Reliance Industries Ltd is all set to cross the border. India's largest private sector company is in talks for picking up equity in Pakistan PTA, the neighbouring country's only major producer of purified terephthalic acid.
A delegation of senior executives from RIL is already in Pakistan for negotiations on valuation. The company's PTA business is headed by Subodh Sapra, president. If the deal goes through, it will be the biggest investment by an Indian company in Pakistan.
Company executives did not want to comment on the issue but sources close to the development said talks were at the preliminary stage.
The PTA plant is in close affinity to Port Qasim, about 50 km from Karachi. "This makes things logistically easier for Reliance. The Indian company's Jamnagar port in Gujarat is just about 10 hours from Port Qasim."
A senior analyst tracking the industry said the Pakistan venture would add muscle to Reliance's polyester business. It also assures RIL another steady source of raw material after the expansion of its polyester facilities.
RIL's polyester capacity of 2 million tonnes per annum is the sixth largest in the world. The company is the largest producer of polyester fibre and yarn in the world. The company is moving towards high-end applications like industrial usage of PTA from mere textiles.
Purified terephthalic acid is the integral raw material in polyester. RIL is the world's fourth largest producer of PTA and the largest manufacturer of polyester fibre and yarn.
With a turnover of nearly Rs 2,200 crore (Rs 22 billion) last year, Pakistan PTA produces 72,000 tonnes of PTA and sells 4,78,000 tonnes. RIL's present PTA capacity is 9,75,000 tonnes a year, which is slated to increase to 1.9 million tonnes after the current expansion.
Pakistan PTA was formed after the PTA business was demerged from ICI Pakistan in 2001. It remains a member of the worldwide ICI group. Incidentally, RIL had acquired ICI's polyester fibre business in India in the early 1990s.
The UK-based multinational was instrumental in producing polyester fibre for the first time in India by setting up a plant at Thane in Maharashtra.
The Pakistan company is listed on the Karachi, Lahore and Islamabad stock exchanges. On December 31 last year, 75 per cent of its shares were held by ICI Omicron BV (on behalf of ICI plc, UK).Do you want to discuss stock tips? Do you know a hot one? Join the Stock Market Discussion Group
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