RIL's O2C business gets leg-up with Rs 75,000-cr investment over 5 years

World's largest carbon-fibre and PTA plants planned; 1 MMTPA PET unit at Dahej

Reliance Industries (RIL) will invest Rs 75,000 crore over the next five years in its oil-to-chemicals (O2C) business and expand capacities in existing and new value chains, Chairman Mukesh Ambani said on Monday during the company’s annual general meeting (AGM).

Addressing its shareholders, Ambani laid out a three-pronged strategy to maximise O2C integration and convert existing feedstock streams into high-value chemicals and green materials.

Tapping the polyester and vinyl value chains would constitute the first two areas of investment, Ambani said. The third would be setting up the world’s largest carbon-fibre plant at Hazira with a capacity of 20,000 million tonnes per annum (MTPA).

Some sector experts, however, said that the investment of Rs 75,000 crore was a surprise. “RIL wishes to consolidate its position as a key petrochemicals player in the world. Yet, the investment of Rs 75,000 crore was a surprise, since it has a large integrated petrochemicals complex in Jamnagar,” Abhijeet Bora, associate vice-president, research at Mumbai-based brokerage Sharekhan said.

UNLOCKING VALUE

1. The company will set up world's largest carbon-fibre and PTA plants
2. A PET plant with 1 mmtpa capacity is planned in Dahej
3. O2C is RIL’s largest business segment and remains a key vertical
4. O2C contributed nearly 57% to the overall FY22 revenue and 40% to Ebitda

Within polyster and vinyl, RIL would set up the world’s largest single-train purified terephthalic acid (PTA) plant of three million metric tonnes per annum (MMTPA) at Dahej in Gujarat. It would also invest in a one MMTPA polyethylene terephthalate (PET) plant at Dahej, with both the PTA and PET plants eyeing completion by 2026.

All of this would more than triple its existing capacity by adding world-scale plants at Dahej and Jamnagar in India, Ambani said. Apart from making carbon fibre an important growth engine for the future. RIL would also become one of the top five polyvinyl chloride (PVC) manufacturers in the world.

PTA is a white crystalline commodity powder and an important organic compound used as a precursor to thermoplastics, like PET. PVC, on the other hand, has a variety of applications in the building and construction, health care, electronics, automobile and other sectors.

RIL would also complete 1.5 MMTPA of feedstock-integrated PVC expansion at Dahej and Jamnagar in phases by 2026, Ambani said. It is looking to add capacities to make ethylene dichloride (EDC) and PVC at Ruwais, in the UAE, as part of the Ta’ziz Chemical Zone.

The emphasis on O2C in the AGM stems from the vertical’s importance in RIL’s overall business, said sector experts. It is the largest segment and remains one among its key verticals, consisting of refining, petrochemicals and fuel retail.

In FY22, O2C contributed close to 57 per cent to the firm’s overall revenue and 40 per cent to earnings before interest interest, tax, depreciation and amortisation (Ebitda). This came on the back of a rise in crude oil prices, as well as higher price realisation in downstream products.