Reliance Industries Limited (RIL) Chairman & Managing Director Mukesh Ambani today said the energy and petrochemicals major was nearing the realisation of its largest investment programme in its history of more than Rs 200,000 crore.
"This is our contribution to our most respected Prime Minister's clarion call of Make in India – over Rs. 100,000 crore committed to strengthening our refinery and petrochemical business and over Rs 100,000 crore invested in enabling the realisation of a 'Digital India'," he told the 41st annual general meeting of the company here today.
"We are committed to creating societal value at par with our financial value. We aim to be among the largest employers in India offering opportunities to hundreds of thousands people in our of
consumer businesses. And partner with lakhs of small businesses, kirana and budding entrepreneurs and make them more productive.
"We will create an ecosystem which will catalyse entrepreneurship through our Jio and Retail businesses. We will be in the top quartile in terms of return on capital employed and operating costs across all our refining and petrochemical plants," he said.
Mr Ambani said RIL's investments were entirely in building assets in India and showed its unwavering faith in the economic prospects of the country and the aspirations of millions of consumers.
"We have over 100,000 people at Jamnagar working round the clock to complete the projects in petrochemicals and refining. This makes Jamnagar one of the largest constructions sites in the world today. At the same time over 150,000 people across India are engaged in building out the network and distribution apabilities
to make Jio our telecom broadband business a reality," he said.
"The full benefits of this entire investment cycle will be realised from the year 2016-17 onwards. We will have a unique portfolio of globally competitive petrochemical and refining business with a new age India-centric consumer business with very high growth potential. This will place Reliance in a select group of most valuable companies in the world," he said.
Mr Ambani said RIL's earnings before taxes and net profit in 2014-15 were both the highest in the company's history. Its capital expenditure in the year of Rs 100,000 crore was not only the highest by the company in a year but the highest by an Indian companye ever in a year, he said.
"We raised the highest amount of debt capital at very competitive cost to finance our growth. We improved our credit ratings internationally which gave us continuing access to public debt markets. We are among the 10 most admired companies in India to work for," he said.
He said RIL exported products worth Rs. 228,651 crore to over 120 countries during the year and paid Rs.18,746 crore of customs and excise duty during the year, which is almost 5% of India's total revenues from customs and excise duty.
Reliance is also the highest Income tax payer in the private sector in India and paid Rs.6 124 crore as income tax during the year, he said.
Mr Ambani said RIL was the largest integrated polyester manufacturer globally, amongst the top 10 producers globally of PX, PTA, MEG and PP and the largest producer of synthetic elastomers in India.
"We will be ready for start-up of another 1.15 million tons per annum of PTAcapacity at Dahej by October this year. With this, our total PTAcapacity will be 4.5 million tons per annum, making us the fifth largest PTAproducer in the world. Our world scale PX plant that will double capacity to 4.2 million tonnes per annum will be ready for start-up by the end of this financial year. With this expansion, we will be the second largest PX producer globally.
"In our plastics business, we are building a world scale 1.5 million tons ethylene cracker at Jamnagar. This will be ready for start-up in the third quarter of the next financial year," he said.
Mr Ambani said that, in order to enhance the competitiveness of RIL's existing ethylene crackers at Nagothane, Hazira and Dahej, the company was working aggressively in creating infrastructure for transporting feedstock ethane from the US to India.
"We will be the first to execute this globally at this magnitude and scale. This will be ready for start-up by December 2016," he said.
Mr Ambani said Reliance had posted a gross refining margin (GRM) of $8.6/bbl, outperforming Singapore benchmark yet again, with a premium of $2.3/bbl. He said its Jamnagar refineries processed 480 million barrels of crude, at an average operating rate of nearly 110%, which is significantly higher than its regional and global peers.
He said the deregulation of diesel prices in India during the year had opened up an opportunity for Reliance to re-enter the
domestic retail market.
"We will now once again be able to offer Indian consumers, a unique, high quality retail experience through various value propositions. We plan to re-commission the entire network of petroleum retail outlets by the end of FY 2015-16. Currently, close to 400 outlets are operational," he said.
He said RIL was implementing a coke gasification facility at Jamnagar, which will convert low value petroleum coke to a clean energy source for its refinery complex. Upon completion, the project is expected to save nearly $ 1.5 billion annually by substituting imported LNG with the gas produced by it.
"The hydrocarbon rich refinery off-gases freed as a result of this project will be utilized as feedstock for petrochemical plants," he said.
On the oil and gas exploration and production (E&P) business, he said the KG-D6 block had already produced nearly 2.5 TCF of natural gas and about 27 MMBBL of crude oil, which have so far
substituted over $ 34 billion of energy imports.
"We, along with our partner BP, believe in the potential and promise of India's deep waters. BP brings unmatched global expertise in deep water exploration and production to this country.
