Archive for June, 2012

RIL Diesel Sales Surge As Consumer Demand for Subsided Fuel Rises

June 27, 2012

On the back of rising petrol rates and increase in demand for fuel from consumers all over the country, Mukesh Ambani-led Reliance Industries Limited (RIL), one of India’s leading private oil and gas producing corporations, is experiencing a sharp incline in the sale of diesel as consumers are increasingly opting for the subsidized fuel which costs about 41 per cent lesser than petrol.

According to Petroleum Planning and Analysis Cell (PPAC) – oil ministry’s data centre – petroleum consumption recorded a monthly growth of merely 0.2 per cent in April ’12 (lowest since the last one and half years), of which nearly 47 per cent of total consumption was that of diesel. Aided by the fact that government caps the prices of diesel, which is the most preferred fuel for farmers and heavy vehicle operators, there seems to be a gradually accumulating artificial demand for the subsidized fuel. Unable to cope up with rising demand, state run oil refiners such as Indian Oil Corp. Ltd and Bharat Petroleum Corp. Ltd., are being hard-pressed to seek help from private oil companies such as Reliance. PSU or state run oil companies have in fact started buying, to an amount close to 15 million tonnes of diesel per year,from private oil companies such as Reliance Industries and Essar to compensate for their deficit. “As this situation continues, we will have to buy more from the private refiners and maybe also increase imports,” noted R.K. Singh, chairman of Bharat Petroleum Corp. Ltd.

This situation, on the other hand,is greatly benefiting private oil companies which have always been pushed to the side of retail fuel market because of cheaper fuel being provided by state-run oil companies. At present, RIL is able to sell diesel at international rates that too in the domestic market without bearing revenue loss which they would have suffered had they pushed fuel sales through their own pumps.

Calling the situation to be the ‘dieselization of the economy’, PPAC has hinted at competitive struggles among fuel suppliers. As the demand growth remains strong, mainly for the reasons of fuel subsidy program, and likelihood that it will continue to remain strong in the light of current fuel price forecasts, it is likely that private and public oil companies will continue to work in tandem to fulfil the rising demand for subsidized fuel. And given automobile companies are also acclimatizing to the shift in fuel requirements and demand of consumers, the pattern is likely to stick around for some more time.

RIL promises investment of Rs.1 lakh crore for ‘a more diversified Reliance’

June 8, 2012

Continuing with a mind-set of investing in India and in her future, Mukesh Ambani, Chairman of Reliance Industries Limited (RIL), at the 38thAnnual General Meeting held on Thursday in Mumbai, promised to the company’s shareholders that the company will invest nearly Rs. 1 lakh crore over the next five years in India to build ‘a stronger and more diversified Reliance’.

Conveying the promise of a buoyant future via a holistic enterprise growth, Mukesh Ambani shared with the company’s shareowners his ambitious plans to double the company’s operating profit over the next five years on the back of investments across all of company’s core businesses and margin improvement projects in a new capacity as well as boosting Reliance’s consumer business front, which will form a significant part of the company’s value over the next decade.

The theme for MukeshAmbani’s statement this year was ‘Partnering for India’s New Future’. The enthusiasm expressed by him did manage to rouse invigorated optimism among his fellow shareowners; a sentiment quite rare among business investors in the current spate of mounting inflation, adverse foreign exchange rate movements, surging economic upheavals and policy paralysis. Nevertheless, the promise of continuously pedalled efforts in the direction of more partnerships – domestic and international – and sustained financial strength, assured a promising outlook for the company over the upcoming years. “In spite of adverse conditions, Reliance has grown stronger by expanding its asset base and significantly improving its financial position. We have also improved our competitive position in our core businesses. It is today among the most profitable companies in its sectors globally,” stated Mukesh Ambani in his AGM address. He also made a note of RIL’s plan to strengthen investments in organised retail and telecom services business which, he exclaimed, will create new waves of growth and value for Reliance.

Presently RIL is working on augmenting its gas output to 60 mmscmd over the next 3-4 years,at the same time strengthening its petrochemicals portfolio globally. The company is also eyeing a six-fold jump in its retail business through improved processesand new partnership frameworks. RIL’s telecom venture, which will see the company roll out the next generation 4G broadband services, is closing completion and is expected to be a ‘significant value creator’ for the firm and its shareholders over the next five years of the company’s operations. With its new strategy of partnerships, Reliance is looking to contribute even more decisively to India’s ‘new future’ and its own too.

Mukesh Ambani Spearheading RIL’s Roadway to Success

June 7, 2012

Starting from July 2002 when Mukesh Ambani took over his father’s (Dhirubhai Ambani) company, he has contributed massively in this company‘s growth by leaps and bounds. Dhirubhai Ambani’s story is often considered as a quintessential example to explicate the “Rags to Riches” story in our country. It has been a decade now and RIL (Reliance Industries Limited), led by Mukesh Ambani is the largest private sector enterprise in the country.

All these ten years have been action-packed for the Chairman and Managing Director of RIL filled with challenges. It was in July 2002 that Mukesh Ambani took over as the Chairman of the conglomerate, RIL. Starting with the gas discovery at Krishna Godavari D6 basin in 2002 that led to much hullabaloo, he has not looked back. The market capital of this conglomerate then was Rs. 27,454 crores. He began his voyage with sheer determination to attain an output of 80MMSCD from his exploration business. He was successful in increasing the market capital to 31,010 crore within 2 months, i.e. during October 2002.

