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2007/3/10 Reliance            解説

Board of Directors of IPCL and RIL approve merger
IPCL shareholders to receive one share of RIL for five shares held in IPCL
Proposed merger is earnings accretive for shareholders of RIL
IPCL
s shareholdes set to benefit from RIL's superior performance and growth momentum

The Board of Directors of Reliance Industries Ltd (RIL) and Indian Petrochemicals Corporation Limited (IPCL) have unanimously approved the scheme of merger of IPCL with RIL, subject to the necessary regulatory & shareholder approvals.
RIL is Indias largest private sector company with a leadership position in the petrochemicals industry while IPCL is Indias second largest company in that sector. As part of the divestment program of the Government of India, RIL acquired 26% equity in IPCL in the year 2002 and thereafter increased its holding to 46% through an open offer.

RIL has a diversified portfolio of businesses in the form of oil and gas, refining and marketing, petrochemicals, organized retail and development of Special Economic Zones.
RIL has plans to make significant capital investments in all its core businesses to pursue growth opportunities. On the other hand,
IPCLs business portfolio predominantly consists of commodity polymers, which makes it prone to earnings volatility and cyclical risk. The merger provides shareholders of IPCL an opportunity to de-risk their investment by participating in the growth opportunities at RIL.
The merger will be earnings accretive for RIL
s shareholders at the proposed merger ratio.

Consolidated Production of Key Petrochemical products (000 tonnes)*

Product RIL IPCL RIL (post merger)
Ethylene 836 946 1,782
Propylene 403 348 751
PE 429 587 1,016
PP 1,362 258 1,620
PVC 341 243 585
MEG 509 271 780
POY 623 121 744
PSF 613 129 743

* Production is based on production for the nine months period ended 31st Dec 2006, as annualized, for comparison purpose only.

Merger Details:

Reliance Industries Limited:

Indian Petrochemicals Corporation Limited:

IPCL operates three integrated petrochemicals complexes in India -
a naphtha based cracker complex at Vadodara; a gas based cracker complex each at Gandhar and Nagothane. The polymer business of IPCL primarily encompasses commodity plastic raw materials namely Polypropylene (PP), Polyethylene (PE) and Poly Vinyl Chloride (PVC).
The fibre intermediates business of IPCL encompasses Mono Ethylene Glycol (MEG). In FY 2005-06, IPCL made its foray
into Polyester by acquiring six polyester manufacturing companies and thereby changed its business model by becoming an integrated petrochemical company.

Effective April 1, 2005, the six polyester companies namely Appollo Fibres Limited (AFL), Central India Polyesters Limited (CIPL), India Polyfibres Limited (IPL), Orissa Polyfibres Limited (OPL), Recron Synthetics Limited (RSL) and Silvassa Industries Private Limited (SIPL) have been amalgamated with IPCL. This marks the entry of the Company in the polyester sector. The polyester units are based in Hoshiarpur (Punjab), Nagpur (Maharashtra), Barabanki (Uttar Pradesh), Baulpur (Orissa), Allahabad (Uttar Pradesh) and Silvassa (Gujarat).


Reliance Industries Limited operates world-class manufacturing facilities at Naroda, Patalganga, Hazira and Jamnagar, all in western India.

The Naroda facility, near Ahmedabad was commissioned in 1966. The synthetic textiles and fabrics manufacturing facility at Naroda manufactures and markets woven and knitted fabrics for home textiles, synthetic and worsted suiting and shirting, dress material, saris and ready to wear garments. The textile plant is spread over 150 acre site.

The Patalganga complex, near Mumbai, has polyester, fibre intermediates and linear alkyl benzene manufacturing plants. The manufacturing facility at Patalganga which was established in 1988 and is spread over 200 acres of land.

The Hazira complex, near Surat, has a naphtha cracker feeding downstream fibre intermediates, plastics and polyester plants. The manufacturing facility at Hazira which was established in 1991 and is spread over 700 acres of land.

The Jamnagar complex has a petroleum refinery and associated petrochemical plants making plastics and fibre intermediates. The manufacturing facility at Jamnagar was commissioned in 1999. It is spread over 7,400 acres of land.

The fiber intermediates manufacturing facility at Kurkumbh was the Glycol division of SM Dyechem Limited and was acquired by the Company in 2005.

Each of these complexes has world class manufacturing facilities.

