$12 bn in bag, RIL set to ride consumer boom
Mukesh Ambani-led Reliance Industries Limited (RIL) sitting on a cash pile in excess of Rs61,000 crore is moving fast to diversify the conglomeration that is expected to span everything from oil exploration to tablet computers. Gaurav Choudhury & Anupama Airy report. A big fat walletbusiness Updated: Oct 16, 2011 23:10 IST
Mukesh Ambani-led Reliance Industries Limited (RIL) is poised to announce major plans in the coming months in consumer-centric businesses spanning retail, telecom and financial services. The giant sitting on a cash pile in excess of Rs61,000 crore is moving fast to diversify the conglomeration that is expected to span everything from oil exploration to tablet computers.
The company, which on Saturday reported a 16% increase in its net profit at Rs5,703 crore for the second quarter ending September 30, is sitting on a cash chest of $12.6 billion (Rs61,490 crore).
Analysts tracking the conglomerate did not rule out high-value acquisitions in areas apart from its core oil and energy sectors, while there has also been a conscious strategy to create products and services that touch a large section of the population.
On the cards are aggressively priced computing devices, a chain of hypermarkets and a financial services venture.
The telecom venture would be modelled on the lines of what RIL didi eight years ago, offering tariffs bundled with handsets priced at as low as Rs500, before an asset division following the death of founder-chairman Dhirubhai Ambani shifted the telecom business to Mukesh’s younger brother Anil’s ADAG Group. After a cooling period that ended a non-compete arrangement, Mukesh's RIL has entered the area afresh.
In the digital space, RIL subsidiary Reliance Infotel, which had acquired pan- India spectrum for broadband wireless access for high speed data access offering speed up to 80 mbps, also plans to create rich content, applications and services.
On Saturday, the company said it was "finalising the arrangement with leading global technology players, service providers, infrastructure providers, application developers, device manufacturers and others to help usher the 4G revolution into India.”
As first reported in HT last month, the second phase of RIL’s multi-brand retail business plan is ready for take-off, involving a mix of retail and wholesale cash-and-carry trade housed in mega stores averaging 150,000 sq ft each. Ranger Farms, its earlier cash-and-carry format launched in 2007, was merged into Reliance Fresh, its food and grocery business, a year later."Our first prototype hypermarket was launched in Mumbai this quarter, with more to follow in the coming months," Reliance said on Saturday.
RIL has already announced plans to buy out the entire 74% stake of Bharti Enterprises in its two insurance ventures with AXA.
A Mumbai-based analyst said RIL’s entry in the mutual fund and asset management space now appeared a logical next step.
RIL, which is set to become debt-free by March 2012, had inked a joint venture with the US-based DE Shaw group in March to offer a range of financial services.