Roadmap for mega entry into power, 4G services.

His brother Anil Ambani disappointed the cameras by not turning up at the much-hyped annual general meeting (AGM) and the tone of the speech to his “dear shareholders” was too matter of fact. But Reliance Industries Limited (RIL) Chairman Mukesh Ambani used the occasion to deliver what he does best: A 9-page detailing of what India’s largest private sector firm wants to do in the next decade.

Describing RIL as an “ignited corporation”, Ambani said the company will achieve in the next decade what it had achieved in the past 30 years. “It took three decades for RIL to create an enterprise value of over $80 billion, that is, over Rs 3,70,000 crore. However, I am confident that the company can accomplish value creation of a similar magnitude in less than a decade,” Ambani told RIL shareholders at the company’s 36th AGM in Mumbai.

The audience, which included his mother, Kokilaben, wife Nita and children, listened with rapt attention and clapped repeatedly, as Ambani said RIL would focus on new fountainheads of value creation — power and infocomm — while continuing to expand the existing chain of value creation.

Ambani set out a new agenda of cooperation with his younger brother’s Anil Dhirubhai Ambani Group (ADAG) by saying RIL would supply gas to ADAG as and when the latter’s power plants are ready to receive gas. This is of course subject to the government granting allocation to these plants. “With the legal dispute over, RIL looks forward to a harmonious and constructive relationship with ADAG,” he said.

RIL is drawing up specific plans for mega-investment in the power sector with clean coal-based projects, hydel projects, solar power and nuclear power, as and when it is opened up by the government. The cancellation of the no-compete agreement with ADAG has opened up the full range of power business for RIL, except non-captive gas-based power plants until 2022.

“The demand for electricity is humongous, given the billion-plus population, rising aspirations and the high rate of economic growth. We are ready to bring into full play our investment mobilisation capabilities, as well as our superior project execution capabilities, into a sector that is crying out for transformational mega-initiatives,” Ambani said.

On the group’s foray into telecom, Ambani said the acquisition of Infotel Broadband Services will create a nation-wide network of next-generation wireless broadband services. This paves the way for the company to offer fourth generation (4G) wireless infocomm services across the nation.

“To build this wireless digital distribution platform, we plan to follow an asset light, but partnership-heavy approach. We will collaborate with strategic partners, such as service providers, infrastructure providers, device manufacturers and other participants in the ecosystem,” Ambani told shareholders.

He said despite adding an average of 20 million mobile users in a month, India continues to lag in terms of broadband penetration, which is less than 1 per cent as against 60 per cent in developed countries.

Ambani also said organised retailing will grow 10-fold in the next five years and will become a significant value creator for Reliance in the coming years. “I believe that organised retailing in India is poised to take off to the next orbit of growth, and that RIL is well equipped to be a national leader in this space,” he said.

RIL also plans to invest Rs 45,000 crore in polyester and petrochemicals in the next five years. “In the next five years, our total investment in all the new polyester and petrochemical manufacturing facilities will be the largest investment in this sector to be made anywhere in the world at any given point of time. This will contribute to enhanced market share and cash flows,” Ambani said.

The company plans to add capacity to produce polyester and chemicals and use its strong balance sheet for inorganic growth aimed at creating value for investors.

On the exploration and production front, RIL said it has intensified energy exploration off India’s east coast with the objective of doubling the proven reserves base in the next three years. The company also plans to drill wells in Iraq and East Timor as well as add shale gas assets. “Having made 49 oil and gas discoveries in less than a decade as an operator, the impetus is now on converting this established resource base into production. Accelerated development of discoveries in the blocks KG D6 in the Krishna-Godavari basin, NEC 25 in the Mahanadi basin, CB10 in the Cambay basin and Coal Bed Methane in Sohagpur, Madhya Pradesh, are our priorities,” Ambani said.

The company said it would continue to pursue joint development opportunities to build a substantial upstream business in North America. RIL, this April, entered into a partnership with Atlas Energy to acquire a 40 per cent interest in Atlas’s core Marcellus shale acreage position in the US. With this, Reliance has secured access to approximately 343,000 acres of undeveloped land with estimated gross resource in excess of 13 trillion cubic feet of gas.

Shale gas is the most promising development in the energy area in North America and is likely to overtake conventional gas as well as liquid fuels as a source of energy within the next decade.

source: Business Standard

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