Opinion on Reliance deal with Hualon Corporation

By Vipin Agnihotri

In what can be termed as an attempt to strengthen its position as the world’s biggest manufacturer of polyesters, Reliance Industries Limited has recently acquired the assets of the troubled Malaysian polyester manufacturer, Hualon Corporation, from the latter’s receivers and managers for $ 250 million.

It is worth mentioning in this regard that Hualon is a leading producer of polyester in Malaysia with a yearly capacity of 500,000 tonnes of polyester and blended yarns, 30,000 tonnes of nylon, 150,000 tonnes of PET bottle grade chips and 400-500 million yards of fabrics.

In my opinion, the acquisition will assist Reliance Industries to consolidate its position as the world’s biggest polyester manufacturer and result in a 25 per cent increase in its production capacity to 2.5 million tonnes. The pivotal factor here is that it will also add $ 1 billion to its revenues as well.

According to my calculation, following the takeover, Reliance Industries Limited share in the global polyester fibre and yarn business will increase from 5 per cent to 7 per cent. Point to be noted here is that since Reliance Industries Limited makes all the raw materials, the acquisition of Hualon is quite an important step towards its forward integration into blended yarn, textured yarn and fabrics.

If experts are to be believed, the integrated facility at Hualon will assist Reliance Industries Limited to comprehend the complete textile value chain and hasten new product developments in polyester.

Talking about Hualon, it is one of the top five exporters of Malaysia and has extensive collaboration for fabric and yarn supply in the global markets.

All in all, we at The India Street believes that the acquisition will enable Reliance Industries Limited to get simple access to the western markets. By the way, this deal from Reliance is the single largest foreign direct investment inflow into Malaysia after the Asian liquidity crisis.

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Reliance Industries Limited on a shopping spree!

By Vipin Agnihotri

Reliance Industries Limited, biggest private enterprise in India is in news these days. It’s not only the controversy about their retail chains but also their buying spree that caught the attraction of The India Street.

To be precise, the start was a gift that Reliance got itself on the silver jubilee occasion of its polyester business- the successful takeover of Malaysia’s leading polyester company Hualon for an undisclosed amount.

It is worth mentioning in this regard that Hualon not only boasts of a manufacturing capacity of nearly half a million tonnes per annum but is also one of the biggest exporters from Malaysia.

In my opinion, after the acquisition of textile company Trevira in Germany in 2004, Hualon’s takeover will further strengthen Reliance Industries Limited position as one of the biggest polyester manufacturer across the globe.

If experts are to be believed, the company’s highly automated plants and cutting edge technology will enable Reliance Industries Limited to become a complete solution provider in the global textile industry.

Apart from that, in the business of liquid gold too, Reliance Industries Limited has just completed the successful acquisition of Gulf America Petroleum Corporation for a price that has again been kept under wraps.

Point to be noted here is that this might not contribute much to Reliance Industries Limited profits but the company officials definitely view it as a strategic move. According to experts, with the help of this deal, Reliance Industries Limited will be able to export the produce from its Gujarat refinery (at this moment of time being expanded to become the world’s biggest) to Africa.

No one will argue with the fact that Africa is a location that is witnessing a steep rise in oil demand. Theoretically speaking, Gulf Africa retails oil in Tanzania, Uganda and owns storage tanks and depots in East and Central Africa. And, if you are of the opinion that it’s over, then you are surely mistaken.

According to sources, Reliance Industries Limited is even planning Rs 250 billion investments in health care over a period of seven to eight years. As a matter of fact, company has chalked out plans to set up 1,500 healthcare centers in B and C class towns in an attempt to revolutionize healthcare industry in India.

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