| Anil and Mukesh Ambani at Reliance’s 29th AGM in Mumbai on Monday. (Reuters)
Mumbai, June 16: Reliance Industries will invest heavily in its core business of petrochemicals and commercialise its gas discoveries in a business consolidation that will follow a year of acquisitions — BSES and IPCL — and its high-stakes foray into communications.
The company intends to set up the infrastructure to carry the 14 trillion cubic feet of gas it found last year to industrial, commercial and household consumers by 2006. The long-gestation plan will cost Rs 1,500 crore, an amount that will be pumped in over the next two years.
“This is only the beginning. Less than 20 per cent of the D6 Block in the Krishna-Godavari basin has been explored so far,” chairman and managing director Mukesh Ambani said at the company’s 29th AGM this afternoon.
The 32 exploration blocks, across 2,88,000 square kilometres, that Reliance has bagged in the country represent the largest acreage under a private sector company.
“Oil and gas will be a wellspring of opportunity for Reliance and India. It will propel the company into being a global corporation and mark a spectacular opportunity of huge value-creation for shareholders,” he added.
It took Ambani 50 minutes to outline Reliance’s prospects to legions of shareholders, who stretched the annual stock-taking session by three-and-half hours, to 3 p.m.
Ambani indicated that the high-margin gas business will earn the company an income of Rs 35 crore daily and over Rs 10,000 crore annually, but said returns from the venture would start flowing in from 2005-06.
“This will be a fountainhead of growth and prosperity of Reliance and of India in the 21st century,” said Ambani, flanked by younger brother Anil and legal eagle M. L Bhakta. He even echoed the legendary GM chief Charles Erwin Wilson’s eloquence when he said: “What’s good for India is good for Reliance.”
Reliance, Ambani said, proposes to increase its paraxylene and orthoxylene capacities by 36 per cent, from 1.65 million tonnes to 2.25 million tonnes per annum.
Polypropylene capacity will go up from 1 million tonnes to 1.4 million tonnes, while MEG capacity will rise 39 per cent to 500,000. PET capacity is being raised 275 per cent, from 80,000 tonnes to 300,000 tonnes per annum, through a new plant that will use DuPont’s technology.
The promises failed to sway Dalal Street, where the Reliance share shed 1.7 per cent to close at Rs 306.90 as investors uneasy with funds locked up in projects that take a long time to come to fruition offloaded their holdings.
Ambani mollified shareholders worried about low dividends by saying he shared their concerns since his family, too, wants to be rewarded better as the largest shareholder.
On the company’s life sciences venture, Ambani was more guarded. “I’ll apprise you of our life sciences business next year.” All he said was that agriculture and corporate farming could be tied to the project.
One of the high points of the AGM was the announcement that Reliance has struck oil in an onshore block in Yemen. The yield from the oil-field, in which it holds a part of the equity, could be half of the company’s share of crude from the Panna-Mukta-Tapti offshore fields in Bombay High region.
While Ambani spoke about the gas discovery in Yemen, he was silent on the Madhya Pradesh find.