The leading private conglomerate Reliance Industries Limited, last week announced that it will be investing $5 billion for its refining and petrochemicals business by March, 2016. The decision came after the strong refining margins led to higher profits for the company in the first quarter.
The Mukesh Ambani-led company operates the largest refinery complex of the world. The company witnessed a 12% increase in its net profit of April-June 2015 quarter. It recorded profits of Rs. 63.18 billion. Analysts had predicted the profit to be Rs. 63.08 billion but the company exceeded expectations. Reliance Industries said that its refining margins are the highest in six years. It was $8.7 in June 2014 and a year later, it is $10.4
The company is making heavy investments to increase the capacity. Reliance Industries is hopeful that its gross refining margin or the profit it makes from each barrel of refined crude oil will be boosted once the expansion is completed by 2017. V. Srikanth, Reliance Industries’ Joint Chief Financial Officer said, “half of the value of the (benefit from) expansion should come in the Financial Year 2016-2017.”
Reliance Industries earns the maximum of its revenue from its core refining and petrochemicals ventures. Recently, the company has planned expansions in retail and telecom businesses to expedite its growth.
Reliance Industries’ telecom and retail ventures
The telecom arm of Reliance Industries, Reliance Jio Infocomm is planning to set up the largest 4G broadband network in the country. The company may initiate its test launches in August. It has planned its official commercial rollout in December 2015 with an access to around 75,000 mobile towers and through the medium of 1,000 retail stores.
“We will start extensive beta testing of our telecom infrastructure, including network across the country in the ensuing weeks to commence operations in December,” Srikanth said.
Reliance Industries re-entered the telecom industry, five years ago. The company has already made an investment over $15 billion in its telecom venture. It looks forward to providing affordable broadband services to millions in the country. India has a population of around 1.25 billion but only 25% people have Internet access.
Reliance Retail will sell 4G-enabled devices under Reliance Industries’ own brand, Reconnect. The company will adopt a twin strategy to attract more and more customers through selling its branded devices in its retail electronics chain, Reliance Digital, and the open market. The company will sell all kinds of smartphones from basic to premium in Reliance Digital stores present across the country.
Apart from the 1,000 planned Jio centers, the company may also come up with around 5 lakh connectivity outlets and a million recharge kiosks. Besides, it is also talking with leading smartphone makers like Apple, Huawei, Samsung and Xiaomi to market 4G devices and pocket routers at different costs in India.
Reliance has announced that it will be investing $5 billion in its refining and petrochemicals business by March 2016.