Mumbai, June 7: Reliance Industries ' the Rs 3.3 trillion private sector behemoth ' plans to invest Rs 1 trillion over the next five years, not just in its core businesses of oil and gas production, refining and petrochemicals but also in telecom and organised retail.
Mukesh Ambani, chairman and managing director, told shareholders at the company's 38th annual general meeting here today that the investment blitz was designed to build a stronger and "more diversified" Reliance Industries ' a juggernaut straddling a range of businesses across the country.
Ambani's pronouncements were keenly watched as the flagship company has been facing challenging times in a tough macro-economic environment in India and overseas.
Gas output from its famed KG-D6 block has been declining and there has been a growing sense of disquiet over what RIL intends to do with its huge cash hoard of over Rs 75,000 crore.
"We are now ready for the next period of growth at Reliance by investing across all our core businesses in new capacity and margin improvement projects," Ambani said, adding that the consumer businesses would provide a second dimension to its growth strategy.
Organised retail is one such area where Reliance is betting heavily. This business, which comprises 1,300 stores and accounts for a turnover Rs 7,600 crore, is expected to see the topline leapfrogging over the coming years.
"We are targeting a growth of five to six times in existing revenues and achieve Rs 40,000 to 50,000 crore over the next three to four years… We will build on our position as the leading retailer in India," Ambani said.
RIL is looking to crank up profits as well. In 2011-12, net profits fell 1.2 per cent to Rs 20,040 crore.
"I have set myself the target to double the operating profit of your company in about five years," Ambani said. Operating profit fell 9 per cent to Rs 22,225 crore in the year ended March 31, the first decline since 2003.
The Reliance chief said the company had experienced some disappointment with the gas reserves at the KG-D6 block, and had consequently seen production drop below the originally estimated quantities. Output from this famed block has dropped to about 32 metric million standard cubic metres of gas a day (mmscmd) from 61.5 mmscmd achieved in March 2010, lower than the projected 80 mmscmd.
Ambani said RIL was hoping to attain production of 60 mmscmd over a sustained period in the next three to four years.
He said the company was targeting a ten-fold increase in sales from its shale gas business in the US. He went on to add that projects in petrochemicals and refinery downstream would come online in the next two to three years, and investments in refinery downstream would see margins improving by 30 per cent to 40 per cent.
The RIL stock flared soon after Ambani's speech but the stock ended off its highs. On the BSE, the share closed at Rs 720.70 after hitting an intra-day high of Rs 731.90.