July 2005 witnessed the demerger of Reliance Infocomm, Reliance Capital and Reliance Energy from the flagship company with respect to the settlement process between the two brothers. Unaffected by this demerger, RIL bolstered growth and had a MCap of Rs. 82,828Cr. He ventured into the retail business with the launch of RRL (Reliance Retail Limited) which has been faring well after overcoming the stumbling blocks staggeringly. The retail subsidiary of RIL has been performing satisfactorily with it acquiring a minimum of 5000 crore, at present. It went on an expansion spree and the market capitalization of the company swelled to 1,76,847 crore by November 2006.

With the aim of tasting global success, RIL bought three shale gas assets in US on September 4, 2007. The market capitalization during this period accounted to be 2,94,710 crore irrespective of the uproar caused due to the contention with respect to the violation of insider trading norms with SEBI.

The year of 2008 was a landmark year for this corporate behemoth as it built the world’s largest refinery in Jamnagar to process 27mpta that may foster its export revenue. The market capital, however fell to 1, 94,493 during December 2008.

In the year of 2011, BP acquired 30% stake in RIL’s 21 Oil and Gas producing companies. The market capitalization accounted to be Rs2, 26,894 and RIL intended to invest in the sectors of refining and petroleum. It sets up a new investment plan in the year of 2012. However, the falling outputs during this period paved way to scrutinizing its production-sharing contract. The market capitalization during June 2012 accounted to be 228,894.

Mukesh Ambani has also already sowed seeds to bounce back with it & has set the ball rolling to launch the 4G network.

The tutelage of his father and his panache to egg on innovativeness has been a key reason for this successful voyage.

How Reliance scaled up its performance globally in FY2011-12

June 1, 2012

RIL (Reliance Industries Limited) is the largest private sector in the country and is the second largest company in terms of revenue behind Indian Oil. Ranked 134th on the Fortune Global 500 listin 2011, business magnates and others across the globe admire its innovation strategies and business acumen.

The global economy was left bleeding with incidents including the Eurozone debt crisis, theUS‘sswelling employment issue, civil unrest in Libya, Tsunami in Japan, etc. India on the other hand was concerned with tightening liquidity in order to curb the rising inflation. Amid all the glumness, RIL succeeded in growing its revenue by 31% and performed satisfactorily. It also racked up to increase the level of exports by 41.8% at Rs. 208,042 crore, as compared to Rs. 146,667 crore in FY 2010-11.

RIL is renowned worldwide for the technological innovation it regularly introduces to the world. It has constantly ushered its growth by infusing assistance from foreign consulting firms and their expertise knowledge in order to keep up to the international standards.

Reckoned as India’s largest exporter, its exports grew to Rs. 208,042 crore as compared to Rs. 146,667 in the precedingyear. Having exported to 119 countries, its export contributes to 61% of its revenue from operations.

Foreign companies have always exhibited a special interest in investing in RIL for the credibility it manifests. RIL’s international business deals and collaborations with varied global giants haveenabled it to achieve remarkable feats globally.

RIL- BP partnership:

The UK based British Petroleum’s(BP) expertise in deep water exploration and developmental activities joined hands with RIL’s proficiency in project management.The strategic alliance where BP picked up 30% stock in 21 Oil and Gas production companies led by RIL geared into action on February 21, 2011. The prime aim of the collaboration is to accommodate exploration, innovation and production of hydrocarbons in India’s deep-waterblocks, paving way for anenhanced energy security in India.

They also worked to incorporateIndia Gas Solutions Private Limited, a 50:50 joint venture company that caters to global outsourcing and marketing of Natural gas in India.

RIL-Pioneer JV

Reliance Eagleford Upstream LP, RIL’s subsidiary had inked collaborationwith Pioneer Natural Resources Company where it acquired 45% interest in the Eagle Ford Shale acreage.

The JV was poised to focuson drilling in liquid rich areas by leveraging drilling experience in the most affordable way. RIL accounted tothe production of 41.7 BCFe this year from this deal. Extensive research carried out in the Eagle Ford drillingenabled them to appreciate the significance of gas liftand rod pumping in order to increase their efficiency.

RIL-Chevron:

RIL Marcellus LLC, RIL’s subsidiary partnered with Atlas Energy, Inc (presently owned by Chevron Corporation) by picking up 40% interest in the Marcellus shale acreage positionof the latter. During this year, RIL contributed to an incremental production of 8.9BCFe with respect to five rigs that it deals with.

A few constraints witnessed due to the slow pipeline construction are intended to be resolved by mid- 2012. Besides, the number of rigs has been reduced to four, in order to facilitate value optimization.

Carrizo JV operations:

RIL entered into a joint venture with Carrizo Oil and Gas, Inc through its subsidiary Reliance Marcellus II, LLC by acquiring 60% stake in Carrizo’s Shale Asset. RIL attributed to the production of 1.8BCFe catering to its operation intworigs, during the year.

It also instilled developmental plans in NEPA by setting up a new pipeline infrastructure that can increase its potential of transporting gas to market in an accommodating way and augment its netback.

It owns 10 blocks in the International conventional portfolio, i.e.3 in Yemen, 2 each in Kurdistan, Peru and Colombiaand 1 in Australia. The momentum of growth in these blocks is further set to intensify by accommodating testing in Sarta block in Kurdistan, 2D data possession of 42 LKM in Yemen and block 37. It also worked towards 3D data acquisition of 500sq. kmin the blocks of Colombia.

RIL leaves no stone unturned in strengthening its foothold internationally by importing knowledge and exporting results. With satisfactory growth that it observed in FY2011-12, it aims to accommodate new techniques and works to eliminate the constraints that have acted as obstacles previously, in order to spur its growth.