Reading Article
RIL To Spend $9-bn To Build World’s Biggest Petro Complex
Reliance Industries has unveiled five fundamental strategic shifts for growth, laying emphasis on acquisitions and partnerships rather than merely organic growth.
“Traditionally Reliance has growth by building businesses from scrath. Now, Reliance is actively pursuing an acquisition mode of growth,” RIL chairman and managing director Mukesh Ambani told shareholders at the 33rd annual general meeting of the company here on friday.
Organic growth strategy cannot entirely drive growth in an era of intensive global competitiveness, rapid technological change and limited Windows of market opportunities, he said.
Ambani highlighted RIL recent acqisitions in Malaysia and Africa as “Forerunners to the unfolding of an acquisition led strategy.” RIL currently has a market capitalisation of Rs 3,82,259 crore.
While acquisition led growth would be the first of the ‘five fundamental strategic shifts” talking place in Reliance, Amabani said the second would be the first of the ‘five fundamental strategic shifts” talking place in Reliance, Ambani said the second would involve a shift from full ownership to both partnershipand full ownership in its business.
“Traditionally, Reliance has grown by owning businesses one hundred per cent, save for exceptions. with globalisation and the constant quest for new initiatives, this approach may be inadequate across all product, market and technology context,” he said.
RIL, was therefore, forging new partnerships, envisaging an ecosystem of partnerships with global companies that could be hugely value accretive, Ambani said.
Citing the examples of Chevron and ‘world leaders’ in consumer products in its organised retailing initiative, Ambani said these partnerships would be founded on the principle of shared visions of growth, mutually reinforcing competencies and value propositions.
The third strategic shift involves covering the agricultire and rural sectors.
A
According to the RIL chaiman, while Reliance has grown on the strength of its industrial and services play, “this strategy cannot entirely determine growth in a context of income and development divide in India” and hence, the focus on the two new sectors. Reliance is, therefore, factoring the agriculture and rural sectors in its growth paradigm,” he said.
RIL’s $9-bn plan for energy ‘Super Site’ Signalling future growth through consodation of existing operations by raising them to World class assets, Reliance Industries LTD chairman Mukesh Ambani on friday said the company would invest $8-9 billion over three-four years for creating the world biggest petroleum and petrochemicals complex at Jamnagar in Gujarat.
‘Reliance will build, at Jamnagar by the year 2012, the world’s largest integrated combined cycle coke Gasification Complex with a capacity of 6 milion tonnes per year.
This complex will gasify all the petroleum coke from the refinery, adding to its complexity, even more bottom of the barrel upgradation. and further value addition. The two refineries combined with IGCC, the olefins complex and the aromatics complex will indeed make the Jamnagar complex, what is called in the energy industry parlance, a ‘Super Site’” Ambani told shareholders at the company’s 33rd annual general meeting.
The new petrochemicals complex willbe the largest’ in the world with a capacity of 2 million tonnes per year of olefins with matching downstram capacities.
The company would extend its petrochemicals business to high growth markets such as Russia and Egypt demonstrating the strategy of ” building strength in India first and then leveraging it to build a global business.”
In the same vein, Ambani said Reliance was shifting from building businesses from scratch as it faced intense competition, limited market opportunity and rapid changes in technology. Pointing to Reliance expertise in project execution, he said the new 580,000 barels per day refinery being built next to the company’s existing refinery, would be completed ahead of schedule.
He also said RIL had invested over $2 billion and would pump in $4 billion of risk capital in the coming years.