RIL AGM: Ambani says to invest Rs 1L cr in 4 yrs

Reliance Industries chairman Mukesh Ambani today said the company would invest Rs 1 lakh crore across business over the next four years. Ambani also said that he had set himself a target of doubling the company's operating profits over the next four years.

"We are targeting to achieve, in the next three to four years, a total production of 60 mmscmd gas for a sustained period," he said speaking about gas production.

RIL has so far bought back 2.79 crore shares for around Rs 1929 crore, which works out to roughly 22.5% of the funds it has earmarked for the buyback scheme, Ambani said.

Shale gas and digitization are the two key areas where the company could be increasing its exposure to in the coming years.

Ambani's statements come at a time when the company is grappling with falling output at its KG-D6 block, a sagging share price, locked in disputes with the government and the Securities and Exchange Board of India. In addition, the company has been criticized for not effectively deploying its Rs 70,000 crore plus cash hoard.

Read on for the full speech and also watch the accompanying videos.

_PAGEBREAK_

Below are excerpts of Reliance chairman Mukhesh Ambani's speech at the annual general meeting today. Click on the accompanying attachment for the full speech.

Refining Business

Our refining margin is in excess of USD 8 a barrel and is among one of the best in the world. We continue to improve our business in every way. We sourced eight new different types of crude to enhance margins. We produced ultra clean fuels to supply to the transportation industry globally. We are an important supply to domestic oil companies and the domestic aviation sector.

We have also invested in efficient improvements and debottlenecks and we strengthened our partnerships with major crude suppliers as well as customers for mutual benefit. We are aggressively pursuing partnership opportunities for the crude feedstock that is enhanced and sustained our margins. We are making a major investment to further strengthen the competitiveness of our refining business.

We are building the largest gasification facility in the world to convert petroleum coke to synthetic natural gas, and this will be used as a feedstock and fuel at our integrated Jamnagar Refining Complex. This project will not only add value to our refining business but also provide competitive fuel and reduce the volatility of our company’s earnings. This investment at this scale is path-breaking in the refinancing industry and is being done for the first time by anybody in the world. It is our target that this will add 30-40% to the integrated Jamnagar Complex margins within the next three years.

Oil & Gas Business

I now come to the oil and gas business. The year saw the Government of India approve a landmark deal between Reliance and British Petroleum, representing the largest ever foreign investment in the domestic hydrocarbon sector. BP acquired 30% participating interest in 21 oil and gas blocks, including the currently producing KG-D6 block. In over three years of uninterrupted and incident free operations, our KG-D6 block has already supplied more than 1.8 trillion cubic feet of natural gas and more than 19 million barrels of crude oil to various consumers in the country.

10 years since its discovery, the D6 block remains India’s first and only producing deep water development project. Unlike similar projects elsewhere, it has not been without its unique set of geological challenges. The reserves from the existing D1-D3 field have proved far more difficult to produce than we anticipated. We have experienced some disappointment with the reserves and consequently seen production drop below the originally estimated quantities. Today, RIL and BP teams are working closely to understand the complex geology of this block. We are chopping out an exploration and development campaign that will efficiently target high quality prospects in the deeper zones and also optimize existing as well as future development plans.

We are well on the way to creating a pipeline of projects for our next way of oil and gas development projects which would include the R-series discoveries and all the satellite discoveries, subject to receiving the requisite approvals,. We hope to add around 30 million cubic metres a day of additional production through the new way of planned development.

We are also set to proceed with development of two cold bet methane blocks in Sohagpur, Madhya Pradesh. If approvals and clearances come as planned, we are hoping to target these additional quantities of gas by 2015. We are targeting to achieve in the next 3-4 years a total production of 60 million cubic metres of gas for sustained period of time. Government and regulatory approvals are key to achieving this and we hope that these will be granted soon.

Our domestic oil and gas portfolio remains a key strategic asset for Reliance, its partners and India. We are confident about its enormous value from a medium-term perspective which will eventually benefit all stake holders.

Reliance has also made significant investment in the emerging and exciting resource base of shale gas in United States of America. We entered into four joint ventures two years ago to build a new shale gas business in the US. The shale gas industry is now recognised as a game changer, its growth has the potential of making North America substantially reduce its dependence on external source of energy in less than a decade. All our three joint ventures are now operational and we are selling natural gas in the competitive markets of Pennsylvania and Texas.

Retail Business

Reliance Retail opened its first set of stores about five years ago. The vision was to radically change the way consumers bought goods and services and to address their diverse consumption needs. The mission was to create a robust producer to consumer value chain and in the process create sustainable value for all stake holders. This initiative has now grown into a 1300 store business spanning 18 states in India. It is a business in which we have attained a clear leadership position within a short period while competing with more established players in each of the markets that we participate in.

We are created new employment opportunities for over 50000 people. Around 25000 of them are directly employed by Reliance retail. In the past year we have opened new stores across all formats. Our value formats Reliance Fresh, Reliance Super and Reliance Mart and in our specialty formats like Reliance Digital, Reliance Trends and Reliance Footprints, have the largest loyalty customer base of over 90 lakh people who visit our stores and buy from us regularly. Each week we have over 30 lakh footfalls into our stores, 30 lakh people visit our stores every week. I am confident that we will have over 1 crore people shopping with us every week in the next three to four years.

In the past we have consolidated our position as the largest food retailer in the country. We engage with 70 lakh farmers and procure fresh produce and milk from there.

In apparel retailing we have established the largest chain of stores in the country. We provide an attractive mix of fashion and comfort at affordable prices. In digital retailing we achieved several milestones in the past year. We tripled the number of stores, expanded product offerings and are the fastest growing digital retailer in the country.

Through our newest format Reliance Markets, we are creating a partnership framework with the kiranas and other small shopkeepers. This partnership leverages our supply chain, large assortment of products, sourcing capability and ability to supply at competitive prices. Our first Reliance Market store operates in Ahmadabad on this partnership model. By scaling up on this format, we will be supplier of choice to a very large number of kiranas and small retailers and this is our vision that we will grow retail in partnership with small retailers.

This really has been the Reliance philosophy since its inception. When we grew in the textile business we always grew with the power loom industry and that is what we are replicating and we are very successful in Ahmadabad with our model.

Reliance is fulfilling the vision of creating an inclusive growth framework by forging enduring bonds between millions of farmers, consumers and small retailers.

Read More