Archive for September, 2011

Moody’s: ‘Impact on RIL’s overall financial health because of lowered gas output to be modest’

September 29, 2011

Moody’s Investor Service, a rating agency, ascertained that the decrease in gas output in KG-D6 field, owned and run by Mukesh Ambani led Reliance Industries Limited (RIL), is likely to have only a modest impact on RIL’s overall financial health. The decrease in gas output could push back company’s cash flow by a small margin, but given that RIL and BP have joined forces to combat the slump in gas output; it is likely the situation will turn around sooner than anticipated.

Following the completion of RIL-BP deal, RIL now stands to employ BP’s advanced petro-technical skills, the reservoir skills and the exploration skills to its advantage and get the production from its field up and running to meet the projected output mark, suggested Moody’s Vice President and Senior Analyst Vikas Halan.

KG-D6 is faced with decline in its output due to unanticipated reservoir complexities. Its output declined gradually to less than 45 mmscmd instead of rising to 80 mmscmd as anticipated in the field’s initial assessment. However, satellite fields in the KG-D6 block and discoveries, also known as the ‘R-Series’, together are estimated to have the potential to produce as much as 35 million cubic meters a day of gas. RIL is now looking to develop these satellite fields in D1 and D3 blocks, and has submitted a proposal to the government for the same. BP’s CEO Robert Dudley, on his two day visit to India, assured that BP and RIL are working with the government to get additional satellites and the R series reservoirs approved at the earliest so as to begin the process of engineering and, by 2014, get the production of gas rising from KG-D6.

With respect to RIL’s Baa2 local currency issuer rating, Moody’s found RIL’s ‘long-term story’ to be compelling. Vikas Halan stated, “Its local and foreign currency ratings were last upgraded in February 2006 and have since remained at Baa2. During this period, the company doubled its refining capacity and started production of gas at its KG-D6 block. Moreover its credit metrics have come to a healthy level.”

Robert Dudley’s to Visit India, to Meet RIL Executives

September 29, 2011

Robert Dudley, BP’s Group Chief Executive is on his 2nd visit to India, to meet Government Ministers and RIL Executives. He marked his first visit for BP’s historic partnership with Reliance Industries Ltd. and his 2nd visit will certainly be for a more significant reason.

BP is into finding, extracting and moving oil and gas, operating across 6 continents and over 100 countries. RIL-BP partnership includes BP taking 30% stake in 23 oil and gas production sharing contracts that Reliance operates in India, which also includes the producing KG-D6 gas block. The British Oil Major has invested $7.2 billion, which is the largest foreign direct investment in the oil and gas sector.

The Petroleum Ministry was unable to seek investors in India’s Hydrocarbon basins, but BP’s venture into the field certainly symbolizes its faith in the Indian Market. Reliance Industries is facing challenges with its Krishna Godavari basin due to falling gas output, and Robert Dudley, who considers it as the ‘Golden Block’ has chosen this time to visit again.

“D6 is a world class resource, but also a complex reservoir that needs high technology and risk taking”, said Robert Dudley in his interview. BP is known to take risks, as it signed its deal with Reliance after the Gulf of Mexico Spill. Robert Dudley’s statement “BP’s great sub-surface exploration can help Reliance get back the sagging output” has certainly restored the faith of many towards RIL.

RIL and BP are jointly working towards restoring the production from the reservoir to its earlier levels. They are studying the field further and simultaneously RIL has submitted a plan for government approval, for the development of four satellite fields, which will help increasing the production from D1 and D3.

Robert Dudley’s first sojourn to the country marked BP’s exploration of India’s Oil Sectors and was a symbol of his faith and confidence in the Indian Market. His 2nd visit is certainly a relief to many investors, as he helps retaining and restoring this faith.

Four new stores to be launched by Reliance Digital

September 26, 2011

Reliance Digital, a multi-brand electronics retail chain from the house of Reliance Industries Limited (RIL), is set to launch four new Reliance Digital stores on 28th of September 2011. The stores will be launched in the cities of Jaipur (Man Upasana, Sardar Patel Marg), Mysore (Mall of Mysore, M G Road), Hyderabad (Kachiguda) and Pune (Solitaire, Aundh).

Staying true to Reliance Digital’s long standing tradition, these new stores will boast matchingfeatures as that of other Reliance Digital stores across the country. Spacious in design and comprehensive in product collection, the latest Reliance Digital stores will be an extension of Reliance Digital’s quest for providing value-based electronic products at best prices throughout the country.

