Reliance may invest in overseas petchems to boost earnings

13 August 2002 08:44  [Source: ICIS news]

SINGAPORE (CNI)--Reliance Industries Ltd (RIL) is planning to invest in petrochemicals overseas - particularly in key markets in China and Southeast Asia - in an effort to deliver targeted earnings growth to shareholders, according to a source close to the company.

The source said a blueprint which is currently being fine-tuned by the company looks at the acquisition of low-cost assets, the establishment of new capacities and emphasises the importance of increasing polymer sales in fast-growing markets. However, RIL does not expect to realise its overseas ambitions until after April 2004.

RIL has promised shareholders that it will grow its net profit by 20-25%/year over the next few years, a target that cannot be achieved if the company relies solely on the Indian market.

For the full year 2001-02, RIL recorded 6% net profit growth to Rs28.1bn ($578.0m/Euro591.1m) compared to 2000-01.

However, the source said that sales of polymers in the domestic market were expected to grow at only 7-8%/year, so it was imperative for the company to look at investments in new markets overseas.

Polymers constituted 25% of the company's total export revenue of $2.5bn in 2001-02 and RIL already has an understanding of global polymer markets and can make prudent investment decisions.

Over the past year, the Reliance group has sent out teams to 10 countries, including China and Vietnam, to study business opportunities in oil exploration, petrochemicals and telecommunications.

By: Prema Viswanathan
+65 6780 4359

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