Ambani brothers plan big

Mumbai, Aug 3 | Updated: Aug 4 2005, 06:28am hrs
Anil Ambani, the head of the newly carved-out Anil Dhirubhai Ambani Enterprises (ADAE) Group on Wednesday unveiled, for the first time, the detailed structure of the demerged entities arising as a result of the division in the Reliance Group.

The ADAE group would comprise four listed companies, with a total market capitalisation of over Rs 47,000 crore, shareholder base of over 23 lakh each and net worth of Rs 25,000 crore.

Addressing newspersons in the evening after attending the Reliance Industries Ltd (RIL) annual general meeting in the morning as a shareholder, Mr Ambani said in addition to the existing listed companies, Reliance Capital (RCL) and Reliance Energy (REL), two new companies, Global Fuel Management Services (GFMS) and

Reliance Communications Ventures (RCVL), would also be listed.

As a result of the demerger, RIL shareholders would receive 5 RCL shares for every 100 RIL shares held, 7 REL shares for every 100 RIL shares held, 100 GFMS shares for every 100 RIL shares held and 100 RCVL shares for every 100 RIL shares held.

While REL already has GDRs, RCL would need to get listed globally since RILs GDR holders would now get GDRs in these two companies as a result of the demerger, Mr Ambani said. At the RIL AGM, however, it was announced that the RIL board had cleared the demerger of the financial services, telecom and power businesses in principle. RIL has also appointed Deloitte, Haskins & Sells, Crisil, Amarchand Mangaldas and JM Morgan Stanley to assist in working out the details of the demerger. No further details were given at the AGM.

* Mukeshs RIL to invest Rs 50,000 crore in expansion * Jamnagar refinery capacity to be doubled to 60mtpa

Corporate Bureau

Mumbai, Aug 3: The Rs 73,164 crore Reliance Industries Limited (RIL) on Wednesday announced a major expansion plan, entailing investments of around Rs 50,000 crore, over three years.

The company is planning to double the petroleum refining capacity of its Jamnagar refinery to 60 million tonne (mt) per year at an investment of Rs 25,000 crore. The move will make the Jamnagar refinery the largest of its kind in a single location globally and is expected to be completed in the second half of 2008-09.

The expansion will see RIL hiking its daily production capacity at the Jamnagar refinery to 1.2 million barrels per day. The increased output is primarily aimed at export markets. The company will further invest Rs 17,600 crore in the upstream oil & gas exploration and production (E&P) business over the next four to five years.

RIL has a 20-year plan in the E&P business, said its chairman and managing director Mukesh Ambani at the companys 31st annual general meeting, the first since the public spat between brothers Mukesh and Anil which finally resulted in the division of the group.

He added that the oil and gas business, though not a major contributor for RILs business now, will play a prominent role in the period 2010-2020. RIL made 10 more oil and gas discoveries since the last AGM. These include three more discoveries in NEC 25, six more in KG D6 and one more in Yemen, said Mr Ambani.

He said RILs next major initiative would be in life sciences, eventually leading to healthcare. To attain these objectives, RIL would pursue both an organic growth strategy of scaling up existing resources, and the inorganic route of acquisition of businesses and assets.

Regarding funding the expansion as well as the new forays, Mr Ambani said RIL generates a large cash flow and has little debt on its balance sheet. The companys financial strength will enable it to pursue expansion and new growth avenues with a small leverage on debt, he added.

The market cap of RIL was around Rs 34,000 crore when I took over as chairman three years back. Now it is over Rs 1,00,000 crore. This is my tribute to my father, he said.

Mr Ambani said that in polyester, there is a distinct global shift from apparel to non-apparel and towards high value segments for home textiles and industrial uses. To tap this opportunity, RIL will increase its polyester manufacturing capacity by 5,50,000 tonne per year this financial year, taking the total polyester capacity to 2 million tonne per year.

The companys new world-scale purified terepthalic acid (PTA) plant at Hazira, to be commissioned next year, will add 6,30,000 tonne per year to its capacity, taking its PTA capacity to 1.9 million tonne. In the petrochemicals domain, RIL would continue to scout for opportunities for acquisition.

A new plant to manufacture polypropylene at Jamnagar is being added. It will add 2,80,000 tonne to polypropylene capacity, taking it to 1.43 million tonne per annum. RIL ranks 11th in the world in petrochemicals, and these investments are expected to bolster its standing further, group officials claimed.

The announcements did not cheer the stock markets as the widely-anticipated acquisition did not come through. At the BSE, the RIL scrip opened at Rs 741, reached a high of Rs 760 and closed at Rs 713.70 on Wednesday.