RIL may buy stake in Basell

Purnendu Chatterjee's loss could turn into Reliance Industries' gain. Reliance Industries is believed to be in the final stages of clinching a deal to pick up a stake in global petrochemical company Basell.

A Reliance executive declined to comment on the issue ahead of the company's annual general meeting on Wednesday. With expectations running high, the Reliance stock surged 4.78 per cent to close at Rs 741.95 on the Bombay Stock Exchange on Tuesday.

In May 2005, Purnendu Chatterjee of The Chatterjee Group was set to buy Basell for 4.4 billion euros ($5.7 billion) in association with Access Industries, an outfit owned by a Russian-born businessman.

The deal fell through as Chatterjee ran into a rough patch with the West Bengal government. This is after the state government insisted that Chatterjee buys out its stake in Haldia Petrochemicals. Chatterjee had to opt out of the deal for want of funds.

Basell is a 50:50 joint venture between Royal Dutch and BASF. Based in the Netherlands, Basell is considered the world's largest plastic polypropylene manufacturer with a turnover of $6-8 billion.

It employs more than 6,000 people and its operations are spread over 20 countries. It has research and development activities in Europe, North America and the Asia-Pacific region.

The details of the deal are not known. But analysts said the acquisition would make immense sense for the company given its global scale.

It may not be a tall order for Reliance Industries to make large-scale acquisitions given its rich cash flows. For financial year 2005, the company recorded sales of Rs 66,051 crore (Rs 660.51 billion) and net profit of Rs 7,572 crore (Rs 75.72 billion). Net profit for the first quarter of 2006 was Rs 2,310 crore (Rs 23.10 billion).

Ambani deal today?

Reliance Industries is expected to make an announcement on the settlement between the two Ambani brothers at Wednesday's annual general meeting. A Reliance director said the corporate governance committee met on Tuesday. An announcement might be made on Wednesday, he said.

Meanwhile, the stock market was abuzz with its list of expectations. This included creation of special purpose vehicles to pave the way for the proposed settlement, a mega investment initiative, stock split and an acquisition of an overseas oil block.