RIL To Rebalance O2C Business, To Focus On Indian Buyers As Exports Suffer
Reliance Industries' strategy has been to focus on high-growth domestic markets with focus on capital allocation on projects to achieve sustainable profitability, says the CFO.
Reliance Industries Ltd. is set to rebalance its oil-to-chemicals business, prioritising the domestic market due to robust demand for its key products like polymers from sectors such as agriculture, automotive, infrastructure and e-commerce. The strategic shift comes as global volatility has impacted the company's export-oriented businesses.
RIL's O2C business, which contributes over 60% to the company's overall revenue, saw its segment revenue drop by 4% sequentially to Rs 1,49,595 crore from Rs 1,55,580 crore on the back of lower exports. Exports for the quarter fell to Rs 67,672 crore sequentially from Rs 70,631 crore in Q2FY25. sequentially on the back of lower exports.
Chief Financial Officer V Srikanth told analysts on a call that the company's strategy has been to focus on high-growth domestic markets with focus on capital allocation on projects to achieve sustainable profitability. Each of the sectors, which have been the demand drivers, have grown by 6–8% and have led to better utilisation of RIL's plants compared to peers, he said.
"We have always invested at the bottom of the cycle to take advantage of lower project costs. Especially when margins are low, it is time to invest," he said.
"Our continued focus on scale, flexibility, integration and new technologies will be there to invest in such projects to achieve competitive cost position," the CFO added.
The company is investing in an integrated 1.5 MTPA vinyl chain of Polyvinyl Chloride and Chlorinated Polyvinyl Chloride — both are plastic piping materials — facilities at Dahej and Nagothane to cater to the large deficit of these materials in the Indian market.
At present, India has a deficit of around 2–2.5 MTPA and this project will help address this gap and boost RIL to the top 10 globally from 24th currently, according to Srikanth.
The company is also expanding the virtual ethane pipeline from North America by 50% to enhance its cost competitiveness, he said. "We are adding three more very large ethane carriers to the existing fleet of six ethane carriers," Srikanth said.
RIL is also setting up 1 MMTPA specialty polyester capacity and 3 MMTPA PTA capacity to meet the growing demand.
