MUMBAI (ICIS)--Indian conglomerate Reliance Industries Ltd (RIL) expects the $15bn sale of a stake in its oil-to-chemicals business to Saudi Aramco to be delayed to early next year.
The deal with Aramco was initially scheduled to be completed by March 2020.
“Due to unforeseen circumstances in the energy market and the Covid-19 [coronavirus disease 2019] situation, the deal has not progressed as per the original timeline,” RIL chairman Mukesh Ambani told shareholders at RIL’s virtual Annual General Meeting on Wednesday.
“We expect to complete this process by early 2021,” he said.
RIL plans to approach the regulatory body National Company Law Tribunal (NCLT) with its proposal to spin off its oil-to-chemicals (O2C) business into a separate subsidiary to facilitate the Aramco partnership opportunity, Ambani said.
“We at Reliance value our over two-decade-long relationship with Saudi Aramco and are committed to a long-term partnership,” Ambani said.
RIL, which is a major petrochemical producer in India, had also been approached by other international companies for strategic partnerships in its O2C businesses, Ambani said.
“These potential partnerships will help us build competitive manufacturing capacity at our existing sites to serve the deficit Indian market that still depends on large-scale imports of chemicals,” he added.
Although the last fiscal year that ended 31 March 2020 had been most challenging for global refining and petrochemical businesses, RIL’s O2C business managed to deliver an EBITDA (earnings before interest, tax, depreciation and amortization) of Indian rupees (Rs) 553.9bn ($7.4bn), Ambani said.
“Globally this year, business and consumer activity had come to a halt leading to unprecedented demand destruction and dislocation of margins. Despite that all our manufacturing facilities continued to operate at over 90% capacity,” he added.
The company was able to enhance its petrochemical and fuel exports by over 2.5 times in just two weeks during the lockdown, he said, adding “in April 2020, our O2C business accounted for nearly 50% of India's exports.
At the same AGM, Ambani announced that Google plans to acquire a 7.7% stake in RIL's digitial business Jio Platforms through an investment of $4.5bn.
($1= Rs 75.18)
Photo: Reliance Industries chairman Mukesh Dhirubhai Ambani at the company's 42nd annual general meeting in Mumbai, India on 12 Aug 2019. (By DIVYAKANT SOLANKI/EPA-EFE/Shutterstock)
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