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RIL to invest Rs. 100,000 cr

business Updated: Jun 08, 2012 01:26 IST
HT Correspondent
Mukesh Ambani

Mukesh Ambani-led Reliance Industries Ltd (RIL) announced on Thursday the biggest investment plan by an Indian company so far. The Rs. 100,000-crore plan will fuel the textiles-to-oil conglomerate's expansion into areas such as retail, media and telecom and new frontiers in energy.

"I have set myself the target to double the operating profit in about five years," chairman Mukesh Ambani told shareholders at the annual general meeting of the company founded by his late father Dhirubhai, as he unveiled the details of the capital expenditure expected over a three-to-five-year period.

Cash-rich RIL's profit from operations in 2011-12 was Rs. 22,416 crore. It has set aside Rs. 10,440 crore for the buyback of its shares — the largest ever by an Indian corporate — and has already bought back 2.7 crore shares at a cost of Rs. 1929 crore.

RIL's stock price was marginally up at Rs. 720.70 on the BSE on Thursday.

While many shareholders raised concerns over RIL diversifying into businesses, Ambani staunchly defended the move.

"This company is built on the shoulders of Dhirubhai Ambani's philosophy of investing in future businesses. Had we not done that we would have still been a textile company," he said with a tinge of emotion.

"We are building a consumer chain now. We believe that is the business of future," he said.

"Every one of us consumes physically and digitally. In the next 10 years the consumer business will be the biggest business in India," he said, responding to shareholder questions.

Ambani's plan is to have more than 10 million (one crore) people shopping with Reliance each week over the next four years and engage seven million farmers for fresh produce as he expands Reliance Retail by six times from the current Rs. 7,600 crore to Rs. 50,000 crore.

While RIL's wireless broadband business will touch education, healthcare and financial services through digital services, joint ventures in the US for shale gas exploration and production will drive the energy business.

Responding to shareholders' queries on gas production off Krishna Godavari basin falling below expectation, Ambani claimed: "In most of the world, from finding to production it takes 15 years. We are now in the tenth year and ahead of the world."

However, lower margins and volatile crude prices resulted in profit stagnation, he said.