Reliance Industries will sell 20 percent of the company's oil and petrochemicals, petrol pump business to Saudi Arabia's leading oil company Aramco. This is the biggest FDI deal ever. Apart from this, Reliance Industries has announced to sell 49 per cent stake in its petrol pump business to UK's BP company. The company will earn Rs 1.15 lakh crore from these deals and with this money it will be able to reduce its debt. The company plans to become debt free in the next 18 months. Regulatory approval will have to be obtained for these deals.
Reliance will get 7,000 crore from UK company BP
The company's chairman Mukesh Ambani said that it would sell 49 per cent of its petrol retail business (petrol pump operations) to UK major petroleum company BP. This will give him Rs 7,000 crore. The company will have a 51 percent stake in this business. He said the company would sell a total of 20 percent of its oil, refinery and petrochemicals business to Saudi Aramco. Reliance will also have a stake in Saudi Aramcoan petrol pump business.
Reliance will get 1.15 lakh crore from deals with Aramco
Aramco has valued Reliance Industries' remaining stake in the oil, refinery, petrochemicals business and petroleum fuels retail business to a total of $ 75 billion. Its 20 percent stake is worth $ 15 billion. Thus, Reliance will get a total amount of Rs 1.15 lakh crore from these deals. It will use it to make itself a zero debt company in the next 18 months. Both these deals will help the company reduce its outstanding debt of Rs 2,88,243 crore by June 30, 2019. While at the end of March 2019, the company had outstanding debt of Rs 1,54,478 crore. A company with zero debt refers to a company on which the debt burden remains below its reserve cash reserves. Reliance Group has not been in this position since 2013. The company had cash reserves of Rs 1,31,710 crore as on 30 June 2019.
The total value of Reliance Group is $ 134 billion. This includes his telecommunications and retail business. On Aramco's investment, Ambani said, "It will not only be the largest foreign direct investment in the history of Reliance but it will be counted among the largest foreign investment deals in the country." Will also supply 500,000 barrels of crude oil per day to both refineries located in Jamnagar, Gujarat. Aramco is the world's largest crude oil exporting company. He said that regulatory permissions are yet to be obtained on this deal. At the same time, Reliance and BP had announced a new joint venture last week with the aim of opening new petrol pumps across the country and retailing the fuel for the airlines.
Reliance has 1,400 petrol pumps and 31 aircraft fuel pumps across the country
Currently, Reliance has 1,400 petrol pumps and 31 aircraft fuel pumps across the country. The entire business of retail sales of fuel will be transferred to a proposed new joint venture with BP for this purpose. BP will hold 49 percent and Reliance 51 percent. The company has set a target of opening 5,500 petrol pumps in five years.
Ambani said in the general assembly, "As a new important initiative, BP has bought a 49 percent stake in the company's petrol retail business. This will give Rs 7,000 crore to Reliance. "Ambani said," We have a clear roadmap to become a debt-free company in the next 18 months i.e. by March 31, 2021. " Transactions with Aramco and BP are expected to be completed. With this, the company is expected to get an investment of Rs 1.15 lakh crore. ''
Target to complete this deal with Aramco by March 2020
After the General Assembly, Reliance Executive Director P.M.S. Prasad said that the deal with Aramco is targeted to be completed by March 2020. "Within the next five years, the oil and petrochemicals business will be made an unlisted subsidiary of Reliance and will operate as a business unit of Reliance Industries in which Aramco will have a 20 per cent stake," said Ambani. Reliance has invested about Rs 5.4 lakh crore in the last five years to develop its chemicals business and 4G network. It will generate operating income of more than one billion dollars annually over a decade. Apart from this, the company is also going to set up the country's largest retail chain.