By ANIRBAN CHOWDHURY and RAKESH SHARMA
MUMBAI -- Reliance Industries on Thursday said it will
invest about 1.0 trillion rupees ($18.12 billion) in India over
the next five years to expand and diversify its businesses that
range from gas production and oil refining to selling groceries and
Speaking to shareholders at its annual general meeting,
billionaire chairman Mukesh Ambani said Reliance also aims to
double its operating profit during the same period.
The investment plan and profit outlook from India's biggest
company by market value come at a time when many business
leaders are concerned about the country's slowing economy,
unfriendly tax moves and the government's failure to push
through reforms required to bring in new investments.
Mr. Ambani said
the economic difficulties are temporary.
"Reliance continues to be in the mindset of investing in India and in her future," he said.
"We believe that India is poised to be one of the growth
engines of the global economy over the next decade."
Though Mr. Ambani sounded upbeat, the company has been under
stress due to issues in its energy business - volatile crude
prices, a fall in output at its key east coast gas block and
subdued refining margins.
Its net profit declined 1.2% to INR200.40 billion in the
fiscal year ended March 31, while profit before non-operating
income and finance costs fell 9% to INR222.25 billion.
As refining margins continue to be
under pressure due to slowing demand in an uncertain global
economy, Reliance, India's largest private refiner by
output, is now looking toward the retail sector for the growth
Mr. Ambani said Reliance will invest aggressively in the
retail sector and target a six-fold jump in annual revenue from
that business over the next three-four years.
"Reliance Retail will be one of our important growth engines
in the next few years and will have amongst the highest growth
rates and earnings potential," the chairman added.
The company said it plans a major investment push in shale
gas as well. It has already acquired stakes in three shale gas
assets in North America and has invested $3.5 billion in the projects.
In the petrochemical business, Reliance is
setting up a gas cracker at Jamnagar in western India, and aims
to double the capacity of purified terephthalic acid, a raw
material for polyester fiber, to 4.3 million tons.
Last year, it sold a 30% stake in 21 oil and gas blocks in
India to BP as it sought technology to explore its assets and
raise output from its D6 block in the Krishna-Godavari
Reliance produced 42 million standard cubic meters a day of
gas from the D6 block in the fiscal year ended March 31, well
below its original target of 70 mmscm/d. The output is
estimated to decline to 20 mmscm/d by March 2015.
Reliance is working with BP to understand the complex
geology of the block and hopes to add around 30 mmscm/d
production by developing some new fields in the block, Mr.
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