Reliance Industries Ltd will spin off its engineering, procurement and construction (EPC) business to create a focused entity to meet the group’s EPC needs, the company said in a statement.
The billionaire Mukesh Ambani-led company’s board on Friday ‘approved a plan of arrangement under which it is proposed to spin off the EPC and infrastructure business from Reliance Projects and Property Management Services Ltd (RPPMSL), a wholly owned subsidiary of RIL in RIL,” he said. This split, together with the existing EPC team in the business, creates a focused EPC business within RIL to meet the needs of the group. The current EPC resources of the RIL group are divided between different operational entities. RIL has some 4,000 engineers with proven expertise in engineering, procurement, project management and construction. RPPMSL also has a team of 20,000 professionals. Separately, the company announced on Friday that it would spin off its financial services business and take it public as Jio Financial Services (JFS). RIL shareholders will receive one JSF share for one share held in Reliance. Regarding the EPC spin-off, the company said the targeted EPC business will combine and synergize the group’s engineering capabilities and expertise. As this is a merger of a division of a wholly-owned subsidiary into the parent company, no shares are being issued by RIL and no cash consideration is being paid under the plan. RIL had revenue of Rs 445,375 crore in the financial year ending 31 March 2022, while EPC and infrastructure business of RPPMSL had revenue of Rs 43 071 crore. “The EPC enterprise will play a pivotal role in implementing RIL’s major projects in the areas of petroleum to chemical (O2C), new energy and 5G deployment,” he said. “Implementing these megaprojects will require significant mobilization of global technology and EPC resources.” and hydrogen electrolyzers, and the expansion of retail operations as well as petchem’s traditional businesses. “Increasing infrastructure spending across geographies in the oil and gas, chemical, telecommunications, and renewable energy sectors is expected to drive significant demand for EPC resources,” the company said. The new EPC company will facilitate internationalization by setting up EPC centers of excellence at strategic offshore locations. It will align with existing RIL subsidiaries in the United States and Dubai. It will also integrate new subsidiaries in Singapore and the United Kingdom.
These subsidiaries will enable faster mobilization of high quality talent and EPC resources in an increasingly constrained global EPC environment. “The realigned EPC resources will further strengthen RIL’s EPC delivery capabilities by leveraging global resources and supply chains. It will also improve productivity, as working across multiple time zones will reduce costs and schedules while ensuring high quality output,” the statement read.
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