Archive for February, 2012

Latest JV between RIL and SiburSeeks to Develop Butyl Rubber Production in India

February 22, 2012

Mukesh Ambani-led Reliance Industries Limited (RIL), an oil-to-retail conglomerate, has joined forces with Russia and East Europe’s largest petrochemicals company Sibur to facilitate development of butyl rubber production in India. The joint venture (JV) between both petrochemicals giant has been titled ‘Reliance Sibur Elastomers Private Limited’ and will work towards producing 100,000 tonnes of butyl rubber per year in Jamnagar, India. The joint venture will be the first manufacturer of butyl rubber in India and the fourth largest supplier of butyl rubber in the world.

While Reliance Industries will hold 74.9 per cent share in the JV, Sibur will account for the remaining 25.1 per cent. A facility for the JV will be commissioned by mid-2014, and is expected to call for an investment of approximately US$ 450 million. Nikhil Meswani, Executive Director of Relaince Industries Limited said, “The joint venture company is expected to post a revenue of INR23 billion to INR25 billion ($463 million-$503 million) in the first year itself and we are putting up this at the Jamnagar plant because of the ready availability of feedstock.” RIL and Sibur have also signed a licensing agreement whereby Sibur’s proprietary butyl production technology will be accessible to the JV. Sibur, it is expected, will develop basic engineering designs for the facility and will also train the JV’s personnel at its production site in Togliatti, Russia.

RIL is one of the largest producers of polymers in world. Its partner, Sibur, is known to have one of the most refined and high-end petrochemical process chains, including gas processing, production of monomers, plastics and synthetic rubbers to the processing of plastics. Collaborating with Sibur is a reflection on RIL’s part to make way for developing domestic capabilities in meeting demands for products like butyl rubber.

Given the rise in demand for butyl rubber, particularly from India’s automotive sector, the RIL-Sibur JV comes as a major boon for meeting domestic demand for the product. India’s automobile sector is one of the fastest growing sectors in the country. With rampant rise in production of two-wheelers, three-wheelers and four wheelers, the prospects of India becoming the hub of automotive sector are very promising. At present, India’s automotive industry requires 75, 000 tonnes of butyl rubber every year, a requirement presently being satisfied by imports. Following institution of RIL-Sibur joint venture, the demand for butyl rubber could be met domestically, with possibilities of export opportunities as well.

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RIL’s Defence Aviation Plan ‘Takes Off into the Indian Skies’

February 13, 2012

On the backdrop of the multibillion dollar deal between the IAF(Indian Air Force)& French aviation conglomerate Dassault Group for the purchase of 126 Rafale jets, the Indian defense sector woke upto a one more stirring news on Sunday. After securing the title of “Preferred Bidder” for the purchase of 126 Medium Multi-Role Combat Aircraft (MMRCA), Dassault has signed a MoU with Reliance Industries Limited for collaboration in the Indian defense & homeland security sector. Officials from the companies have commented that they plan to develop a lot of opportunities through complex manufacturing & support facilities.

Unverified sources stated that there is a possibility that the two corporations could work together in the Rafale deal, which marks the first time a private Indian entity will be directly working for any of the Indian defense services. This is a significant development, given the fact that the MMRCA purchase is slated to increase in volume, as the IAF could place an order for 63 additional jets, as a part of its modernization plans.

Vivek Lall, who heads the aerospace and security division at Reliance, is known to have played a key role in this deal. Vivek was at the head of the Boeing pitch for this deal with the IAF, but could not, unfortunately, see it to its closure. Lall’s presence at RIL is important, as he has been actively associated with the aerospace industry majors like NASA & Raytheon. He was recognized at Cambridge, England, as one of the 2,000 outstanding scientists in the 20th century. The former head of Boeing’s defense business, quit his job last May to join RIL to head its then yet-to-be-announced aerospace and homeland security division.

Reliance envisions that having Lall in its fold “would help drive the company’s efforts to partner with global leaders in homeland security to bring latest technologies and innovation to the country”. Conservative estimates suggest India to be the world’s biggest importer of arms and is looking to spend nearly $112 billion in the next five years to buy defense equipment ranging from arms to fighter jets.

This is the first time; a major Indian corporation will look to invest in the defense sector. A lack of access to competitive & cutting-edge technology was a major hurdle for all Indian companies, and the government has preferred not to rock the boat in a critical space like defense aviation. The deal, if successful, promises to expose Indian engineering firms to valuable insights into the global defense array.