Reliance Industries is underperforming

(reuters) - Reliance Industries is underperforming. Yet the hydrocarbon-rich conglomerate, which is controlled by Mukesh Ambani, India's richest man, also has a cash mountain of USD13.8 billon which it does not seem to know how to spend.

As returns have dwindled from core businesses, the proportion of profits from its treasury operations has surged. They accounted for as much as 42 percent of the total in the March quarter, roughly triple last year's share.

Reliance is now generating more profit from cash management than from exploration, and the contribution is almost equal to gains from refining. It's nice to have such an efficient treasury, but it raises big questions about the sustainability of the overall Reliance business model.

Reliance posted its second consecutive quarter of declining profits in April, as refining margins fell and the firm struggled to boost production at the natural gasfield it co-owns with BP. Net profit for the three months to March fell 21 percent. Even so, Reliance generates up to USD1 billion in free cash every quarter. The pile is three times what it was two years ago, and is now equivalent to around 40 percent of the company's net worth.

Reliance Industries Ltd. (500325.BY) will invest about 1.0 trillion rupees (USD18.12 billion) in expanding its business in India over the next four-five years, Chairman Mukesh Ambani said Thursday

MRC

(plastemart) -- Several leading global brands have joined hands to shift to plant based feedstock for packaging as crude oil prices continue to sky rocket.

Coca-Cola Co., Ford Motor Co., H.J. Heinz Co., Nike Inc. and Procter & Gamble have come together to boost the development of 100% plant-based polyethylene terephthalate (PET) in their products including bottles, apparel, footwear, automotive fabrics and carpets.

The companies have formed the Plant PET Technology Collaborative (PTC) in order to evolve a material that is partially made from plants to one made entirely from plant. The collaborative aims to drive the development of common methodologies and standards for the use of plant-based plastic including life-cycle analysis and universal terminology, which in turn will be promoted by the brands with and used by both PTC and non-PTC members globally.

MRC

(reuters) -- Nova Chemicals Corp had a fire at its Corunna petrochemical facility near Sarnia, Ontario.

The firefighters were dealing with a fire in a heater unit at the facility.

No other details were available. The facility supplies as much as 40 percent of Canada's primary petrochemicals.

It produces ethylene, propylene, benzene and toluene.
MRC

(upstreamonline) -- Russia's top oil firm Rosneft is still due to be further privatised by 2016, Prime Minister Dmitry Medvedev has said, in an apparent attempt to rebuff opponents to the now-delayed move.

Russia had planned to sell 15% in Rosneft this year for around 200 billion roubles (USD6.2 billion) as part of a wider privatisation programme, but the plan was later scrapped due to a low share price amid volatile stock-market conditions.

The appointment of former Deputy Prime Minister Igor Sechin, who advocates a strong state role in the economy, as Rosneft’s new chief executive last month added to doubts the company was on track for sale.

But Medvedev, himself recently re-appointed as prime minister after a term as president, said at a government meeting on Thursday that Rosneft was still on the list of companies which the government aims to withdraw from direct state control by 2016.

Government officials have said Rosneft, the owner of the world's largest hydrocarbon reserves, will not be sold cheap.

MRC

(upstreamonline) -- A confidential shareholder agreement between BP and its Russian billionaire partners in TNK-BP could be made public under legal changes reportedly agreed by Russia’s competiton watchdog as the pact again poses a potential obstacle in the UK supermajor’s bid to sell its stake in the stormy joint venture.

BP’s earlier proposed Arctic exploration tie-up with state-owned oil company Rosneft was poleaxed last year after its 50:50 partner in TNK-BP, Alfa-Access-Renova (AAR), successfully challenged the deal in court, claiming it was in breach of their shareholder contract.

The four oligarchs in AAR are now brandishing the document once more in an apparent bid to block BP’s proposed sale of its 50% stake in TNK-BP.

The UK company has revealed it has received multiple offers for the holding, which could be worth up to USD30 billion, with state energy holding company Rosneftegaz – parent of Rosneft – reported to be the likely buyer.

However, the AAR tycoons have responded that BP is required to consider their counter-offer, said by sources to be around USD25 billion, under the terms of their shareholder pact.

A spokesman for AAR was quoted as saying BP did not have the right to disclose confidential information to a third party without its consent, which would block progress on a deal with a potential buyer.

BP responded that AAR did not have veto power on a sale.

MRC