As a part of quadruple launch festivities, Reliance Digital has put in place an exclusive offer wherein customers stand a chance to win free Rs. 1000 e-vouchers on all purchases of Rs. 10,000 and above. This scheme can be availed at the new Reliance Digital stores between 28th September and 29th September.

About Reliance Digital: Reliance Digital is value-based consumer electronics and durables retail chain from the house of Reliance. Spread over 10,000 of space, Reliance Digital stores carry over 4000 products of 150 brands from world over. Carrying a wide assortment of products from high-end LED and LCD TVs, microwave ovens, refrigerators, washing machines, mobile phones, laptops, gaming consoles and software, home appliances, mp3 players to even the smallest of IT based devices, Reliance Digital is a one-stop shop for all things electronic. Reliance Digital stores offer its customers the value proposition of having the lowest prices and best quality products. Offering great value for money on every purchase, Reliance Digital stands as an ideal store for every customer looking for a great deal on electronics.

Reliance Retail to Roll out Multiple Cash-And-Carry Formats across the Country

September 23, 2011

Reliance Retail, a subsidiary of Mukesh Ambani run Reliance Industries Limited (RIL), plans to roll out multiple cash-and-carry format stores for wholesale business across the country, after getting an encouraging response from the first such store launched in the city of Ahmedabad. With this initiative, Reliance Retail hopes to offer numerous national and international brands to small traders across the country and, at the same time, propel the growth of its consumer-focused business in the coming years.

Eyeing multilateral growth in its retail processes, Reliance Retail has put in place a new management team to steer the course of next phase of growth for the retail subsidiary. It has roped in top executives from Wal-Mart China, Rob Cissell and Shawn Gray to take over as chief executive officer (CEO) and chief operating officer (COO) of the Reliance Retail business respectively. Their principle role will be to turn around the retail business of Mukesh Ambani led subsidiary and make it profitable within the next two years. Major focus will be put on FMCG, consumer electronics and durables business and more significantly on the cash-and-carry segment. The cash-and-carry segment in India is a relatively small fraction of modern trade and there is a huge opportunity for the cash-and-carry model to grow in the Indian organized retail sector.

Reliance Retail has been the aggressively pursuing major changes in its business structure. Mukesh Ambani, addressing his shareholders at the 37th AGM 2011, stated that the next phase of growth for RIL will be derived from its subsidiary businesses, especially retail, telecom and financial services. Asserting that Reliance Retail has already become the largest food retailer in India, Mukesh Ambani noted that all the specialty formats of Reliance Retail will attain top positions in their respective segments in next two years.

Reliance Retail is expecting to see its same-store sales increase by almost 20 per cent in the FY 2011. This anticipation is riding on the back of steady consumer spending over the last year; negating any adverse affects that can be rendered as result of present economic conditions.

John Abraham and Genelia D’Souza to visit Reliance Digital in Ahmedabad

September 22, 2011

Bollywood heartthrobs John Abraham and Genelia D’Souza are scheduled to visit Reliance Digital consumer electronics retail store at Iscon Mall in Ahmedabad on 22nd September. These actors are pairing up on screen for the first time.

The actors are visiting the store as a part of promotion of their latest forthcoming release FORCE. Fans can hope to see their favorite stars in action as both John and Genelia will interact with the crowd and media during their visit to the store.

Store Address:

Iscon Mega Mall, Near Rajpath Club,
Sarkhej Gandhi Nagar Highway,
Ahmedabad – 380054

About Reliance Digital: Reliance Digital, the value oriented consumer electronics chain, is one of the most popular destinations for purchase of electronics items. Carrying over 4000 different products of 150 brands – both domestic and international – Reliance Digital is a state of the art, one stop destination for all consumer electronic items, ranging from home appliances, gaming and communication devices to entertainment utilities. From audio and video products (Television sets, DVD players, Car Audio players), Electronic Musical Instruments, Digital Cameras, Gaming consoles and software, Computers and related accessories, Mobile and Fixed line devices to Air Conditioners and Kitchen and Home Appliances, Reliance Digital carries it all. Value for money and friendly services are standalones for this electronics monolith, which is now making its presence felt across every major Indian city.

Technical Experts support RIL’s stand in KG-D6 audit report reply

September 19, 2011

After Comptroller and Audit General (CAG) hot pressed Reliance Industries Limited (RIL) for allegedly overstating its cost expenditure incurred on account of KG-D6 gas block and for violating production sharing contract (PSC), technical experts from the field have stepped up to possibly detach alleged allegations from factual reality and present an objective view of the situation that has now been subjected to barefaced assertions and no definite agreement.

