Archive for August, 2014

HPCL and Reliance in Talks to Jointly Enhance Oil Retailing Business

August 26, 2014

Reliance Industries Ltd (RIL) is in talks with Hindustan Petroleum Corporation Ltd (HPCL) to work out a possible tie-up. This tie-up is to help the state-owned petroleum company expand its oil retailing business. Prices in the oil sector are looking up now that retail diesel is approaching market rates and petrol prices are de-regulated. This is encouraging many oil retailers to re-examine their business strategies going forward.

These talks with HPCL are part of RIL’s long-term plan to focus its attention on petro-chemicals, refining, retail and telecom. In fact, RIL is looking at pumping in 75% of all the investments (Rs 2,40,000 crore) it has made over the past 37 years of itspresence in these sectors.It is confident that it will also achieve a debt-free status by 2017-18.

Brighter Future for the Petro-Chemical Industry

Should the talks between RIL and HPCL work out;the former will be able to strengthen its leadership position in the oil retail sector. RIL’s oil presence in Gujarat alone is around 200-215 retail outlets. Combined with its pan-India presence of 1,400 oil outlets, it puts RIL above Essar Oil’s presence of 1,400 outlets and Shell’s 79 outlets. With RIL’s infrastructure combined with HPCL’s might as the second-largest oil retailer in the country, the mutual benefit would be unmatched.

Also, with the pricing between petrol and diesel narrowing down, vehicle owners now have a range of fuelling options. An agreement between RIL and HPCL ensures that any increase in demand for petrol cars will be efficiently met.

Well Planned Basis for Talks

The talks with HPCL are in the preliminary stages and RIL is working on a strategy that will completely reduce its risks. As a private player in the petroleum industry, RIL is beginning these talks with HPCL to help the company begin operations with the Rs 5000 crore infrastructure that RIL has in place already.

With the Government’s move to stagger the diesel price increase by 50 paise a liter each month, the current under-recovery stands at Rs 1.78 per litre. This move has had a positive impact on retail and commercial consumption. The diesel demand up until July of this year stands at a 6.25% increase year-on-year.

Part of a Larger Investment Plan

The talks with HPCL are part of the efforts that RIL is undertaking to reinvent itself by the time it completes 40 years of its first public offering. RIL is currently in the midst of its largest investment programme since its inception. Confident about the long-term prospect of the Indian economy, RIL believes that now is the right time for rapid expansion.

In successive 3-year investment cycles, the company will investRs 1,80,000 crore each time. This takes the company’s 3-year investment target up by 20% from the Rs 1.5 trillion that was first envisaged in its 2013 AGM. Each of these large investments is being done with the view of taking RIL to the level of a Fortune 50 company.

RIL’s core petro-chemicals business will receive the highest allocation of capital. Any of the new projects in the pipelines are slated to be completed within 24 months. The company is working closely with the Indian government to resolve any regulatory issues and market-based gas price fluctuation to ensure success in the petro-chemical business.



RIL to Create a World-Class Education Hub in Navi Mumbai

August 20, 2014

Chairperson of Reliance Industries Limited (RIL), Mukesh Ambani, recently announced his plans to develop a world-class education hub in Navi Mumbai. With academic collaborations with some of the world’s leading universities, this hub intends to encourage innovation in learning by providing students with infrastructure to conduct research. The collaboration includes top names such as Oxford, Harvard and Cambridge.


The hub will be developed in Ulwe, on a 400-acre plot owned by Anand Jain and Mukesh Ambani. Originally acquired to develop a Special Economic Zone (SEZ), revisions in the state’s industrial policies enabled the land to be unlocked for other purposes. The land remained undeveloped because it was under the flying zone of the proposed Navi Mumbai International Airport; disallowing building of skyscrapers as per aviation norms. So, RIL decided to build an international education hub here instead.

While the exact location of the education facility has been announced only recently, RIL’s intentions to set up a world-class, multi-disciplinary university in Maharashtra were declared at the company’s Annual General Meeting in 2011.

State-of-the-Art Education

Intelligently nicknamed “Special, Education Zone”, this campus plans to involve state-of-the-art infrastructure that facilitates well-rounded education from kindergarten to doctorate programs. Stemming from the belief that existing universities are not able to meet the industry demand for well-trained engineering personnel, this education hub intends to fill the prevalent talent gap. It will also offer courses in science, arts and a variety of professional vocations. As per the initial plans, this education hub will act as an autonomous university. It intends to blend western and eastern education systems and cultureto nurture talent holistically.

However, it has been made clear by a senior spokesperson at RIL that the plans for this hub are still at a rather nascent stage. To start with, the nitty-gritty of the revised government policies are yet to be understood and the modalities of the project still need some fine-tuning.

Other Academic Initiatives

Nita Ambani, wife of Mukesh Ambani, will also be actively monitoring the progress of this project. Known for her philanthropic inclinations in the fields of education, human resources and disaster relief; her involvement in the project comes with her drive to place this hub on the global map.

This will be Mukesh Ambani’s second academic project since 2011, when he signed a pact with the Gujarat Government to transform the Gandhinagar-based PanditDeendayal Petroleum University into a leading world-class academic institution.

RIL has been involved in a number of educational projects as part of its social responsibility and community development initiatives,. It has developed 9 schools that jointly cater to 13251 students across the country. RIL is also known to play a crucial role in supporting the Government’s initiative in educating the girl child. A number of primary and secondary schools in rural India have been transformed into platforms that encourage computer literacy. Other academic initiatives have been continuously executed by providing financial support to NGOs and charitable trusts.


