Adani and Ambani set to share spotlight in petrochemical business

The Indian petrochemical sector is all set to welcome another big name to its midst. The Gautam Adani-led Adani Group announced the creation of a new subsidiary that will mark the ports-to-energy conglomerate’s foray into the business.

The newly created entity, Adani Petrochemicals Limited (APL), will look after the Group’s interest in the petrochemical business and set up refineries, petrochemical complexes and hydrogen plants. Established with an authorized paid-up capital of Rs 1 lakh, this new venture will witness India’s two biggest names – Adani and Ambani, on the same stage, directly competing against the other.

While Adani’s entry into the petrochemical business may come as a shock to many, plans for such an enterprise had already been formulated in 2019. A proposal for a joint venture with German chemical giant BASF SE was in the works when the global pandemic forced a temporary halt on any progress. Initial plans called for the establishment of a chemical factory at Mundra, Gujarat, followed by manufacturing units for petrochemical products.

India is fast emerging as a major hub for petrochemicals. Global demand is on the rise and India is expected to contribute more than 10 per cent of the total global growth over the next decade. Given India’s dependence on imports to meet the rising demands, the entrance of Adani into the sector is a watershed moment for the business. The presence of both Adani and Ambani in a sector that is predicted to drive demand for oil and gas in the near future, bodes well for the industry.

Ambani’s Reliance Industries Limited (RIL) is the largest petrochemicals manufacturer in the country. Its business portfolio consists of polymer and polyester chains, fibre-intermediates and advanced composite materials. With the entrance of Adani, Ambani may have to restructure and reformulate his strategy to anticipate the moves of the latest entrant. In addition to the joint venture undertaken with BASF SE, Adani also has plans to set up a 2m tonne/year polyvinyl chloride (PVC) plant at Mundra.

The entry into the petrochemicals business is a reflection of Gautam Adani’s belief in diversification across sectors. The billionaire’s strategy of expanding his business empire into related sectors and creating an integrated model has proven successful so far. What remains to be seen is if the distinctive ‘Adani Model’ stands out in the Group’s latest venture too. But no matter the outcome, one thing is for certain – the Adani Ambani presence on a common platform is a game changer on many levels.