As Reliance Industries (RIL), India's largest private company by revenues, ramps up its telecom and digital network outreach and consolidates its new refining and petrochemical projects, chairman Mukesh Ambani is expected to outlay the company's new capital expenditure plan in the shareholders' meeting tomorrow. It was reported that the retail-to-refining conglomerate looks to invest Rs 60,000 crore in Jio, over and above the Rs 2 lakh crore already invested over the last five years. In addition, RIL along with its joint venture partners BP Plc and Niko Resources announced Rs 40,000 crore investment in oil and gas exploration and production. The third investment would be in refining, as reports earlier quoted sources saying the company wants to increase the Jamnagar refinery capacity to 100 million tonne (MT) by 2030 from the present 60 MT.
Ambani wants to invest in new sources of energy, including renewable, besides multiple new applications. He said at the last AGM that he has set a target of 30 per cent growth each year over the next decade for Reliance Retail, which is expanding in rural and semi-urban markets. That is expected to take Reliance Retail to a revenue of Rs 4.65 lakh crore by 2027, which is not an easy task.
The Rs 1.5 lakh crore investment in petrochemical and refining enhancement projects is about to be concluded, while investors expect a new set of investments in the sectors, which generated a revenue of Rs 4.3 lakh crore for the company in the last financial year. The earnings before interest and tax (EBIT) from refining and petrochemicals verticals stood at Rs 25,869 crore and Rs 21,179 crore, respectively. RIL, which is valued Rs 6.3 lakh crore, has generated an EBIT of Rs 2,064 crore from retail business, on a revenue of over Rs 69,000 crore.
At the annual general meeting (AGM) on July 5, RIL will seek approval to issue redeemable non-convertible debentures, it said in its latest annual report, without specifying how the money will be used. According to Bloomberg, the company plans to borrow Rs 20,000 crore for recapitalising existing loans. The company's loans of about Rs 90,000 crore are nearing maturity in the next three years. RIL's outstanding debt stood at Rs 2,18,763 crore at the end of last fiscal, while cash and cash equivalent stood at Rs 78,063 crore-- largely in bank deposits, mutual funds, corporate deposits, government bonds and other marketable securities.
Another question that Ambani is expected to face from shareholders will be unlocking value in telecom and retail. Since both ventures have turned profitable --- Jio posted net profit of Rs 723 crore in the first year of commercial operations --- the chairman is expected to throw some light on it. In the past, RIL has twice listed its refining business --- Reliance Petroleum --- as part of value unlocking exercise.