Deal Watch

Every month, we bring you a listing of the biggest deals struck by Indian companies in India and abroad. Our partner: global professional services firm Ernst & Young. Here are the deals that were struck in September 2007.

Deal Particulars: In an attempt to strengthen its position as the world’s largest manufacturer of polyesters, Reliance Industries Limited recently acquired the assets of the troubled Malaysian polyester manufacturer, Hualon Corporation, from the latter’s receivers and managers for $250 million (Rs 993 crore).

Hualon is a leading producer of polyester in Malaysia with an annual capacity of 500,000 tonnes of polyester and blended yarns, 30,000 tonnes of nylon, 150,000 tonnes of PET bottle grade chips and 400-500 million yards of fabrics.

Impact Analysis: The acquisition will enable Reliance Industries to consolidate its position as the world’s largest polyester manufacturer and result in a 25 per cent increase in its production capacity to 2.5 million tonnes, and add $1 billion (Rs 4,000 crore) to its revenues. Following the takeover, RIL’s share in the global polyester fibre and yarn business is expected to increase from 5 per cent to 7 per cent.

Since RIL makes all the raw materials, the acquisition of Hualon is a significant step towards its forward integration into blended yarn, textured yarn and fabrics.

The integrated facility at Hualon will help RIL to comprehend the entire textile value chain and hasten new product developments in polyester.

Hualon is one of the top five exporters of Malaysia and has extensive tie-ups for fabric and yarn supply in the global markets. The acquisition is expected to enable RIL to get easy access to the Western markets. This acquisition is the single largest foreign direct investment inflow into Malaysia after the Asian liquidity crisis.