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RIL to make IPCL 'gem of a selloff'

BS Corporate Bureau in Mumbai

Reliance Industries, having acquired the management control in Indian Petrochemicals Corporation, is looking at turning it into the "most successful example of the divestment programme of the government of India" by March 2003, its chairman Mukesh Ambani told shareholders.

Ambani has outlined a vision for the company "to achieve global leadership, based on capacity, competence and competitiveness, by tapping its innate strengths and unlocking its potential for value creation."

"As a young chemical engineering graduate in the late seventies, I was in awe of IPCL as the largest petrochemical company in India. Today, I am overwhelmed with a sense of honour in having the opportunity of leading IPCL and addressing its shareholders," Ambani said at the annual general meeting.

Elaborating on his plans for IPCL, he said several feedstocks have been identified for value addition, particularly for IPCL's oldest unit at Vadodara.

Reliance and IPCL have already achieved feedstock integration for naphtha, a key raw material for IPCL. This has already resulted in lower costs for IPCL, Ambani said.

"Capitalising on the expertise available at Reliance, IPCL's information technology facilities and management information systems are being rapidly recast to enhance efficiency at all levels. In financial management, an expert team has been placed to reduce financial costs related to working capital and long-term debt," he added.

However, Ambani did not spell out the details. In what could be an indicator to Reliance's plans following the acquisition of IPCL, Ambani pointed out that at 26 lakh (2.6 million) tonne per year the combined polymers manufacturing capacity of IPCL and Reliance is still only a third of the capacity of Dow, the world's largest polymer manufacturer.

"There are several opportunities of growth for IPCL, through geographical expansion, market consolidation, product extensions, acquisitions and green-field investments," Ambani added.

Reliance had in May acquired government's 26 per cent stake in IPCL at Rs 231 per share, involving a total consideration of Rs 1,490.84 crore (Rs 14.91 billion).

The company has more recently completed an open offer to acquire an additional 20 per cent stake at the same offer price.

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