With RIL chairman Mukesh Ambani reiterating his firm?s commitment to a R1.5 lakh crore capex over the next 3 years, that?s good news for both an investment-starved nation as well as for RIL?s shareholders who want to know what their company plans to do with the huge cash it generates. The better news is Ambani?s statement that RIL has had some luck in its new discoveries off the eastern coast?he has said success at the MJ1 well in the KG-D6 block could add meaningfully to the company?s resource base. Output of gas has fallen to below 20 mmscmd from the peak of 60 mmscmd in early 2011. RIL is expected to invest over $5 billion in domestic E&P; the higher production from KG-D6 together with an increase in the price of gas?possibly to $8 per mmBtu?based on the Rangarajan Committee?s recommendations, should boost profits from this business.

While RIL?s refining margins remain robust at $10.1 per barrel in Q4FY13, the move towards market-pricing of diesel is good news since, if global prices continue to remain soft while Indian prices get raised 45 paise each month, subsidies can be reduced to nothing over the next 6-7 months. Were this to happen, firms like RIL can once again resume their retail sales strategy. In any case, with the global recovery still looking fragile, RIL would want to look for more domestic sale options. With the government yet undecided on whether or not to raise gas prices?RIL has made it clear, further exploration is not viable at below $8 per mmBtu?the company has done the right thing to plan to diversify its exploration activity to other parts of the world. It has made a success of its $5.7 billion shale gas investments in the US?revenues and operating profits doubled in FY13 over the previous year?which will contribute a third of the firm?s aggregate production this year. There?s a lesson here for the government to stop dithering.

Given RIL?s unsuccessful telecom venture the first time around, it is easy to be sceptical about whether wireless broadband will work. What RIL has going for it is the larger chunks of spectrum BWA has compared to 3G and that data usage has gone up by leaps and bounds?the flip side is the competition is well entrenched and the lack of a voice platform suggests Ambani?s strategy is not fully rolled out. The key to RIL, and India?s gas future, of course, will be the government decision on whether to raise gas prices or not?with no decision on this, it?s easy to see why RIL continues to underperform the Sensex.