Plan 2004: Reliance to turn multinational
BS Corporate Bureau in Mumbai
The Reliance group, already India's largest with sales of over Rs 65,000 crore (Rs 650 billion), is chalking out a blueprint to go global after April 2004. The plan includes targeting international assets in oil exploration, plastics and even telecommunications.
Reliance Industries Ltd Chairman Mukesh Ambani told Business Standard: "We have our hands full for the next 18 months in rolling out operations in infocom, oil retailing and exploration. Once that is complete, we will turn our focus on making Reliance a global corporation."
Ambani, though unwilling to share specifics, said the foray would be in Reliance's established core competencies, and in businesses that were expanding. "We have already begun to send our top people to different countries to look for viable opportunities. China and Southeast Asia are already priority areas. We are open to all possible options," he added.
Ambani said he expected oil exploration to become a significant contributor in Reliance's stride towards becoming an MNC.
"Currently, the market is not favourable for acquiring proven oil blocks overseas. But the cycle will turn and I see international prices soon coming down to around $16-18 a barrel. That would be the time to acquire assets overseas," Ambani said.
Southeast Asia is likely to be a major target for an expansion in the plastics and fibres business.
"We already have a large presence there through our products and are looking at that area keenly. Few people know we have almost a 60 per cent market share in a country like Vietnam," Ambani said.
Reliance could even look at global opportunities in telecom with several global corporations going bust and valuations coming down steeply.
"It is not opportune to look at global telecom assets right now since we are yet to roll out our own telecom network here. But once that is complete by next year, we will be in a position to consider overseas opportunities," Ambani said.
Ambani said RIL would review its plans to raise capital on the New York Stock Exchange only after it makes strategic investments in the oil companies being divested by the government.
"There has been no progress on the NSE listing as we didn't have the need for capital. But as we go forward, and feel the need for capital, we will go to the NYSE," he added.
Ambani said apart from obvious operational synergies, the proposed merger between Reliance Industries and Reliance Petroleum was also aimed at strengthening the balance sheet that would enable the group finance big investments.
Following the IPCL acquisition, Reliance's annual cash flow is over Rs 12,000 crore (Rs 120 billion).
"If I take a 3-year view, we will have over Rs 30,000 crore (Rs 300 billion) in our hands to deploy efficiently so as to earn adequate returns. So we may have to invest in assets in India and overseas for that return. With just about Rs 21,000 crore (Rs 210 billion) of debt on our books, Reliance Industries will be debt-free in three years and will be in an even better leveraging position," he said.