Reliance has an enterprise value of $75 billion in just 33 years since the company floated its first public offer. The company is betting big on polyester, petrochemicals, oil and gas, organised retailing and broadband wireless services <
FPJ BUSINESS DESK Mumbai The annual general meeting of Indiaalt39s largest company by M- cap Reliance Industries Limited ( RIL) saw Chairman and MD Mukesh Ambani outline the conglomeratealt39s plans for the retail and broadband sector.
He said the energy giant aims to be debt- free by the end of this fiscal on back of robust cash balance and expected proceeds from stake sale in gas blocks to British oil major BP. However, the Reliance stock closed 1.5% down on the BSE following what analysts said was lack of clarity on issues related to gas output at KG- D6 basin.
Ambani, 54, told shareholders, government approvals for the BPReliance partnership, the KG D6 reservoirs will be jointly assessed to address the technical issues in ramping up production.
Meanwhile, vigorous efforts are underway to accelerate the development process of other discoveries – not only in the KG Basin, but also in Mahanadi, Cambay and other basins”. Ambani said RIL, the countryalt39s biggest company by market value, aims to be debtfree by the end of this fiscal on back of robust cash balance and expected proceeds from stake sale in gas blocks to British oil major BP. BP is acquiring 30% participating interest in 23 oil and gas blocks including the currently producing KG for the transaction Reliance will receive 7.2 billion US dollars to be paid up front. In addition, performance payments of up to 1.8 billion US dollars will follow based on future exploration successes.
With a cash balance of Rs 42,393 crore ( US$ 9.5 billion), it is in a very strong position financially. All these reflect a robust financial position and a sound balance sheet, he said.
Exports at Rs 146,667 crore ( US$ 32.9 billion) rose by 33% and made up 57% of the turnover of Reliance.
The company is betting big on polyester, petrochemicals, oil and gas, organised retailing and broadband wireless services.
Debt free by this fiscal:
Mukesh said the company aims to be debt- free on the back of robust cash balance and expected proceeds from stake sale in gas blocks to British oil major BP. The 30 per cent stake sale in 23 oil and gas blocks to BP is likely to fetch Rs 32,400 crore, which will also help in paying off debts.
Banking not on cards:
Mukesh, who was largely silent on RILalt39s foray into financial services, said the group is not contemplating ( seeking a) banking licence in the present scheme of things.
Recently, RIL had tied up with DE Shaw group.
Why the scrip fell:
RIL reversed its gains in early trade and fell by over 1.5% to Rs 936 after the AGM failed to offer any positive surprises or clarity on decline in gas output from KG- D6 fields. ” Too many questions were left unanswered, be it the companyalt39s entry into the financial services, or gas ramp- up issue. Market was expecting that the company would make some announcement on acquisition front,” said SMC Global Securitiesalt39 Chief Strategist and Research Head Jagannadham Thunuguntla. RIL has declined 11 % since December 2010 while the Sensex has lost over 10 % during the same period.
Sitting on pan- India spectrum for Broadband Wireless Access for nearly a year, RIL said it is in the process of conceptualising the products and services to be offered.
Mukesh said the services would be in the domain of education, healthcare, entertainment, financial services and governmentcitizen interfaces.