Reliance buys Malaysian polyester firm

Reliance Industries Ltd (RIL), India's most valuable company, has acquired Hualon Corporation (M) Sdn Bhd of Malaysia, the world's largest integrated polyester manufacturer, for an undisclosed sum.

One of the top Malaysian textile exporters employing over 6,000 people, Hualon has the capacity to produce over 500,000 tonnes of polyester and blended yarns, 30,000 tonnes of nylon, 150,000 tonnes of polyethylene terephthalate and 400-500 million yards of fabric annually.

The acquisition will help RIL consolidate its position as the world's largest polyester manufacturer with a capacity of 2.5 million tonnes, 25 per cent more than its current capacity.

It will raise the company's share in the global polyester fibre and yarn business from 5 per cent to 7 per cent. The buyout will add Rs 4,000 crore to RIL's revenue next year.

The RIL stock closed 1.32 per cent higher at Rs 1,987.20 on the BSE. "This will be the largest foreign direct investment in Malaysia after the Asian currency crisis. Hualon is one of the top five exporters of Malaysia and has extensive tie-ups for fabric and yarn supply in the global markets. With our large manufacturing capacities in India, we can meet large orders, which will be an added advantage for us," an RIL spokesperson said.

"Reliance celebrates its silver jubilee in the polyester business with the acquisition of Hualon. The integrated assets of Hualon will help RIL strengthen its position in the entire textile value chain and the company will graduate to a solution provider for the global textile industry," Mukesh Ambani added in a statement.

Analysts said this was an indication of RIL's plans to consolidate its position in polyester.

"It will augment the company's geographical reach in the Far East," said Arun Kejriwal, director of investment advisory firm Kejriwal Research & Investment Services.