Hazira Plants and Capacities

Plants Licensor Technology Startup Capacity ( KTA ) Installed
Cracker S & W Mar. 1997 750
PE 1 Du Pont Jul. 1992 160
PE 2 Nova May 1997 200
PP UCC Sep. 1996 360
Aromatics HRI/Mobil Mar. 1997 350
MEG 1 Shell Sep. 1991 100
MEG 2 Shell Mar. 1997 120
MEG 3 Shell Oct. 1997 120
PVC Geon Dec. 1991 160
VCM Geon Apr. 1992 160
PTA 1 ICI Jan. 1997 350
PTA 2 ICI Nov. 1997 350
PET Sinco Oct. 1997 80
POY Du Pont Dec. 1995 120
PSF Du Pont Sep. 1996 160
PFF(Polyester Film/Foil.) Du Pont Oct. 1997 30

Patalganga

Plant Process Licenser Start up date
Polyester Filament Yarn (PFY) Du Pont Oct.1982
Polyester Staple Fiber (PSF) Du Pont Mar.1986
Purified Terephthalic Acid (PTA) ICI (U K) Feb.1988
Paraxylene Plant (PX) U.O.P (USA) Nov.1988
Linear Alkyl Benzene Plant (LAB) U.O.P (USA) Nov. 1987
L A B (Front End) U.O.P (USA) Mar.1992
A-3 Tank Farm   May 1992
Reliance Industrial Infrastructure Limited Pipe line from BPCL to PG   May 1992

 


IPCL

BARODA COMPLEX NAPHTHA CRACKER ABB Lummus, UK ETHYLENE :175,000
BUTADIENE UOP, USA 54,000
Benzene UOP, USA 55,000
LDPE ATO Fina, France 95,000
PP Bassel, Italy 100,000
PPCP Bassel, Italy 35,000
PBR-I Polysar, Switzerland 20,000
PBR-II JSR, Japan 40,000
PVC Oxyvinyls, USA 55,000
GANDHAR COMPLEX GAS CRACKER STONE & WEBSTER, USA ETHYLENE : 300,000
CHLOR ALKALI KRUPP UHDE GMBH,GERMANY CAUSTIC LYE 133,000
CHLORINE 115,000
VCM INEOS Vinyls Ltd, UK
( Previous name was
INOVYL, BELGIUM )
170,000
PVC OXYVINYLS, USA 150,000
EO/EG SCIENTIFIC DESIGN, USA 120,000
HDPE BASELL, GERMANY 160,000
NAGOTHANE COMPLEX GAS CRACKER Stone & Webster, USA ETHYLENE : 400,000
EO/EG Union Carbide, USA EG : 50,000
EO : 5,000
LDPE CdF Chimie, France 80, 000
LLDPE/HDPE BP Chemicals, UK 220, 000
PP Himont, Italy (now Basell, Italy 60, 000
BUTENE-1 IFP, France 15,000
Wire & cable compound B P Chemicals, UK 12, 500
DHC IPCL, R&D 60

Polyester Units
Effective April 1, 2005, the six polyester companies namely AFL), Central India Polyesters Limited (CIPL), India Polyfibres Limited (IPL), (OPL), (RSL) and (SIPL) have been amalgamated with IPCL.

Recron Synthetics Limited Allahabad Unit, Uttar Pradesh PFY - 66.,000
India Polyfibres Limited Barabanki Unit, Uttar Pradesh PSF - 40,000
Orissa Polyfibres Limited Dhenkanal Unit, Orissa PSF - 35,000
Appollo Fibres Limited Hoshiarpur Unit, Punjab PSF - 51,681
POY - 14,870
PFF (Conjugate)-28,330
PFF (fibrefill)-10,630
Chips - 14,600
Central India Polyesters Limited Nagpur Unit, Maharashtra POY - 45,000
Silvassa Industries Private Limited Silvassa Unit, Union Territory of Dadra and Nagar Haveli PFY - 141,000
PTT - 600

 


2007/3/11 thehindubusinessline.com

Reliance and IPCL: A plastic merger
http://www.thehindubusinessline.com/iw/2007/03/11/stories/2007031101181100.htm

The Reliance Industries that we know today is an amalgam of Reliance Petrochemicals Ltd (which implemented a part of the Hazira complex), Reliance Polyethylene Ltd, Reliance Polypropylene Ltd (these two were floated to implement another part of the Hazira complex) and Reliance Petroleum Ltd (the original entity that was floated to implement the Jamnagar refinery).

 

Operational synergies achieved

The core function of marketing and sales was combined within a year of the acquisition of IPCL by Reliance in 2002, with agents selling both brands of polymers and fibre/fibre intermediates. Synergies have also been achieved in product exchanges between the two - Reliance supplies naphtha for the Vadodara cracker of IPCL and also minor quantities of ethylene to the Gandhar complex.

The merger will also diversify the feedstock profile of Reliance, which now runs its cracker - the mother unit of a petrochemical complex - on naphtha. IPCL's crackers at Nagothane (Maharashtra) and Gandhar (Gujarat) use natural gas as feedstock.

Petrochem monolith

There is the question of what to do with the Vadodara complex of IPCL, which is about four decades old with capacities that do not help in deriving scale economies.

Valuation issues

  Reliance IPCL
Petrochemical compolexes Patalganga, Hajira, Jamnagar Vadodara, Bagothane, Gandhar
Naphtha cracker Hazira Vadodara
Gas cracker - Nagothane, Gandhar
Ethylene 750 875
Propylene 365 225
Paraxylene 1,856 48
PP 1,150 195
PE 450 555
PVC 325 205
PTA 1,350 -
Polyester Staple Fibre 550 126
Polyester Filament Yarn/
Partially Oriented Yarn
523 266