News: ‘We will strive to become one of the top 100 companies’

(DNA 28/06/2006) The man at the helm of India’s largest private sector company, Reliance Industries Ltd, exuded oodles of knowledge and confidence at the company’s 32nd AGM on Tuesday. Flanked by Y P Trivedi and M L Bhakta, both independent directors, CMD Mukesh Ambani told shareholders that 2009-10 will see a quantum jump in revenues at RIL, as revenues from new projects start flowing in. He also assured shareholders that he was personally in charge of value creation for shareholders and declared that the next big energy company will come from the agro-sector. Excerpts from the AGM:

On projects

We are clearly embarking on a growth path. Earlier, it’s true that we went for one project at a time. We are now investing in three large businesses: 1) The refinery project, 2) Oil & gas exploration 3) Retailing. All these initiatives will bear fruit by 2009-10, which will be a significant year for Reliance when we’ll see a quantum jump.

On the RIL share

It’s our job to perform. It’s for the market to decide on the valuation. In the long run, I am sure that the markets will recognise our performance.

I can assure you that we will put the performance. Rest will come automatically. As papa (Dhirubhai) used to say, we are on the same side. Personally speaking, I am the largest shareholder and therefore we share the same interest in the company performing well.

One thing I would like to say, shareholder value creation is central to everything that we are doing today. It’s not from today that we are looking at it, it was from papa’s (Dhirubhai’s) time when Reliance Industries was born.

As regards shareholder value, let me confide that I am personally in charge of shareholder value creation in this company. I can look into your eyes and say that this will be my endeavour.

On preferential offers for RIL shareholders for the retail and SEZ projects

Let me assure you that as Reliance Industries shareholders, we own all these companies. While we have noted your request on par, there’s one more option that we can consider and that is on how we can get the shares (Reliance Retail and SEZs) for free. The time has come back to give back to shareholders.

We (RIL) will find our place in the world. We’ll strive to become one of the top 100 companies in the world

On acquisition of oil & gas exploration blocks overseas

We are very committed and focused towards the domestic market. We are very selective about the acquisition of overseas oil and gas assets. As and when we close in on something, we’ll share it with you.

On de-merger and merger strategies

Whatever action we take is after ensuring that it is value accretive to our shareholders. All the mergers and de-mergers in the past have created value. World is moving very fast. We have to respond to acquisitions etc.

On India’s GDP growth

India is on an unstoppable growth path. It’s driven by the youth of India and it represents the aspirations of the youth. By the decade 2020-30, the world is going to rebalance itself. There are 6 billion people on this globe and one billion of the people own 80% of the wealth. That’s going to dramatically change in the future. India is going to be in the forefront of this rebalancing. Dhirubhai betted on the youth, I was only 23 years old when he asked me to join him.

While the world grows at 2%, we are growing at 10%. So, naturally, we’ll increase our per-capita income. Our farmers are the most competitive in the world. The arable land is the highest in the world. It is the beginning of the trend.

On bio-diesel and alternate fuel technologies

The next big energy company will be an agro company. As the world runs out of oil in 30-50 years, technology and human innovation will have to come from the agro-industry. Keeping with the trends, we are personally excited with our agro-retail initiatives.

On setting up ethanol plants in Maharashtra and getting into sugar

Our only interest is in ethanol. In sugar we have no interest. Of course, we’ll be selling sugar through our retail network.

On setting up a new refinery

There are some 800 odd refineries in the world. Out of this, only 30 odd refineries can process heavy crude. This is because most of the refineries in the world were built 20-30 years ago. We will have a very competitive refinery. Also remember that all the new crude that is flowing into the market is of the heavy sour variety.

On oil & gas finds

The commercial production will start by the second half of fiscal 2008-09. It will give RIL a substantial contribution.

On energy self-sufficiency

We are embarking on a massive drilling program for the next three years. But I’ll be realistic here, we cannot be self-sufficient ever in the near future. It may take 5-7 years for us (Reliance Industries) to become more self-sufficient. We’ll continue to import crude.

On hedging crude oil prices in view of the market volatility

We only take hedging for refinery margins and that to on a 12 month basis, as per RBI norms.

On investment in tax havens

Let me remind you that we are largest taxpayers in the country. But we will invest solely based on the economic merit of the project, rather than on tax benefits.

On being compared to Hrithik Roshan in ‘Krissh’ and footballers scoring goals

I do watch football. I guess, I’ll now have to watch Krissh too.