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Reliance Industries Shares Fall After Halting $15 Billion Aramco Deal

Reliance Industries Shares Fall After Halting $15 Billion Aramco Deal

Reliance had recently inducted Aramco Chairman Yasir Al-Rumayyan into its board.

Shares of Reliance Industries fell as much as 4.2 per cent to hit an intraday low of Rs 2,368.20 on the BSE on Monday as the country's largest firm decided to halt a stake sale in its oil-to-chemicals business (O2C) to Saudi Arabia's Aramco and pulled back from a potential spinoff of its most profitable unit.

Here are 10 things to know about fall in Reliance Industries shares

  1. Over the last two years, the oil-to-telecom conglomerate owned by billionaire Mukesh Ambani has been in the process of selling a 20 per cent stake in the oil business for roughly $15 billion to Aramco and making it a separate unit, while also revamping it in a push towards renewable energy.

  2. The company has remained net-debt free since June last year. Analysts at Jefferies said the deal cancellation has no bearing on Reliance's balance sheet but comes as a disappointment as it loses a chance to set a benchmark of $75 billion valuation for the O2C business.

  3. Reliance had recently inducted Aramco Chairman Yasir Al-Rumayyan into its board amid opposition by California State Teachers' Retirement Fund. Al-Rumayyan's appointment, initially seen as part of a process to formalise the stake sale, was later said to have no connection to the deal.

  4. "Due to evolving nature of Reliance's business portfolio, Reliance and Saudi Aramco have mutually determined that it would be beneficial for both parties to re-evaluate the proposed investment in O2C business in light of the changed context," the company said late Friday, adding that it will continue to be Saudi Aramco's "preferred partner" for investments in India's private sector.

  5. Reliance also decided to withdraw the proposal filed before the National Company Law Tribunal (NCLT) to separate O2C business from the company.

  6. A stake in Reliance's O2C business would have given Aramco an entry into one of the world's fastest-growing fuel markets. It would also have given it a ready-made market for 5 lakh barrels per day of its Arabian crude and offer a potentially bigger downstream role in the future.

  7. Aramco has an equity stake in China's largest O2C project at Zhejiang with a long-term crude supply agreement and a plan to build a network of retail outlets. It also has a fuel retailing joint venture with Sinopec operating 1,000 retail outlets.

  8. An investment in Reliance's O2C subsidiary could have given Aramco a similar footprint - a stake in India's largest O2C project with a long-term crude supply agreement and participation in fuel retailing via the Reliance-BP joint venture.

  9. Over the past years, the oil-to-telecom conglomerate has segregated businesses into separate verticals - Jio Platforms houses the company's digital and telecom unit, retail is a separate unit and oil refining and petrochemical segments have been carved into the O2C sector to attract strategic partnerships.

  10. Reliance Industries was top drag on the 30-share Sensex as it alone accounted for over 250-point decline in the Sensex which fell as much as 751 points or 1.26 per cent.