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As Mukesh Ambani sells stake to Aramco, BP Reliance to be debt-free in 18 months

Mumbai: On a mission to cut debt in Reliance Industries, billionaire Mukesh Ambani on Monday announced plans to sell stakes in the firm's oil and chemicals business to Saudi oil giant Aramco and in fuel retail network to BP plc for Rs 1.15 lakh crore, and said its telecom unit Jio will begin offering fibre-based broadband services from next month.

Saudi Aramco will buy a 20 per cent stake in the oil and chemicals business of Reliance, including the 1.36 million barrels a day Jamnagar refining complex in Gujarat, for an enterprise value of USD 75 billion. BP will buy 49 per cent stake in the firm's 1,400 petrol pumps and aviation fuel selling facilities at 31 airports for another Rs 7,000 crore.

The twin deals along with deleveraging of telecom arm Jio's infrastructure assets will help Reliance become "a zero-net debt company within the next 18 months, that is by March 31, 2021", Ambani said at the company's annual general meeting (AGM) here.

Reliance as a whole has an enterprise value of about USD 134 billion, including telecom and retail businesses. The company, which had a net debt of Rs 1,54,478 crore as on March 31, 2019, also intends to list its retail and telecommunication units within five years, he said.

A zero-net debt company would mean that borrowings fall below cash reserves with the firm, a level Reliance hasn't seen since 2013. It had an outstanding debt of Rs 2,88,243 crore as on June 30, 2019, and a cash balance of Rs 1,31,710 crore as on June 30.

Reliance has invested Rs 5.4 lakh crore, mostly in debt, in the last five years in the expansion of its oil to chemicals business, creating 4G wireless telecom network that offers high-speed internet and in setting up India's largest retail chain.

The debt levels had raised concerns among analysts including at Credit Suisse Group AG which felt the ballooning borrowings would weigh on growth. Ambani sought to allay those fears.

"With these initiatives, I have no doubt that your company will have one of the strongest balance sheets in the world," he said. "We will also evaluate value unlocking options for our real estate and financial investments." Announcing a 'new Reliance', Ambani said the Saudi investment is "the biggest foreign investment in the history of Reliance" and "among the largest foreign investments in India."

BP had previously bought a 30 per cent stake in 21 oil and gas blocks of Reliance for USD 7.2 billion in 2011. The deal with Aramco covers all of Reliance's refining and petrochemicals assets as well as the remainder of stake the firm has in fuel retailing business after selling 49 per cent to BP, he said.

The world's biggest crude producer, Aramco will also supply 5,00,000 barrels of crude oil to Jamnagar refineries, roughly double of the amount Reliance buys from Saudi Arabia currently.

Stake in Reliance business is apart from 50 per cent interest Aramco along with UAE's ADNOC is picking up in a planned USD 60 billion refinery on the west coast of India. These investments are part of Aramco's plan to double oil processing capability under its belt to 10 million barrels a day by 2030, locking in friendly buyers for the Kingdom's crude. The deal is subject to due diligence, definitive agreements, and regulatory and other approvals, Ambani said.

Later talking to reporters, Reliance executive director P M S Prasad said the Aramco deal is targeted to be completed by March 2020. "Within five years, the oil-to-chemicals business will be carved out as an unlisted subsidiary of Reliance and will operate as a business division of RIL with the Aramco having 20 per cent economic interest."

At the AGM, Ambani announced roll out of fibre-based fixed-line broadband services from September 5, offering internet speed of at least 100 Mbps, free voice calls for life and HD television sets given for free along with the connection that would come for as low as Rs 700 per month. Calls will be free on fixed lines phones to anywhere in the country.

Reliance has received "strong interest" from strategic and financial investors for its consumer businesses -- telecom venture Jio and Reliance Retail, he said without giving details. With these initiatives, Reliance will have one of the strongest balance sheets in the world.

"As we achieve our zero-net debt target, I assure you, my dear shareholders, that we will reward you abundantly through higher dividends, periodic bonus issues and other means, and at a more accelerated pace than any time in our history," he said.

Watched by his mother Kokaliben and children, he said as India is getting transformed into 'New India', "Reliance will also transform itself into New Reliance".

"We also have large and valuable real estate assets, and have a strong portfolio of financial investments," he said. "On the strength of our existing and new growth engines, I am very confident that we can grow this by 15 per cent annually over the next five years."

Jio subscriber base at over 340 million, ready to kick-start 4 new growth engines: Mukesh Ambani

Mumbai: Mukesh Ambani on Monday said that Jio which has amassed over 340 million subscribers in less than three years, is now ready to fire four new growth engines including Internet of Things (IoT) for the entire country, home and enterprise broadband services as well as broadband for SMEs.

"Revenue from each of these engines will kick in this fiscal itself," Reliance Industries' Chairman and Managing Director Mukesh Ambani said addressing the 42nd Annual General Meeting (AGM) here.

The investment cycle of Reliance Jio is complete, and about Rs 3.5 lakh crore has been invested in high-speed 4G network, he said.

Terming Jio's journey since 2016 as "incredible", Ambani said that India was "data dark" before the entry of Jio into the telecom market.

"Jio has made India data-shining bright. Today Jio customer base stands at over 340 million... The potential for growth is immense and half a billion customers, is now I believe well within our reach," he said.

"India because of you, Jio has not only become the largest operator in India but is the second largest operator in the world on a single platform," he said.

The investment cycle of Jio is now complete, and only marginal investments would be needed in areas to grow capacity, he said adding that this gives the company strong operational leverage and superior return on investments for years to come.

"We are ready to kick start four engines of connectivity revenue for Jio...Internet of Things for entire country, home and enterprise broadband, broadband for small and medium enterprises (SME),' he added.

RIL's 'new commerce' to digitally connect kirana stores

Mumbai: Reliance Industries (RIL) Chairman Mukesh Ambani on Monday said the company's retail arm will soon unveil Reliance New Commerce, an initiative to digitally connect kirana stores across the country.Speaking to shareholders at RIL's 42nd Annual General Meeting, Ambani said that the trials of Reliance Retail's digital commerce venture have delivered positive results."This user-friendly digital platform is designed for inventory management, customer relationship management, financial services and other services," he added.According to the RIL Chairman, the initiative is aimed at digitally empowering kirana stores, including those in smaller towns. "Reliance Retail has brought a retail revolution in India," he said, adding that 'new commerce' is meant to revolutionise India's three crore kirana stores.

The purpose of 'new commerce' is to transform unorganised retail into organised retail. New commerce is a $700-billion business opportunity, he added.On the business of Reliance Retail, he said the company had crossed Rs 1.3 lakh crore in revenue last year and added that two-third of its stores were in tier-II, III and tier-IV towns."It is four times larger than the second largest retail player and also larger than all the other major retailers put together," Ambani said."Our two consumer businesses now collectively contribute nearly 32 per cent to the consolidated EBITDA, up from 2 per cent five years ago. The day is not far when their share would be 50 per cent," he added.