Reliance in JV talks with Nova Chem

Reliance Industries, the country's most valued firm, is understood to be in advanced stage of discussions with North American plastics and petrochemicals major Nova Chemicals as part of its bid to spread wings to foreign shores.

Reliance Industries (RIL) Group Chairman Mukesh Ambani, who leads India Inc on the world's list of billionaires with a net worth of over $20 billion, is in the US with his top confidantes to discuss a potential joint venture with Nova Chemicals, sources close to the development said.

No official comments could be obtained from executives of RIL, which is also looking for a possible acquisition in the global retail space and is understood to be talking to Carrefour and the likes of Sainsbury and Marks and Spencer.

The planned alliance with Nova Chemicals, which has operations across the US, Canada and Europe with an annual turnover of over $6.5 billion, could include product swaps, infrastructure sharing as well as joint exploration of business growth opportunities.

RIL has made presentations to Nova and Dow Chemicals, sources said, indicating that Nova appeared to be on the radar of India's biggest corporate house as of now and an alliance announcement could be made soon.

If all goes well, the two companies could also consider equity partnership at a later stage of the joint venture, sources said.

Nova officials were not available for comments.

Nova Chemicals, which has a market cap of about $2.5 billion, has seven manufacturing facilities in the US, six in Canada and two others in South America, while it is also present in Europe through various joint ventures.

The development comes at a time when Reliance is consolidating businesses to derive synergies, as well as delinking assets in risk-prone areas from its balance sheets.

Early this month, it merged its subsidiary IPCL with itself as it felt there are better synergies for both companies in terms of cost savings.

"The merger will be earnings accretive for shareholders of RIL and shall provide shareholders of IPCL an opportunity to participate in RIL's diversified business portfolio," said Mukesh Ambani Chairman and Managing Director, RIL.

RIL also hived off its overseas oil and gas projects into a separate business in Dubai and is believed to be mulling a tie-up with Oil and Natural Gas Corporation Videsh to bid for opportunities abroad.

RIL, which is understood to have a war-chest of Rs 1,00,000 crore, is looking to create international business arms for accessing global markets with its various products.

The group has enough liquidity and Ambani is believed to have created a trust with cash up to Rs 25,000 crore, which could be doubled with their investors for leveraging the equivalent debt for global acquisitions.