Reliance Industries Limited announced fall in petrochemical earnings for full-year 2019-20 due to lower margins and weak demand in the last quarter due to COVID –19 pandemic.
Fourth Quarter:
4Q FY20 revenue from the Petrochemicals segment decreased by 24.1% Y-o-Y to Rs 32,206 crore ($4.3 billion) due to lower price realizations along with disruptions in local and regional markets.
Petrochemicals segment EBIT was at Rs 4,553 crore ($0.6 billion), down 42.8% Y-o-Y, with significant decline in margins. The impact of lower product margins was mitigated to some extent by optimizing feedstock mix during the quarter.
Full-Year:
FY20 revenue from the Petrochemicals segment decreased by 15.6% to Rs 145,264 crore ($19.2 billion) due to lower price realizations with weaker demand in well-supplied markets.
Petrochemicals segment EBIT was at Rs 25,547 crore ($3.4 billion), down 21.1% as compared to previous year, due to lower margins in key products – Paraxylene, MEG, PET, Polypropylene and Polyethylene.
Reliance O2C Ltd Subsidiary:
Reliance Industries Ltd (RIL) on Thursday said its board has approved hiving off its $75 billion worth oil-to-chemicals business into a separate division to enable the sale of 20% stake in the unit to Saudi Aramco.
“RIL Board approved a Scheme of Arrangement for transfer of O2C Undertaking of the company to Reliance O2C Ltd as a going concern on slump sale basis for a lump sum consideration equal to the income tax net worth of the O2C Undertaking as on the appointed date of the Scheme”, the company said in its fourth-quarter earnings statement.
The hiving off will be subject to the approval of the National Company Law Tribunal. After the approval, the oil-to-chemical (O2C) business will become a separate vertical with independent balance sheet.
O2C undertaking of the company comprises entire oil-to-chemicals business of the company consisting of refining, petrochemicals, fuel retail and aviation fuel (majority interest only) and bulk wholesale marketing businesses together with its assets and liabilities.
In August last year, RIL announced initial agreements to sell a 20% stake in the oil-to-chemical business to Saudi Aramco for an asking of $15 billion. The deal covers all of Reliance’s refining and petrochemicals assets as well as the remainder of stake the firm has in fuel retailing business after selling 49% to BP Plc of UK for Rs 7,000 crore ($924.2 million).