RIL to make batteries in renewable energy push
26 Feb 2021
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Reliance Industries Ltd (RIL), led by India’s richest man Mukesh Ambani, is planning to make batteries and storages in a big way, as part of its makeover into a new energy and digital technology conglomerate.
“RIL will further accelerate its new energy and new materials business towards its vision of clean and green energy development,” the company said in its filing with the stock exchanges.
For Reliance Industries, which earns 60 per cent of its revenue from fossil fuel and related businesses, this would mean huge investments in both technology and infrastructure.
RIL is expected to pump in $13-15 billion into renewable energy business in the next 10 years, according to investment bank Morgan Stanley.
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The stock of RIL opened up 2% on Tuesday. Much of the cheer was because Saudi Arabia’s Aramco, the world’s seventh largest company by revenue, was back on the table for deal talks. Aramco, owned by the Kingdom of Saudi Arabia, agreed to buy a 20% stake in RIL’s oil-to-chemicals business for $15 billion. However, the deal talks hit a speed bump due to the pandemic.
The scale and potential of Ambani’s plan is yet to unravel, but it is safe to assume that it will be sizeable. Reliance Industries Limited announced the demerger of its oil-to-chemicals (O2C) business into a wholly-owned subsidiary.
"Reorganisation of O2C business facilitates participation by strategic investors and marquee sector focused investors," it added.
Mumbai-headquartered oil major also announced that it aims to work with the O2C business to reduce its carbon footprint and become "net carbon zero" by 2035.
In a late-night filing to stock exchanges, the company said the reorganisation would enable a focused pursuit of opportunities across the O2C value chain, improved efficiencies through a self-sustaining capital structure.
"Reorganisation of O2C business facilitates participation by strategic investors and marquee sector focused investors," it added.
The demerger plans gained momentum after RIL resumed talks with the Saudi Arabia-based oil company, after months of pause caused by the coronavirus pandemic. RIL has acknowledged that there are “ongoing talks” with Aramco for a deal, without giving more details.
It further added that the company expects to get the necessary approvals for O2C business spin-off by the second-quarter of the next fiscal year.