Ernst & Young a global consulting firm, along with IPA Inc. – an industry leader in quantitative analysis of project management systems – and Daniel Johnston & Co Inc. – an independent US based consulting firm with experience of working with 40 governments and numerous independent oil companies worldwide – have conducted independent research on KG-D6 process and its cost evaluation to ascertain RIL’s actions more clearly.

E&Y performed a procurement audit on RIL’s KG-D6 acreage and confirmed that costs were correctly allocated and there exists no evidence that would suggest that KG-D6 costs were overstated in anyway. The firm confirmed this stance after carefully reviewing project management principles relevant to the assessment of KG-D6 block. With regards to the impact of escalation of capital expenditure, E&Y confirmed that any increase in capital expenditure is detrimental to both the contractor and the government.

IPA assessed the Field Development Plans (FDPS) on five essential criteria including cost overrun, cost competitiveness, slippage in execution, schedule competitiveness and operability. After carefully reviewing against these criteria, IPA rated KG-D6 as ‘a successful project’. It stated that although KG-D6 faced many execution based challenges, its FDP complies with industry standards. IPA also noted that KG-D6 projects achieved successful outcomes across most project measures including cost growth, cost competitiveness, operability performance and schedule competitiveness.

Daniel Johnston & Co. noted that sophisticated actions, including extensive drilling, seismic and geological activity undertaken in the KG-D6 region, make the block ‘one of the most extensively appraised frontier, ultra-deep water blocks in the world’. The exploration, appraisal and development operations carried out by Reliance in the KG-D6 block are entirely consistent with GIPIP. It also affirmed that DGH’s decision to treat the entire block as a ‘discovery area’ was a reasonable decision fully supported requisite data and the situation.

The consensus averaged out by these independent researches completely validate RIL’s stand in its reply to CAG’s accusations. Coming from such eminent bodies in the field, the insight purported by each of these firms has almost authenticated Reliance’s actions and procedures to a large extent.

‘CAG’s report detrimental to both contractors & government’

September 14, 2011

After presenting its final report on audit of Reliance Industries Limited‘s (RIL’s) KG-D6 gas block, Comptroller and Audit General (CAG) body has invited a lot of negative press as far its process of gauging industry procedures is concerned.

CAG, in its audit draft report, had lashed out against RIL for allegedly overstating its costs, while also pointing a finger at the oil ministry for showing laxity in implementation and management of production sharing contracts (PSCs). Reliance Industries took a stand on the charges stated by CAG saying that CAG had missed the mark as far as gauging E&P procedures, in relation to internal and external factors, is concerned. While RIL maintains that irrespective of the report, it continues to maintain a strong adherence to global benchmarking procedures, the after math of the allegations has left many operators in oil and gas sector questioning the forethought of the audit body.

Industry experts have stepped up in support of Reliance’s stand sharing the view that the entire shenanigan put up by CAG has left a detrimental mark on the reputation of the E&P sector. Also, independent reports by experts from E&Y, IPA and Daniel Johnston & Co. Inc. have entirely validated RIL’s stand in its responses to CAG. These independent reports have acknowledged RIL’s commendable efforts in ‘bringing to stream India’s first deep water hydrocarbons production facility in record time’ and the fact an energy major as big as BP Plc has entered into a strategic partnership with RIL in this exact block further strengthens Reliance’s stand and justifies its efforts and processes to a large extent.

As for the issue that has been stretched out of proportion by CAG, one thing that finds common ground in all opinions, including those of industry leaders and experts is that CAG has obtusely relied on going by book as against gauging a situation based on current trends and economic factors. Questioning the prudence of an operator is not a part of CAG’s mandate and questioning the technical and operational judgments of an operator that were in effect the best possible judgments at the time, is a factor that must find precedence in evaluating any procedure.

“CAG must gauge actions based on influencing factors both internal and external to a process”

September 8, 2011

As the issue enters a steaming stage, industry experts have stepped up with their opinions regarding the matter concerning Reliance Industries Limited (RIL) and the allegation put on its account by Comptroller and Audit General (CAG) body of India. The subject matter of concern revolves around the allegation made by CAG accusing RIL of gold-plating its capital expenditure incurred on its oil and gas acreage, including KG D6 block, and a parallel assertion made on account of the oil ministry for allowing such price escalation, that too in violation of production sharing contract s (PSCs).

