Reliance Industries Ltd. already is making about half of all the plastic resin consumed in India. And from the looks of its expansion plans, the firm would like to add the other half as well.
The Mumbai-based company already ranks as the world's seventh-largest polypropylene maker and is in the process of adding a fourth production line at its plant in Jamanagar. That line will raise Reliance's total PP capacity to almost 3.1 billion pounds per year.
Reliance also is doubling capacity at its PVC plant in Gandhar to 880 million pounds annually.
New plants for plastic feedstocks butadiene and styrene monomer are being built in Hazira and Jamanagar, respectively.
Overall, Reliance will spend $1.2 billion to grow its petrochemicals and polyesters businesses through 2006, the firm's executive director, Nikhil Meswani, said at an Oct. 22 news conference at K 2004 in Dusseldorf.
Meswani, a nephew of Reliance founder Dhirubhai Ambani, laid out a compelling growth picture for India's plastics market and for its economy in general.
``India has 1.2 billion people, 60 percent of whom are under age 40,'' Meswani said. ``We now have a middle class that's 350 million strong. These are people who went from not having enough money for a simple meal to affording a comfortable cost of living.
``In terms of polymers, India is a small country, consuming only 4 kilograms per capita, but that's going to change,'' he added. ``Going forward, India is poised to be in the top five polymer consumers worldwide by the end of the decade.''
In that period, India's per-capita polymer consumption is expected to increase to 20 kilograms.
That type of growth would produce annual polymer consumption of 27.5 billion pounds and require 29,000 more pieces of plastics processing machinery and an overall investment of $9.5 billion.
For now, much of Reliance's output is exported. The company did less than $100 million in export business as recently as 1997 but now is on track to send $4 billion of its product elsewhere. About 18 percent of that total goes to China.
The success of Reliance is partly the result of the Indian government's policies promoting the petrochemicals industry, said Gurdial Sandhu, joint secretary of India's Department of Chemicals & Petrochemicals.
``India's average growth rate in petrochemicals has been between 12 and 13 percent,'' Sandhu said at the news conference. ``That's almost double the rate of the overall economy and shows that the industry has good prospects for the future.''
But he added that India's plastics processing community has to make strides to keep up the pace.
``We need to acquire better technology on the processing side so we can really compete with the best in the world,'' Sandhu said.
Moving forward, Reliance will continue to grow internally, as well as through possible acquisitions.
Meswani said the company has looked into Basell Polyolefins, the global PP leader that's been placed on the selling block by co-owners BASF AG and Royal Dutch/Shell Group, but he declined to elaborate.
Reliance pulled off India's largest-ever merger and acquisitions deal in 2002 when it acquired Indian Petrochemicals Corp. Ltd. Since the acquisition, Meswani said Reliance has improved productivity at IPCL's plants in Gandhar, Baroda and Nagothane while reducing production costs by 7 percent.
Earlier this year, Reliance added to its holdings in a deal for the plastics and petrochemicals divisions of National Organic Chemicals India. The acquisition gave Reliance a position in specialty polymers such as ultrahigh- molecular-weight polyethylene and ethylene vinyl acetate.
Reliance is part of the Reliance Group, a corporate monolith with businesses ranging from oil and gas to financial services to telecommunications.
Reliance Group has annual sales of almost $23 billion and accounts for about 3.5 percent of the nation's gross domestic product.
Reliance Industries provides about 75 percent of Reliance Group's sales and contributes 17 percent of India's private sector profits through its oil and gas, chemicals, polymers and textiles operations. The resin maker's sales have grown at a compounded rate of 27 percent annually since 1978.