Mumbai, Jan. 29: The Reliance group is hot on the heels of ONGC in its quest to become the first private sector entity to rack up an annual profit of Rs 10,000 crore. The PSU oil major is the only firm with that distinction.
Not content at being placed among the top global players in the petrochemical business, the group is on track to generate cash flows of over Rs 30,000 crore over three years, a feat few corporations in the world boast of.
Much of this rise will be fuelled by Reliance Industries (RIL), whose fortunes are looking better with hardening petrochemical prices and higher refining margins.
The company’s nine-month scorecard feeds the optimism. Cash profits increased to Rs 6550 crore against Rs 5602 crore, an increase of 17 per cent. “We will be generating Rs 10,000 crore of cash flows every year,” vice-chairman and managing director Anil Ambani said after announcing the results here this morning.
Less than 200 companies in the world have cash flows over Rs 10,000 crore,” Ambani said, adding an expected upturn in petrochemicals cycle will boost numbers.
Industry watchers feel the “war-chest” that the company will amass from a Rs 10,000-crore profit every year will be used to pull off global acquisitions like FLAG. Ambani, however, said there were several other areas where the cash flow would be put to good use. These include oil and gas, marketing of petroleum products, petrochemicals, power and communication business.
Some of that is already happening. Reliance’s first 300 petrol pumps will be up and running in six months; that number will double by the end of this year.
On Reliance Infocomm, Ambani said it has already achieved cash breakeven and is on its way to a net profit in this financial year. Its subscriber base, expected to jump to 7-8 million by March, will be boosted by the launch of pre-paid services. The fixed wireline service is also ready for launch this calendar year. For the moment, the group is looking at various opportunities that will arise from the acquisition of FLAG.
Reliance plans to turbo-charge its initiatives in energy with plans that could see it setting up power projects as big as the one it announced for UP, in five to six states.
The planned project in UP will not only serve customers in the state, but in Delhi too. “Over the next few years, customers in Delhi can forget about power cuts,” Ambani said. The group’s power plans revolve around a value-chain strategy that encompasses integration from the “gas well-head to the wall socket”.
Asked about the plans for Nocil, its most recent acquisition, Ambani said to begin with, the objective would be to run it at 100 per cent capacity, later turning it into a speciality product manufacturing facility. Ambani said the group was reviewing its overseas borrowing plans. This comes after the government recently liberalised controls on external commercial borrowings (ECBs) and the upgrade by Moody’s Investor Service. A $750 million bond issue is on the cards.
Meanwhile, a Bloomberg report from Singapore says Reliance has tabled the lowest offer to sell gasoil and jet fuel to Sri Lanka in shipments on February 27 and 28, an official of Ceypetco, Sri Lanka’s oil PSU, said.