Mukesh Ambani, India's richest man. Photo: AFP

Oil-to-telecom conglomerate Reliance Industries, promoted by India’s richest man Mukesh Ambani, has moved a step closer to hiving off its oil-to-chemicals business into an independent unit.

The company on Tuesday announced that it has received approvals from market watchdog Securities and Exchange Board of India and the stock exchanges, and it now awaits clearance from the income-tax authority and other regulatory bodies. Reliance also requires the approval of shareholders and creditors and expects to complete the process by the second quarter of the 2021-22 financial year.

The oil-to-chemical business unit will hold Reliance’s oil refinery and petrochemical assets and retail fuel business, but not upstream oil- and gas-producing fields and textiles business. The hive-off includes Reliance’s 51% stake in its joint venture with BP, the existing fuel retailing subsidiary. The newly-formed company will be a wholly-owned subsidiary of Reliance Industries.

During a presentation the company mentioned the ongoing talks with the Saudi oil giant Aramco for a stake sale in Reliance. It claimed that once the deal is finalized, it will be one of the largest downstream transactions in India. Plans to sell 20% stake in the oil-to-chemical business was announced back in 2019, but the deal has yet to be completed. The talks have now resumed after being hampered by the Covid-19 pandemic’s crippling impact on oil firms.

Market observers feel that after attracting global investors for its retail and telecom arms, Reliance may be looking to replicate the same in in its oil-to-chemical business. This spin off will also support strategic partnerships and new investors in the business.

Reliance also has plans to enter the clean energy space as India is looking to reduce its dependence on fossil fuels, and is likely to seek investments. Morgan Stanley expects Reliance to pump in $13-15 billion in the next 10 years to capture a $50-billion opportunity in renewables, batteries and electric vehicle charging stations.

Earlier, Reliance Jio Platforms had attracted an investment of $20 billion from 13 investors, including Facebook and Google, and a host of private equity firms. Reliance is also planning to offload 15% stake in Reliance Retail Ventures and it is also attracting many global investors.