India Chemicals Blog

Trevira was Reliance's first global acquisition and was expected to be the start of a wider programme to extend Reliance's global reach through mergers and acquisitions.

But just five years later Trevira is once again on the block after filing for insolvency with a German court. Reliance has pumped in Euro55m to clear outstanding bank liabilities but it is clear that it will distance itself from Trevira.

Trevira has blamed the economic crisis for its problems. The textile and auto industries, two key end-use segments, have been hit hard by the crisis resulting in falling orders amid growing competition from Asia and Eastern Europe.

Trevira's new managing director, an insolvency expert, has said that Reliance does not plan to be "engaged with" Trevira any longer. It would eventually be sold to a suitable investor who could offer a long-term future.

She has also said that Trevira has good products and is 'basically competitive'.

But if that's the case why does Reliance, the largest integrated polyester producer in the world, want to exit from Trevira? Surely Reliance with its deep pockets can afford to ride through the crisis.

If Reliance with its strong management capabilities has failed to make Trevira work other companies are likely to struggle. I suspect it will be tough for Reliance to find a buyer willing to pay a high enough price for this business in the current economic climate.