The Telegraph
Since 1st March, 1999
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Reliance goes shopping in Malaysia

Mumbai, Sept. 10: Mukesh Ambani-owned Reliance Industries has hit the acquisition trail.

Less than a week after it bought a majority stake and took management control of Gulf Africa Petroleum Corporation (GAPCO), it has snapped up the assets of Hualon Corporation, Malaysia’s leading polyester producer, for an undisclosed sum.

Hualon is an integrated polyester-to-textile manufacturing company in Malaysia with half a million tonnes of polyester capacity, 250,000 spindles for spun yarn manufacturing, 5,800 shuttleless looms for weaving along with processing facilities.

The company also manufactures nylon filament. Hualon has manufacturing plants spread over two locations in Malaysia that include Nilai and Malacca. It is one of the five largest exporters in the country.

Hualon has posted an average turnover of $800 million annually. In June, its receivers and managers had invited bids from interested parties to acquire assets of the financially troubled company.

Reliance’s deal with the receivers and managers of Hualon Corporation (M) Sdn Bhd is subject to certain conditions and regulatory approvals.

Although RIL did not say how much it paid for the Hualon assets, sources said it would be the largest foreign direct investment (FDI) in Malaysia after the Asian financial crisis 10 years ago.

The company explained that Hualon would help Reliance consolidate its position as the world’s largest polyester manufacturer with a 2.5-million-tonne capacity, a 25 per cent increase over its current capacity.

The acquisition will boost Reliance Industries’ revenues by around $1 billion and raise its global market share in polyester fibre and yarn to just over 7 per cent.

This overseas acquisition will be Reliance’s second in the polyester sector after the successful takeover of Trevira in Germany in 2004.

RIL chairman Mukesh Ambani said, “Reliance celebrates its silver jubilee in polyester business with the acquisition of Hualon. The integrated assets of Hualon will help Reliance strengthen its position in the textile value chain and the company will graduate to become a solution provider to the global textile industry.”

He added that the acquisition would give it greater access to western markets.

It is also expected that Reliance’s existing research and development will help the industry in Malaysia launch innovative products catering to high-value premium segments.

Sources close to the company said while Hualon was one of the largest integrated textile companies in the world, it was also a supplier to large retail outlets worldwide.

News of the acquisition boosted RIL shares today. The scrip opened at Rs 1,945, rose to a intra-day high of Rs 1,994.50 and ended at Rs 1,987.20, up 1.32 per cent (Rs 25.80) over Friday’s close of Rs 1961.40 on the BSE.

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