June 7, 2013 1:15:36 am
Embarking upon an investment programme of over Rs 1.5 lakh crore in the next three years,Mukesh Ambani assured Reliance Industries (RIL) shareholders on Thursday the numbers were a clear sign the company was bucking a slowdown in the Indian economy. His speech,however,failed to enthuse the markets and RIL shares fell by 1 per cent at the BSE.
Speaking at the 39th Annual General Meeting of RIL in Mumbai,the chairman and managing director outlined investment plans for all five business streams exploration and production,petroleum refining and marketing,petrochemicals,retail and 4G to create a bill of Rs 1.5 lakh crore over the next three years.
Ambani claimed the number was the largest capital investment plan in India by any enterprise public or private,Indian or foreign.
He,however,fell short of giving specific details to the shareholders and investors on the much anticipated 4G launch and said that he will be in a position to talk about specifics in about a years time.
Instead he said Reliance Jio the telecom arm has finalised key vendors and suppliers required for initial launch of services and will take its staff strength from the present 3,000 to around 10,000 in the next 12 months.
According to Ambani,the company plans to derisk its refining business and create larger and diversified portfolio of products in petrochemicals business. In the retail business where the company has crossed a turnover of Rs 10,000 crore in FY13 and employs around 35,000 people,it plans to take its employee base to around 1,20,000 in the next three years.
Market experts cheered some of the numbers saying the company has provided a clearer roadmap this time of how they plan to deploy their cash. There is a better roadmap on what kind of capacity they will be building and clarity on global tie- ups, said Deven Choksey MD,KR Choksey Securities. I think in the financial year 2015-16 the company will see a significant jump in its profits.
Gautam Sinha Roy,VP (Equities) at Motilal Oswal Securities said,”The increasing prominence of the retailing business is a key takeaway with it having achieved cash breakeven,revenues crossing Rs 10,000 crore in the last financial year and expectation of this business to deliver over 50 percent revenue growth going forward”.
Responding to shareholder concerns that the market capitalisation of the company has not grown over the last few years even as revenues had grown significantly,Ambani said,Reliance has rewarded shareholders as it has completed its investment cycles and shared prosperity.
Over the last three years RIL has witnessed its total shareholder base decline by 4 lakh from 35.62 lakh in March 2010 to 31.61 lakh in March 2013 amidst weak performance at the stock markets.
Only last week,the global ratings firm Standard and Poor raised its long-term corporate credit rating on RIL from BBB to BBB+ and said that its discussion with the management removes the uncertainty regarding the investment spend and its timeline. In its report it said that it has clarity on the $30 billion investment by the company over the next three years.
PetROchemICALS Polyester expansion to get commissioned in next 12-36 months
Refining Expects 30-40% gross refining margin improvement through petcoke gasification project in next three years
Shale Gas Current investment above $3.5 billion. Net sales expected to increase ten-fold in the next five years
Retail Targeting six-fold revenue growth in the next four years
Currently finalising plans to offer services on a nation-wide basis
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