

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