Dhirubhai Ambani and Reliance
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Backward Integration Contd...
Gradually, Reliance started manufacturing petrochemical intermediaries like paraxylene, n-paraffin and mono ethylene glycol (MEG), and ethylene, the basic raw material for all petrochemical bi-products and intermediaries. And finally it entered into production and extraction of oil (Refer Exhibit V for Backward Integration). In 1991, Dhirubhai embarked on his most cherished project at Hazira (Gujarat)-to build the largest single multi-feed ethylene cracker plant in the world.
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The plant produces ethylene (imported so far), propylene to make PP, xylene to make PX, benzene to make LAB. The Jamnagar plant commissioned in 1999, the world's largest refinery with a capacity of 27 million tonnes per annum, was the single largest investment ever made at a single location in India. Besides the refinery, the plant included India's largest port terminal, fully automated rail-road loading and product dispatch terminal, a 3.5 million tonne tank farm, a 500MW power plant, a 12 mgd sea water desalination plant, a 1000-giga byte IT network, connecting 50 servers and 2,500 terminals with 200 km long optic fibre cables. This plant accounts for over 25% of India's total refining capacity. The process of expansion revealed Dhirubhai's interest in integrating vertically and concentrating on petrochemicals and other downstream products.
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Some of the characteristic features of the Reliance group were:
(i) Continuous vertical integration;
(a) From synthetic textiles into the manufacture of polyester fibre and filament yarn;
(b) From yarn and fibres to intermediaries like purified terephthalic acid and mono-ethylene glycol; and
(c) Further upstream into basic building blocks like paraxylene;
(ii) Consolidation of internal capabilities generated in this process through related horizontal diversification into petrochemical end-products such as detergent intermediates, for example, linear alkyl benzene (LAB), or thermoplastics like high density polyethylene (HDPE), low density polyethylene (LDPE), polyvinyl chloride (PVC), polystyrene (PS), polypropylene (PP) and styrene butadiene rubber (SBR - synthetic rubber) and their intermediates and basic building blocks; and
(iii) Efforts to complete this process of integration through investment in an NGL/naphtha cracker and in oil extraction itself.
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