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Reliance Aramco Deal: What is going on in Reliance Industries

Created on 06 May 2020

Wraps up in 3 Min

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Updated on 29 Jan 2022

What is going on in Reliance Industries?
In the 1970s, Dhirubhai Ambani stunned the business environment making Reliance a $25.6 billion worth entity. Later, his son Mukesh Ambani amazed the world again with his revolutionary ideas. He took what his father left to another level. Right from energy to technology his business ideas swept the whole world by awe. Now Reliance Industries is on the news once again. Aren't you curious to find out what has been set on his agenda? The entire world is waiting to find out Ambani's next move. 

Mission “wiping out the net-debt”

So he plans to make RIL's entire O2C (oil to chemical) and telecom business net-debt free by inviting strategic and equity investments. The March quarter balance sheet of the company showed a net debt standing at 161,035 crores. While the entire business circle was taken back by this announcement, he claimed to do it by the year-end.  

As a part of it, Reliance joined hands with Facebook and sold a 9.99% stake in it. The deal was closed at Rs. 43,574 Crore. Following the deal, the share market saw a 9% rise in the price of reliance shares. 

Find out more: https://insider.finology.in/economy/reliance-facebook-deals-super-app 

Apart from that, the company is also in close talks with Saudi Aramco, the multi-national petroleum and gas company. If both the companies come to terms, then Saudi Aramco will pick a 20% stake in the O2C business of the Reliance for an estimated 1,12,500 crore. After this Saudi Aramco will be supplying 500,000 barrels a day to RIL’s Jamnagar refinery. 

The Indian oil and petrochemical sector will be seeing tremendous growth in the next 2 decades. Hence, this will be an accurate time for RIL to expand in this arena through the Reliance ARAMCO deal. The deal will also offer Saudi Aramco to have direct access to the Indian Market. However, lockdown and the fall in the prices of petroleum products are meddling with the Reliance ARAMCO deal's signature.

On the other hand, the discussions have been initiated with the UK’s BP as well. Reliance and BP together are planning to partner in a joint venture in the petrochemical segment. BP will be holding a 49% stake in the auto and aviation fuel venture. Hence, Reliance will receive a sum of Rs.7000 as an investment. The venture will erect about 5500 stations. Silver Lake, a private investment company, will be offering 4.90 lakh crore for a 1.15% stake in Jio platforms.

While all this is one side, Reliance recently came up with the announcement that it is looking forward to a possible “rights issue”, through which they will be raising about 53,125 crore rupees. According to that, the shares will be made available to the existing shareholders at a 14% discount to the closing price of April 30 at Rs.1257. Any shareholder who is holding 15 shares of the company will be eligible to apply for 1 share of the company. The applications for the same will be made available from May 22 onwards. 

The Reliance industry is also looking to get further investments similar to that of Facebook’s. OTT, online shopping platform market intervention, the proposed purchase of the startup Netmeds, and Jio fiber are also on his “to-do list”. The EBITA and other ratios about his plans and investments are relatively good.  

Just like the king who turned everything he touches into gold, Ambani seems to be on a mission of converting his company into a money minting cash cow. Though the deadlines are missed due to uncontrollable factors, Reliance Industries Ltd. doesn’t seem to be deterred. Following the legacy of his father Dhirubhai Ambani, Mukesh Ambani's RIL will for sure cross the skies as it grows tall and strong.

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