2016 to be a Significant Year for Reliance Industries

Brokerage company, Credit Lyonnais Securities Asia (CLSA) predicted that 2016 would be the biggest year for Reliance Industries.

Value of Reliance Industries’ Business

In 2015, stocks of Reliance Industries outperformed the Sensex for the first time in the past seven years. This is because its petrochemical and refining business fetched better results. On 6th January, the stock attained a five-month high of 1,029.10 by gaining 2.38%. This also improved the scope of its upcoming telecom business.

Reliance Industries will expand its business in petrochemicals and refining. It is also working to set up its telecom business. The MukeshAmbani-led company has decided to invest USD 55 billion, which is equal to its present market cap, by 2018. Out of this, it will start projects worth around USD 30 billion, this year itself. This will increase Reliance Industries’ earnings and future returns as well.

The petcoke gasification project of Reliance Industries is among the largest in the world. The company has decided to replace expensive imported Liquefied Natural Gas (LNG) with low-cost petcoke gas. This will help the company to add USD 2 per barrel to its Gross Refining Margin (GRM). It will also be focusing on Refinery Off-Gas Cracker (ROGC) project to reduce the cost of raw materials in the petrochemical segment. This will increase its GRM by USD 1.

Reliance Jio aims to get around 10 crore telecom subscribers. As per CLSA, this will add another USD 25 billion to Reliance Industries’ market cap.

Reliance Industries’ Business

Founder of Reliance Industries, DhirubhaiAmbani started his business venture as a polyester yarn trader. Today, the company is one of the largest private companies in the world. It produces oil and gas, makes petrochemical intermediates, refines thecrude product,and produces and sells branded textiles. This growth has been possible due to its unwavering focuson the oil, gas, and petroleum business in the last 20 years.

Reliance Industries partnered with British Gas and ONGC in the PannaMukta and central and southern Tapti blocks. The company also has conventional oil and gas blocks in places like Cambay Basin, Krishna Godavari, Sohagpur,Gujarat-Saurashtra, Mahanadi, and Cauvery Palar, among others. Its Krishna Godavari basin is an example of the biggest investment in gas exploration and production in India.

Internationally, Reliance Industries has inked Production Sharing Contracts (PSC) for two offshore blocks in Myanmar. It also has conventional blocks in Yemenand Peru. In 2010, the company invested in partnerships to drill, explore, and produce shale oil and gas in the United States.

When Reliance Industries began its operations in the petroleum refining segment, the Indian economy flourished. Reliance Industries initiated its facility in Jamnagar in 1999. From an importer of petroleum products, the country became a net exporter within just 3 years. The Jamnagar plant has a capacity of 6 crore tons a year.

Reliance Industries has been a leader in refining operations. Its unmatchable execution of projects at a high speed and at low prices makesit stand out from the rest. At present, the company has become a significant player in the global market.

Reliance Industries’ Radio

Last month, Reliance Industries rolled out its ‘R-Radio’ for employees. Through the medium of radio, the employees will be able to give and take suggestions on management. This is a part of the company’s focus towards human resources to attract and motivate them.

Summary

According to CLSA, a brokerage company, the year 2016 will be the biggest year for Reliance Industries.

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