RIL signalled a major shift in growth strategy on Wednesday,saying it was on the prowl for “world-scale” acquisitions of up to $15 billion.
Deal could take place as early as next year
MUMBAI: Reliance Industries Ltd (RIL) signalled a major shift in growth strategy on Wednesday,saying it was on the prowl for “world-scale” acquisitions of up to $15 billion -- or Rs 60,000 crore -- as soon as next year.
The Mukesh Ambani-controlled RIL has largely followed an organic growth path that has made it one of the world’s leading refiners, despite powerful Indian peers such as Tata Group expanding aggressively overseas.
But that may be about to change, Atul Chandra, president of RIL’s international oil business, said at the Reuters India Investment Summit.
“We would be looking at major acquisitions, there is no question, because our growth cannot come only in the organic. We are always looking at opportunities where we find hidden value,” he said.
“All companies look for acquisitions all the time, but I can say that we would look more seriously from this year onwards.”
“If we do something, it will be world scale, it will be a major acquisition ... Such acquisitions could be in excess of $10 billion-$15 billion,” said Chandra, who leads the global hunt for oil and gas assets for India’s biggest listed firm. He didn’t say whether the company would likely buy into upstream exploration or production assets, or expand its core downstream refining and petrochemical activities.
RIL finished its 6,60,000 barrels-per-day (bpd) export-oriented refinery in western India in 2000, and next year subsidiary Reliance Petroleum will start an adjacent plant that will lift joint capacity to over 1.2 million bpd.
RIL needed to boost overseas output to help ensure supplies, he said.
“We would like to have oil production close to 400,000 bpd for ourselves, as a part of supply security for the refinery,” said Chandra, who led the successful overseas expansion of state-owned ONGC Videsh in the 1990s.
“We hope 1,00,000 bpd should be available from India. Therefore, I should look at another 3,00,000 bpd overseas.”
RIL could begin looking for more refining deals, once the $6 billion refinery project is finished in mid-2008, he said.
“At this time, when construction activities are on the peak, we would not like to divert our resources, but we would like to look for such opportunities in 4-5 months,” he said.
Most of RIL’s acquisitions have been smaller in scale and concentrated in the petrochemicals sector. It recently bought assets of Malaysian polyester maker Hualon Corp and purchased German polyester maker Trivera in 2004.
RIL, which has a market capitalisation of more than $100 billion, is currently focussed mainly on exploration in the upstream sector, and has producing assets in Yemen and India.
“You can have the luxury of consolidation when you have something in hand. What happens is that when you start collecting exploration acreages, after a while when you have a portfolio, then we start swapping and consolidating,” he said.
“Some partial consolidation may start taking place in one year or so,” he said.
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