39TH AGM OF RELIANCE - 'JIO' AS LIFE MOVES ON....
By Ruma Dubey
The market dismissed the 39th AGM of RIL within a few seconds of its conclusion. That is the world we live in today – everything is instant and pops like a fire cracker – bright one moment, agog with expectations and fizzled out within minutes.
Even today, the AGM of RIL is one of the big events of India Inc, though a very watered down version of the AGM which earlier used to held in the football stadium! RIL has completed 36 years on the bourses since the time it got listed in 1977. And still remains a big mover and shaker, which speaks a lot about how some companies remain big and relevant, despite the rapidly changing winds of time.
In 1985 when “Reliance equity fever” was at its peak, Dhirubhai had booked a stadium for the AGM, then in Bombay, at Cooperage Football Ground. It was the first AGM ever held in the open. A canvas awning was put over the ground and there were around 12,000 shareholders. It was historic and this AGM was covered even in London’s Financial Times. That was the AGM where the name and symbol was changed from Reliance Textiles to Reliance Industries. It was like a carnival, where food packets were distributed!
Well, that was then and this is now. Neither will those days come back nor will the AGM have the magic of Dhirubhai. RIL has built on the legacy left behind and we now look at a new dimension of the company emerging. Unfortunately, today the stock is not earning much money for the shareholder and seems to be stuck in a crux. And going by the announcements made in the AGM today, there does not seem to any immediate trigger.
The markets, as usual, expected too much and thus got disappointed. It was a very quiet kind of a speech, with no all-out, big bang announcements; it was more subtle, leaving many questions unanswered. This time around, the message which got conveyed was that it was business as usual when it came to petchem, refinery and shale gas. But it was now betting big on retail and telecom.
And if today the AGM was a non-event it was essentially because of this change in psyche. People do not see the magic like before and the new generation, on number crunching, does not see much in the immediate future. There was major disappointment as he did not really say much, not on facts which needed clarifications. A quick look at the highlights:
Planning Rs.1,50,000 crore investments in 3 years
Retail revenue crosses Rs.10,000 crore
Expect retail business to deliver over 50% revenue growth going forward
Bets big on telecom – Reliance Jio to make aggressive launches this year; key vendor for launch Of 4G services finalised
New Gas discoveries likely - RIL has target for first gas from East Coast in 2015.
Plans to be among the top 5 petchem producers in the world
To de-rssk refining business.
Expects shale gas to account for over one-third of production this fiscal
To increase staff in its telecommunications business unit to 10,000 next year from 3,000 currently
In petchem - capacity is likely to expand from 15 mtpa to 25 mtpa; Silvasa petchem plant to become operational this fiscal
Continue to be debt-free on a net basis,
At last year’s AGM, Mukesh Ambani had announced plans to invest Rs.1 lakh crore over the next 5 years and this time around, it has increased to Rs.1.5 lakh crore over the next 3 years. That’s a huge amount of money and good for the country though where it plans to invest this money is not known. It will surely be in core sectors and that should be exciting. Our Editor, Mr.SP Tulsian said, “Does it mean that we are talking of the cash accrual of the company of Rs 150,000 crore in next three years, which is now at about Rs 25,000 crore? In FY13, the company had a net cash profit of Rs 25,000 crore which can legitimately get deployed for this new expansion. So are we really looking for that kind of cash accrual in next three years which itself is looking quite ambitious”.
Regarding Reliance Jio, we know he has ambitious plans for the company over the next 12 months but he will not indulge in undue haste. We are sure to hear more about telecom in the 40th AGM.