Archive for July, 2014

Mukesh Ambani’s Reliance Jio eyes Online Retail & 4G Services

July 18, 2014

Mukesh Ambani has been on somewhat of a spree acquiring new business and expanding the operations of current ones. Reliance Jio (RJIL) is touted to be the next big thing in the Indian telecommunications landscape and its parent company Reliance Industries Limited (RIL) is wasting no time in expanding its operations while gearing up for a highly anticipated launch in the first half of 2015. RIL hit headlines when it announced the acquisition of media behemoth Network 18. As such this marquee acquisition looks like the beginning of a highly ambitious phase for the company.

The past six months or so have seen RJIL enter into new agreements with mobile handset manufacturers and Videocon for telecom towers.The abrupt acquisition of the Independent Media Trust (“IMT”) of which RIL is the sole beneficiary, has completed the acquisition of control of Network 18 Media and Investments Limited (“NW18”) including its subsidiary TV18 Broadcast Limited (“TV18”).Apart from nominees of IMT, Deepak S Parekh and AdilZainulbhai have been inducted, as Independent Directors on the board of NW18 and RaghavBahl will continue to be on the Board of NW18 as a Non-executive Director.

On the other hand, the highly awaited fourth-generation services are expected to see the light of day in the next year. Mukesh Ambani, in the annual general meeting told investors that 2014 was going to be a year of testing and finalizing the rollout plan. 4G is the next big thing with network speeds faster than the existing 3G network by about 12 times. With over Rupees 70,000 invested in this domain, all eyes are on RJIL for a blockbuster launch next year.

The launch is expected to take place in two stages – In the first stage, the services will be introduced in 5000 towns and cities. In the second stage, the network will be expanded in six lakh villages. With intelligent marketing like reaching out to the student community at IIT-Bombay, analysts expect Reliance Jio to hit the ground running from day one.

Apart from these services, the company has also made the news for the many deals it has signed with its peers. The most notable such deal signed by RJIL has been with Sunil Mittal’s Bharti Airtel. Now, Reliance Jio has signed an agreement to share 500 towers of Videocon Telecom in Uttar Pradesh East, Uttar Pradesh West, Bihar and Jharkhand. Along with this, the fact that innovative products like live streaming television on its handsets mean that RJIL is well on its way to carving out a niche for themselves in the highly lucrative and promising Indian telecom sector.

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Mukesh Ambani’s Reliance Retail set to buy Carrefour’s India Assets

July 11, 2014

Mukesh Ambani’s Reliance Retail has achieved quite a high level of success in recent times. The retail chain has invested a lot in its expansion in rural and urban India and as constantly reinvented some of its store formats to appeal more to the local crowd. The chain reached profitability this past year, much to the delight of RIL Shareholders and Mukesh Ambani, the Chairman and Managing Director of Reliance Industries Limited (RIL), the parent company of Reliance Retail. As such, in the recent Annual general Meeting of RIL, Mukesh Ambani made a special note of Reliance’s retail plans. In his speech, Mr. Ambani mentioned the need to expansion of retail chains and sought to increase the profitability as well as visibility of the stores from the consumer’s perspective. With this as the target, the retail division of RIL did indeed start aggressively planning on increasing its foothold in the highly-lucrative sector.

New Acquisitions:

Carrefour is the world’s second largest retailer. The French Company had been in India for little under two years after Foreign Firms were allowed to consolidate their presence in 2012. Now, the French giant has decided to leave India and move its targets back to Europe and other emerging markets like China and Brazil. The retailer has not only quit India, but a host of other underperforming markets, including Singapore, Malaysia and Greece, under chief executive Georges Plassat’s three-year revival plan. The chain operated five stores in India.

Reliance Retail and Bharti Enterprises are believed to be in race to buy India assets of Carrefour who, like many stores of Reliance Retail operate on a cash and carry format. For many key decision-makers at RIL, the allure of readymade cash and carry stores and the associated infrastructure may be too difficult to ignore. Both Reliance Retail and Bharti Enterprises spokespersons declined to comment.

In a statement regarding its exit from India’s retail sector, a Carrefour statement said, “Closure of Carrefour’s business in India will be effective at the end of September 2014. Until that time, the company will continue to be fully engaged with all its employees, suppliers, partners and customers to ensure a smooth transition.”

The $500 billion retail sector was opened up to foreign supermarket operators in 2012 but mandatory local sourcing requirements and the policy of letting state governments decide whether to allow global chains in their states has deterred new entrants. The Narendra Modi government has also opposed foreign investment in the supermarket sector, fearing it will harm small shopkeepers.

For Indian Firms like Reliance Retail though, acquiring assets like these can only help in strengthening their brand across India’s incredibly vast geography and lead to an increase in profits – something which the RIL-owned company seems to have mastered, even in the light of a dismal economy.

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Department of Telecom reiterates no wrong-doing from Reliance Jio

July 3, 2014

The Department of Telecom (DoT) has gone on record to categorically state that there was absolutely no wrong-doing on anyone’s part in granting licenses to Mukesh Ambani’s Reliance Jio Infocomm Limited (RJIL). The government agency that forms a critical part of the Telecom Ministry has further gone on to state that there was no wrongdoing in allowing Mukesh Ambani-owned Reliance Jio Infocomm to convert its internet service provider (ISP) permit into a unified licence (UL) or in the auction of the broadband wireless spectrum in 2010, as alleged in a draft report of the national auditor.

CAG’s Allegations:

The Comptroller & Auditor General of India (CAG) has claimed in a new report that the Department of Telecom (DoT) ignored signs that pointed to evidence of rigging the 2010 auctions in which a company called Infotel Broadband Services Pvt. Ltd (IBSPL) – won pan-India broadband spectrum by paying 5,000 times its net worth of Rupees 2.5 crore.

The CAG highlighted that IBSPL, which submitted an earnest money deposit of Rs 252.50 crore and won a slot of 20 MHz of pan-India BWA spectrum, had through the “covert and overt assistance of third party/private bank” bid for Rupees 12,847.77 crore and then sold the company to a Reliance Industries unit on the day of completion of the auction.

It accused IBSPL and RIL, the parent of Jio, of collusion, and asked for a through probe into the whole matter, cancellation of the broadband spectrum allotted post the 2010 auctions and “exemplary punishment” on the colluding firms.

Reliance’s Response:

Reliance Jio’s parent company Reliance Industries Limited (RIL) completely rejected the CAG’s allegations. “We outrightly reject any suggestion whereby spectrum was acquired in any manner other than through a transparent bidding process duly supervised by Government of India and our company being in compliance of every single stipulation and rule,” it said. The company also clarified that it was not aware of any such draft report from CAG.

Even IIBSPL’s parent company denied such allegations. MahendraNahata, the head of IIBSPL’s parent company Himachal Futuristic Company Ltd ( HFCL), said that no condition in the auction rules was violated and no confidential information was shared with anybody.According to the draft audit report, the IBSPL promoter-director went on electronic media on June 11, 2010, to say the company had been in talks with RIL during the course of auction process.

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