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Confident of making RIL debt-free: Mukesh Ambani
Reliance Industries Ltd is set to sell a 20 pc stake in its oil to chemicals business to Saudi Aramco in one of the largest foreign investments in the country, Reliance Chairman Mukesh Ambani said.
Ambani also announced the commercial launch of Jio Fiber on September 5, with the base plan starting at a speed of 100 MBPS and going up to 1 GBPS with prices ranging from Rs 700 to 10,000 per month.
Reliance Industries Ltd is set to sell a 20 pc stake in its oil tochemicals business to Saudi Aramco in one of the largest foreign investments in the country, Reliance Chairman Mukesh Ambani said. Ambani also announced the commercial launch of Jio Fiber on September 5, with the base plan starting at a speed of 100 MBPS and going up to 1 GBPS with prices ranging from Rs 700 to 10,000 per month.
Ambani on Monday announced that Saudi oil giant Aramco has agreed to take a 20 pc stake in his flagship Reliance Industries’ oil refinery and chemical business at an enterprise value of $75 billion (around Rs 5,32,466 crore). Making the announcement at Reliance Industries’ 42th annual general meeting, he said this would be the biggest foreign investment in the history of the company.
As part of the deal, Saudi Aramco will supply 500,000 barrels per day or 25 million tonnes per annum, of crude oil to Reliance’s twin refineries at Jamnagar in Gujarat. Saudi Aramco will take 20 pc stake in a proposed special purpose vehicle (SPV) housing the twin refineries of Reliance as well as the firm’s petrochemical complex. Reliance operates two refineries in Jamnagar, Gujarat, with a total capacity of 68.2 million tonnes per annum. It plans to expand its only-for-exports special economic zone (SEZ) refining capacity to just over 41 million tonne from current 35.2 million tonne but does not have any plans to set up a new refinery in the country. It is currently focused on expanding petrochemical and telecom business.
Jio pan-India broadbandservice launch from Sept 5
Ambani has also announced the roll out of Jio Giga Fiber from September 5, that will offer free voice calls for life from landline phones, high-speed broadband of minimum speed of 100 mbps, free high-definition TV and dish with minimum subscription of Rs 700 per month. The RIL CMD also announced unlimited ISD calling service from Jio landline at fixed monthly rental of Rs 500 to US and Canada. “In India even the most basic Jio Giga Fiber will start at 100 mbps at the lowest end. We have plans to go all the way to 1 gbps. We are pricing our plan at one-tenth of global rate to make it accessible for every home,” Ambani said. He said plans will start at monthly rental of Rs 700 and go up to Rs 10,000.
From mid-2020, the premium Jio Giga Fiber customers will also get to watch new movies on the same day of its release, Ambani said. “Premium Jio Giga Fiber customers can watch movies at home the same day they are released in theatres!” he said.
BP to pay Rs 7,000 cr for 49%stake in RIL’s fuel retail network
Further, Ambani said British energy giant BP will pay about Rs 7,000 crore for acquiring a 49 pc stake in Reliance Industries’ fuel retailing network. Last week, the two firms had announced a new joint venture to set up petrol pumps and retail aviation turbine fuel to airlines in India.
Reliance’s existing 1,400-odd petrol pumps, as well as 31 aviation fuel stations, will be transferred to the new joint venture where BP will hold 49 pc equity stake. Reliance will hold the balance 51 pc in the entity, which aims to expand the retail network to 5,500 petrol pumps in the next five years, the two firms had said. Ambani said, “In a significant new initiative, BP acquired 49 pc stake in our petro-retail business. Reliance will get Rs 7,000 crore from BP for this transaction.” This is the third joint venture between Reliance and BP since 2011.
Jio subscriber base at over 340 mn, ready to kick-start 4 new growth engines
Ambani also said 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,” Ambani said.
The investment cycle of Reliance Jio is complete, and about Rs 3.5 trillion has been invested in high-speed 4G network, he said. Terming Jio’s journey since 2016 as “incredible”, Ambani said 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 added.
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.
Jio, Microsoft team up fordigital transformation
The RIL Chairman also said Reliance Jio has entered into a long-term alliance with Microsoft to accelerate digital transformation with the launch of new cloud data centres. Ambani said Jio is setting up a pan-India Edge Computing and Content Distribution network starting with tens of thousands of nodes. On the Jio-Microsoft alliance, he said Jio will set up a network of large world-class data centres across India powered by Microsoft’s Azure cloud platform.
The two sides have entered into a long-term pact to accelerate the digital transformation in the country with launch of new cloud data centres, to ensure that more organisations can access the tools and platforms they need to build their own digital capability.
Reliance to be zero-net debt company in 18 months
Ambani also announced plans to make Reliance group a zero-net debt company within 18 months as he sells stakes in oil and chemical business to Saudi Aramco and fuel retailing business to BP. “We expect to complete transactions with Saudi Aramco and BP within this financial year. These are expected to generate inflow of Rs 1.15 trillion,” he said. Along with other transactions to de-leverage the group, these would make it a zero-net debt company in 18 months. “We have a very clear roadmap to becoming a zero-net debt company in next 18 months,” he said. Reliance has invested nearly Rs 5.4 trillion over the last five years to generate EBITDA in excess of $1 billion annually for over a decade.
Ambani also said Reliance “will induct leading global partners in (telecom arm) Jio and Reliance Retail in the next few quarters, and move towards listing of both these companies within the next five years.” “As we achieve our zero-net debt target this financial year, 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.
WHAT RELIANCE HAS ACHIEVED?
- Became India’s largest and most profitable company - both in public and private sectors
- Only diversified multi-sector Indian enterprise with three major growth engines in one single corporate entity – oils to chemicals division, Jio and retail
- Jio crossed the 340 mn subscriber mark to remain world’s fastest growing digital services firm
- Jio is India’s largest telecom enterprise in terms of subscribers, revenues and profits
- Jio has truly become the DIGITAL GATEWAY OF INDIA
- Has crossed Rs 130,000 cr turnover to cement position as India’s largest retailer
- 4 times larger than the 2nd largest retail player. Larger than all the other major retailers put together
- Two consumer businesses now collectively contribute nearly 32 per cent to the consolidated EBITDA, up from 2 per cent five years ago.
HOW IT HAS CONTRIBUTED TO INDIAN ECONOMY
- Largest exporter - Rs 2,24,391 cr exports to 107 countries accounting for 9.8% of India’s total merchandise exports
- Highest payer of customs and excise duty in the private sector @ Rs 26,379 cr
- Highest payer of GST amongst all public and private sector companies @ Rs 67,320 cr
Performance of business units
- Oils to chemicals business achieved revenue of Rs 5.7 lakh crore, exports of Rs 2.2 lakh crore and EBITDA of Rs 52,041 crore
- Processed 68.3 million tons of crude during the year maintaining record of over 100% operating rate
- Despite challenging global environment, achieved a GRM of $9.2 per barrel, maintaining a margin of $4.2 per barrel over the Singapore complex
- Biggest foreign investment in the history of Reliance and among the largest foreign investments in India – Saudi Aramco and Reliance. Both have agreed to form a long-term partnership in Oil to Chemicals (O2C) division
- Saudi Aramco to invest in Reliance for a 20% stake in O2C division at an enterprise value of $ 75 Billion for the division
- Natural Gas biz to regain place of pride in Reliance’s value-creation strategy
- JV with BP to play a major role as a producer of natural gas
- With world class deep-water infra in the east coast of India, the JV is uniquely positioned to monetise over 3 trillion cubic feet of discovered resources in the KG D6 block
- JV committed investment of Rs 35,000 cr in three deep water fields in this block