Reliance Jio Joins COAI to Expedite Broadband Penetration

August 12, 2014

Mukesh Ambani’s Reliance Jio Infocomm, a subsidiary of Reliance Industries, has joined the Cellular Operators Association of India, considered to be India’s top telecom operators’ association.

The Cellular Operators Association of India (COAI)

The core members of COAI are telecom companies that hold valid licenses, which provision communication services and are issued by the Government of India. With Reliance Jio on board, the number of core members in the association has gone up to 7. Other leading members of this association include Airtel, Idea, Vodafoneand Facebook.

Strategic Collaborations for Infrastructural Development

So far, Bharti Airtel is the only telecom company to have launched 4G services in a limited way in cities such as Pune, Bangalore, Kolkata and Chandigarh. However, the services are yet to exhibit any scalability, primarily because of high prices.

In October last year, Reliance Jio Infocomm Chairman Mukesh Ambani made a statement hinting a potential infrastructure-sharing collaboration with Bharti Airtel. This deal was later confirmed in December 2013. Interestingly, Founder,Chairman and Group CEO of Bharti Enterprises, Sunil Bharti Mittal, was earlier considered Ambani’s arch rival.

Reliance Jio is in the process of developing the digital infrastructure backbone and is slated to launch its 4G high-speed data and voice services in 2015. With the help of a collaborativeequipment procurement process, costs for services as well as infrastructure can be significantly reduced, subsequently facilitating economies of scale. Such collaborations can significantly influence how they offer affordable propositions to their end consumers.

In addition, Reliance Jio also struck similar infrastructure-sharing deals with Reliance Communications, American Tower Corporation, Tower Vision India, Ascend Telecom, Viom Networks and Bharti Infratel. The objective of such infrastructure-sharing collaborationsis to improve digital experiences pan-India.

Supporting Telecom Penetration

The company acknowledges the need to expand advanced data networks such as 4G in India. This is to expedite broadband penetration, which, at the moment, is weak in comparison to other developing nations.

Given the current pressure on mobile broadband data pricing, it is believed that strategic partnerships such as those between Reliance Jio and Bharti Airtel will not only make business sense for all parties but also benefit the consumers on the whole.

A spokesperson at Reliance Jio said, “We see ourselves contributing significantly by building out a nationwide high-speed data network. We are therefore pleased to join the COAI, where along with other operators; we hope to create an operating environment that will help us realize this ambition for all Indians as an industry, in the overall context of our nation’s development.”

The members of this association, headed by Rajan Mathews, cumulatively contribute to about 68% of the subscriber base and 71% revenue share in the market. In addition to the 7 core members, the COAI also consists of 12 associate members.

COAI has welcomed Reliance Jio with open arms. They expect considerable support from the company towards introducing affordable and innovative broadband services to Indian customers.


RIL looks to sell 30% Stake in Reliance Jio – Hopes to Build New Partnerships

August 3, 2014

Reliance Jio Infocomm Limited (RJIL) has been in the news for the past year or so. The company’s grand expansion plans coupled with the promise of cutting-edge fourth-generation services has garnered a lot of attention from both the general public and media outlets. Now, the Mukesh Ambani owned company is contemplating selling up to 30 percent stake of RJIL. This, analysts expect, could bring in immense capital into Reliance Industries Limited (RIL).

Reliance Jio has already seen investments of over Rupees 33,000 Crore from its parent company, RIL. The telecom venture is expected to be operation by early next year. Many analysts believe that selling a stake in the company could reduce the risk factor in RJIL. This could turn out to be critical as many investors are worried about the profitability of Reliance Jio as it faces stiff competition from existing players such as Vodafone, Bharti Airtel and others. Global Investment giant UBS valued Reliance Jio at Rupees 140 a share, a value that would be driven north in case of any external investment, not to mention the boost this would give RIL’s share which currently are priced around the Rupees 1,100 mark.

A source within the company on condition of anonymity told us, “As of now, stake sale might not fetch good valuation. But once the company is up and running and consumers get first-hand experience of world-class services, the valuations will get better.”

This is not the first time that RIL will be selling stake in a new venture. Earlier, it had sold a 30 per cent stake in 23 KG-D6 gas blocks to BP Plc in 2011 for $7.2 billion and another 10 per cent to Canada’s Niko Resources. It had also sold a five per cent stake to US oil major Chevron in 2006, when it set up its Jamnagar refinery. Chevron sold the stake back to RIL in 2009.

Another option open to Reliance is the prospect of taking over or acquiring another telecom company in India as a second-stage investment. At present, Tata Teleservices, Aircel and Videocon are looking for partners for their telecom ventures and Reliance could be a natural partner. Besides, South Africa-based MTN is an international player looking at an India entry. It is reported to be doing due diligence on a Mumbai company.

Only time will tell what the future hold for Mukesh Ambani’s Reliance Jio. For now though, the company is conducting extensive field trials for what will become India’s foray into a new age of mobile technology. With string backing from RIL, Reliance Jio could well be the game changer the public has lobbied for in this sector for years.


<a href=”; title=”Mukesh Ambani”>Mukesh Ambani</a>’s <a href=”; title=”Reliance Jio Infocomm Limited “>Reliance Jio Infocomm Limited </a> is considering selling a small stake in the company in order to bring in outside investment and de-risk the entire company’s investments.