RIL may build chemical plant

Jun 04, 2010 - Age Correspondent |

mumbai

Oil and petrochemicals major Reliance Industries Ltd (RIL) may be planning a major expansion of its petrochemical capacity to make plastics, rubber and other chemicals.

The past few days have seen intense speculation on billionaire Mukesh Ambani’s next move, after a favourable judgment from the Supreme Court and a truce with younger brother Anil. Some big ticket announcements could also be made during the company’s annual general meeting, which is to be held shortly.
Citing a wire report, brokerage house JP Morgan said that Reliance Industries could be reviving a $3 billion plan for setting up a two-million tonne petrochem plant. This plant would use waste gas from the company’s refinery at Jamnagar as the feedstock.
The brokerage says that focus of RIL seems to be shifting towards new projects as the Krishna-Godavari basin gas fields and oil refineries are generating cash. The broker estimates that RIL may have a cash flow of $10 billion during financial year 2011. The company also has close to $5 billion as cash on its balance sheet.
RIL’s attempts at inorganic expansion haven’t been very successful so far. The recent proposed acquisition of LyondellBasell had to be aborted. The company seems to be focussing on smaller acquisitions and organic growth, the broker feels.

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