Page 44 - Plastics News March 2018

Business news

Saint-Gobain Performance Reliance Industries’ Rs1.3 trillion

Plastics acquires HyComp non-core spending seen diluting
return on capital
he Performance Plastics business of Saint-Gobain has
Tacquired HyComp LLC. While Saint-Gobain Performance eliance Industries Ltd (RIL) has committed Rs 1.3
Plastics, a maker of polymer products, is based in Solon, Rtrillion worth of investments across five states in
Ohio, composite component maker HyComp is based in its non-energy businesses over the past two months.
Middleburg Heights, Ohio. Though analysts worry that these investments may
dilute its return on capital employed, RIL executives say
HyComp's products, which are made of carbon fiber and it underlines the seriousness with which the company
thermoplastics, are "used in applications such as actuation is pursuing opportunities in telecom and retail. Since
and electric systems on aircraft, as well as wear rings and January this year, RIL has announced investments in
air rotary valves for the canning and rolling mills markets," Maharashtra (Rs60,000 crore); Andhra Pradesh (Rs52,000
the release stated. crore); Uttar Pradesh (Rs10,000 crore); West Bengal
(Rs 5,000 crore) and Assam (Rs 2,500 crore). Most of
these investments would go into telecom (Reliance
Jio Infocomm Ltd); Reliance Retail and energy, in that
order.“RIL has invested about $53 billion in a range of
businesses from wireless telecommunications and shale
reserves in the US to real estate and retail outlets.
These investments made over the past decade have
lowered the return on capital to just 6.4% in the year
ended March 31, 2017. Its Jio telecom venture alone
has sucked up more than $38 billion,” said Somshankar
Sinha, Piyush Nahar and Pratik Chaudhuri of Jefferies
"HyComp's joining Saint-Gobain gives us the opportunity to India in a report.
broaden our portfolio of critical parts for high-temperature The analysts expect return on capital to rise but stay
and long-life applications in aerospace and industrial in single digits till FY24, “but even this may prove
applications," Jean Angus, general manager of Saint-Gobain optimistic if Reliance starts spending again,” they said.
Performance Plastics' seals division, said in the release. So far, RIL has invested $38.6 billion in telecom; $9.2
"The HyComp management team's years of experience will billion in shale gas business and a total of $6.5 billion in
help us to continue to make a material difference for our retail, media, real estate and others. RIL’s investments
in Assam, West Bengal and Uttar Pradesh will be to
customers. The operation's design, engineering and quality strengthen Jio’s network and infrastructure in the
control processes, coupled with pioneering, advanced states; strengthening its optical fibre network; setting
thermoplastic and thermoset manufacturing capabilities, up of an electronics manufacturing facility for mobile
have provided customers with unique, complex parts phones, set-top boxes and television sets and expanding
critical for demanding applications over the years. its retail network including fuel retailing.However,
analysts expect RIL to be generating impressive cash
It's a perfect fit for Saint-Gobain."Company spokesman Bill flow from next fiscal to finance these investments.
Seiberlich said the purchase price is not being disclosed.
HyComp employs about 120, the release stated. Saint-
Gobain Performance Plastics has about 6,500 employees
across 58 manufacturing sites. The business is part of
building materials company Saint-Gobain, which is based in
France and had about $46.1 billion in global sales in 2017.

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