We have constantly innovated to maximize recovery and sustain production from the KG-D6 block, despite these being located in one of the most challenging geological reservoirs," he said.
"We are aware that the domestic E&P business, while creating huge economic value to the country, has generated shareholder returns lower than the cost of capital. This is in sharp contrast to other domestic infrastructure sectors such as roads, fertilizers and power where 12 to 16% returns are assured under the policy.
"It is important to highlight that there is value yet to be unlocked from 5-6 TCF of resources discovered at various stages of development, appraisal and approval. These developments are very capital intensive and technically challenging which requires cutting edge technologies – a challenge that your company is known to take on and excel in execution. We are aware that future investments hinge upon the continuing confidence of our shareowners in this high risk business," he said.
Mr Ambani also said RIL was constructively engaged with the Government to resolve legacy issues in a timely manner with regards to its rights to cost recovery, gas pricing and other issues to create value for the nation and its shareholders.
"In this context, it is important to follow the intent, purpose and commitment of the NELP Policy i.e maximising E&P activities, getting the risk reward balance right and providing marketing and pricing freedom. This will provide predictability and certainty to the investors. We are hopeful that the Government will address this policy issue in the larger interest of attracting investments in the
critical E&P business," he said.
Mr. Ambani said Reliance Retail, which operates across various product categories and formats, had attained revenues of over Rs
17,000 crore in the last year and record profits of Rs 784 crore at an EBITDA level.
He said 930 new stores had been added last year, which worked out to five every two days and the company now had a network of more than 2600 stores and presence in 200 cities in 20 states.
"We are committed to scaling up our retail presence across formats from 200 cities to over 900 cities by next year," he said.
"This year will bring about disruptive shopping experience for consumers as they embrace technology and get access to anytime anywhere shopping. With the advanced internet infrastructure built by Jio and a robust physical retail business built by Reliance Retail, we will create a differentiated e-commerce model for India," he said.
"This model will entail seamless integration of online and offline while innovating across superior customer experience, delivery services and payment ecosystem," he said.
Mr Ambani said Reliance Jio was one of the largest transformational green-field digital initiatives anywhere in the world.
"Jio is now present in all of the 29 states of India, with a direct physical presence in nearly 18,000 cities and towns of our
nation. Jio's wireless footprint extends even further and covers over one lakh villages. We are expanding this footprint to cover nearly 80% of India's population by the end of this year. Our roadmap is to have 100% national coverage within the next three years," he said.
"Jio is the first 4G broadband wireless operator to achieve wireless coverage far in excess of the rollout obligation as per its license conditions. In rural areas, we are prioritizing connectivity to thousands of schools. This is to ensure that the benefit of our broadband initiative is first and foremost felt by students who stand to gain the most by accessing the Information highway.
"Jio has also deployed a network of nearly 250,000 route kilometres of fibre optics, thereby creating a future-proof digital backbone across India," he said.
Mr Ambani said that, over the next three years, Jio would more than double its fibre footprint by deploying fibre optics in the last mile.
"We are using this deep fibre network also to ramp-up our Fibre-to-the-Home deployment. By April of next year, we would have connected over 1 million homes via fibre with a capability of rapidly scaling up in the top 50 cities of India.
"Jio is the only operator in the world providing next generation digital services over an end-to-end all-IP network. We are also connecting Enterprises, SMB, and SME customers over this high speed IP network, enabling advanced services using cloud based solutions," he said.
Mr Ambani said that, in addition to this domestic fibre optic capacity, Jio had created a multi-terabit capacity international network. More than half of Internet traffic served by Jio will be carried end-to-end on Jio's own network, creating an unparalleled
customer experience, he said.
"Across the world, a full-blown social, mobile, digital and cloud revolution is underway. To support India's prominent participation in this revolution, Jio has operationalized nearly half a million square feet of its own next-generation cloud data centres. Work is underway to double this capacity over the next year," he said.
Jio's cumulative investment in spectrum assets has gone up to nearly Rs 34,000 crores and it now has the largest footprint of liberalized spectrum in the country, acquired in an extremely cost effective manner, he said.
"All the key components of the Jio broadband network are now operational. As we speak, we have an end-to-end initial capacity to serve in excess of 100 million wireless Broadband and 20
million Fibre-to-the-Home customers, with capability to easily expand further as the business scales up.
"We are currently in the pre-launch testing and stabilization phase of this large and complex network. Over the next few months, we will initiate an extensive beta launch involving millions of friendly customers across all our markets. This beta program will be upgraded into commercial operations around December of this year.
"I am glad to announce that financial year 2016-17 will be the first full year of commercial operations for Jio," he said.
He said Jio had also applied for a pan-India cable television multi-system operator (MSO) license and has plans to enter into broadcast TV distribution.
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