Reliance unveils $18bn investment plan in India
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 iPhones.
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 push.
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 basin.
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. Ambani said.
Dow Jones Newswires
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