CAG had submitted its initial report on the KG D6 audit earlier in June, red lining many aspects of RIL’s production process, however, the audit report has failed to rationalize any claims it has made against RIL. RIL, in its reply to the audit report, had stated that the increase in cost was a result of increase in cost of deep sea exploration process altogether. Due to rise in cost of procurement of technology and labor worldwide, a ripple affect found its way to Indian operators as well, including Reliance. CAG had also noted that because of this unwarranted increase in cost, the government is at the brink of facing heavy losses, to which RIL has replied that it is in fact the operator that stands to face heavy losses; while the government stands to regain its share through reduction of subsidiary burden.

At present, when CAG is in the process of finalizing its audit report regarding RIL, industry experts have come to suggest that CAG is not the right body to raise questions at the prudence of an operator and question the technical and operational judgments of the operator that were in effect the best possible judgments at the time. It should consider every factor, internal and external, which led to a possible situation and try to reason the action undertaken by taking in the viewpoints of the operator as well. CAG cannot use a pre-existing yardstick to reason an outcome, which could have been taken as necessitated by the situation. Also, to suggest changes in the PSC is matter of deliberation for concerned authorities and not CAG.

BP to register a new JV company for gas sourcing and distribution in association with RIL

September 7, 2011

After receiving an official go ahead from the Indian government, RIL-BP deal is all set to roll out its big plans soon. For starters, the London based energy major BP Plc is keen on establishing a new gas marketing joint venture with Reliance Industries Limited (RIL) in an effort to kick start the RIL-BP venture. The new JV company will most likely be registered within the next two months, and the management team responsible for driving this company is currently in the process of finalization.

To encourage private sector investment in gas infrastructure, BP wants gas prices to be largely market driven, especially ‘in light of significant untapped potential of natural gas in the country’, as stated by Steve Westwall, member of BP’s executive management team, at the recent energy conference in New Delhi.

Head of BP’s Indian operation, Sashi Mukundan, said that the new joint-venture company will most likely import liquefied natural gas (LNG) via a possible LNG import terminal, established specifically for this account. It will also look to utilize the capacity at existing LNG terminals of Mukesh Ambani-owned pipeline company Reliance Gas Transportation Infrastructure across the country. As LNG import and usage sees an escalating climb, RIL and BP are both optimistic in charting the opportunity to its full potential.

As far as KG-D6 gas field is concerned, BP will be rendering its full support to RIL in increasing the production level at the block within a period of two years. As a part of the RIL-BP venture, the companies plan to engage in extensive discussions with the government to streamline their plans to increase production at KG- D6. They may also present new field development plans for various blocks and appraise other discoveries simultaneously. For now, teams from both RIL and BP will take part in extensive research of gas and oil acreage to determine the future stages of development of KG D6 fields.

Meet the cast of Mere Brother Ki Dulhan at Reliance Digital, New Delhi

September 5, 2011

The Reliance Digital store at Moments Mall Kirti Nagar, in the city of Delhi is all set to welcome actor Imraan Khan, Katrina Kaif and Ali Abbas Zafar today(5th September 5, 2011) at 5:00 PM. The actors and their team will visit the store for the promotion of their latest flick Mere Brother ki Dulhan. The cast is expected to interact with the crowd and media at the promotion event.

This Reliance Digital Store is the latest addition to the electronics chain. The store was launched on 3rd September. As a part of special launch festivities, Reliance Digital has put in place exclusive launch offers which range from price-offs and discounts to exchange offers. As a part of the ‘Mismatch Exchange’ scheme, customers can bring in their old refrigerators, washing machines and television sets in exchange for any of the latest electronic product from the store. Reliance Digital is also offering a special purchase scheme where customers can take home any product of their choice at an easy EMI of just Rs. 51. And every purchase will be backed by Reliance Digital’s customer support team at ‘Reliance resQ’, available 365 days a year.

About Reliance Digital:
Reliance Digital is a one stop shop with cutting edge technology for the entire range of household electronics, appliances, computers, gaming and telecom products. Reliance Digital Stores house over 150 international and national brands and over 4000 products. The range at Reliance Digital spans, Audio and Video products (TV’s, DVD players, Car Audio players), Electronic Musical Instruments and Digital Cameras, Gaming Consoles, Computers and Peripherals, Mobile and Fixed line instruments, Durables like, Air Conditioners, Refrigerators, Water Purifiers, Kitchen and Home Appliances.