Mumbai: Mukesh Ambani plans to more double Reliance Industries Ltd’s (RIL’s) size in the next seven years. “As India starts on its high growth journey to double the size of its economy by 2025, I assure you that the size of Reliance will more than double in the same period,” RIL chairman Ambani said at the company’s 41st annual general meeting (AGM) on Thursday.
And to achieve that, Ambani plans to continue investments in RIL’s consumer-facing businesses—Reliance Jio and Reliance Retail—while the hydrocarbon vertical grows parallelly. “As the earnings from our consumer businesses begin to match those from our hydrocarbon businesses, I assure you that the next decade will truly become a Golden Decade for Reliance,” Ambani said at the RIL AGM.
In January, RIL completed the largest ever cycle of investment in its hydrocarbon business which, Ambani said, will yield healthy profits for many years to come. “The value-chain integration allows us to create an annuity-like cash flow with lower risk of cyclical markets,” he said. RIL had in 2014 announced a $16 billion capex plan at Jamnagar, Gujarat.
“We have a full plan to further increase the level of integration by adding new chemical chains and capacity to produce new materials and composites of high value.This will minimise the impact of renewables and electricity on transportation fuels. We have the unique advantage, among global players, of being able to pursue this strategy with physical integration at one large site. I’m confident that our current business model and planned investments make our hydrocarbon portfolio future-proof with sustained earnings growth,” said Ambani.
RIL currently derives 80% of its sales from its refining and petrochemicals business. This, however, is undergoing a change as the company focuses on the new-age, consumer-facing businesses. About 13% of the firm’s ebitda in 2017-18 came from telecom and retail businesses, up from 2% till 2016-17.
“The core downstream projects are largely on track, with Paraxylene and RoGC (refinery off-gas cracker) already running above the design capacity and petcoke gasification project now fully stabilized,” said Abhijeet Bora, analyst at Sharekhan by BNP Paribas.
At the end of 2017-18, RIL’s consolidated revenue from operations was at ₹ 408,265 crore and net profit at ₹ 36,080 crore. On Thursday, RIL shares fell 2.53%, or ₹ 25.05, to ₹ 965.00 on the BSE, imparted the oil-to-telecom conglomerate a market capitalisation of ₹ 6.11 trillion. The benchmark Sensex closed lower by 0.20%, or 70.85 points, at 35,574.55 points.