Archive for August, 2013

RIL Supports Aspiring Talent by Stanford Reliance Dhirubhai MBA Fellowship Programme

August 23, 2013

In order to support Indian students with financial need in obtaining a MBA degree at Stanford, Reliance Industries Limited (RIL) has renewed its Stanford Reliance Dhirubhai MBA Fellowship Programme with Stanford Graduate School of Business (GSB). This project was launched as a five-year pilot in April 2008 and has helped 19 Indian MBA graduates till date.

Under this fellowship, the student will receive full tuition support for their two-year Stanford MBA Programme. Fellows must agree to return and work in India within two years of graduation. Applications for September 2014 scholarships have closed and for scholarships in 2015, interested students will have to wait till April 2014. Complete details about the scholarship are available online. It is a two-stage process.

– In the first stage, prospective fellows complete the Stanford Reliance Dhirubhai MBA Fellowship Programme application. There are fifty applicants, who are chosen on the basis of merit, commitment to developing India and financial need after their financial resources have been reviewed.

– Out of the fifty finalists, Stanford may select five Fellows. In this second stage, the finalists are selected based on the primary admission criteria of intellectual vitality, demonstrated leadership potential and personal contributions by GSB.

These Fellows receive an estimated $1, 40,000 for the duration of two-year programme. The funding for the second year is automatically renewed if the student performs well in the academic standing as well as the community citizenship at Stanford GSB. Under the mandatory norms, these Fellows should return to India, on completion of their course for a minimum of two years of employment in the private or public sector.

Apart from this scholarship programme, RIL is planning to establish a world-class education hub in Navi Mumbai. This education hub will have collaboration with world-renowned universities like Cambridge, Oxford and Harvard.

According to the initial plans, the education hub will be autonomous. A senior executive working with Reliance said, “We will bring western and eastern culture and talent together. We will offer courses in science, arts and professional streams.”

A senior spokesperson of the company said the plan is still in infant stage. “We are still working out the modalities and understanding the nitty-gritty of the revised government policy. However, so far nothing has been fixed yet. The plan will take concrete form in coming future,” said the spokesperson. Reliance has been associated with Pandit Deendayal Petroleum University in Gujarat and is developing this university into a premium world class university.

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RIL Plans to Invest in Iraqi Oil Sector

August 19, 2013

The domestic energy giant, Reliance Industries Limited (RIL) is planning to invest in oil and gas fields of Iraq. Mukesh Ambani announced recently at a programme in Mumbai on Wednesday that, “Petroleum minister Veerappa Moily has asked us to consider investing in Iraq. We are looking at the Nasiriya giant oilfield and three other oil and gas blocks in Middle Furat region.”

This programme was also attended by Iraq’s deputy Prime Minister Hussain Saleh al-Shahristani, who was perplexed as Reliance was only evaluating the possibilities and that no decision has been taken yet. “We are glad that companies like Reliance are taking keen interest in Iraq,” he said. He also added that Iraq is open joint ventures by Indian and Iraqi companies in the oil and gas sector as the Gulf Country seeks to become a petrochemical hub.

“We are keenly looking at Iraq’s resources… we have not yet decided on investing in the Nasiriya giant oil field and the accompanying refinery project but all options are being evaluated. But so far, nothing has been finalized and we will take a call on this- both the downstream and upstream assets- in Iraq by the end of the year.” added Ambani. Iraq has passed Iran to become the second-largest crude oil supplier to India. On his last visit to Iraq, Petroleum Minister M. Veerappa Moily was offered that Indian energy companies are permitted to invest in Iraqi oil and gas acreages.

Kifil, West Kilfil and Merjan oil blocks discovered in the Middle Furat oilfields were made accessible to Indian energy companies on a nomination basis. On nomination basis means that there will be no bidding in between the private energy companies for these oil or gas blocks. This is the first of its kind instance that an oil rich Middle East nation has presented oilfields to India without mandating a formal bidding process. Earlier this year, Reliance was shortlisted by Iraq for developing the Nasiriya oilfield and building an associated 300,000 barrels per day refinery. Last year, the company had divested its holding in two blocks in Kurdistan amid threats of blacklisting by the war-torn country. In 2007, Reliance’s Dubai-based arm, Reliance Exploration and Production had acquired 100 % stake in Rovi and Sarta blocks of Kurdistan. The company sold its entire holding in the two blocks to Chevron. “We have divested all our assets in Kurdistan,” Ambani said.

“We are interested in Iraq’s resources as we are the world over, but we remain India focused as 90% of our energy needs are imported,” RIL Chairperson said. At the annual general meeting he announced that an historic investment of Rs 150,000 crore will be made to enhance the petroleum, gas and refinery businesses of RIL. He envisages the country to become energy import-independent.

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RIL Free of CBI Preliminary Inquiry on KG-D6 Fields

August 8, 2013

The Central Bureau of Investigation (CBI) has closed its preliminary inquiry against the gas price issue of KG-D6 fields owned by Reliance Industries Limited (RIL). The enquiry was also set against the former Director General of Hydrocarbons (DGH), V K Sibal for allegedly planning with the Mukesh Ambani-led company to raise KG-D6 gas field cost. The enquiry, begun in 2009, was closed due to lack of substantial evidence.

The company had sought governmental nod for its field development plan in 2004. The plan indicated a production capacity of 40 million cubic metres per day (mcmd) with a cost of $2.39 billion. Again, in 2009, Reliance had proposed a development plan of raising the production capacity to 80 mcmd with a cost of $8.8 billion.

However, three years back, CBI was involved to solve the matter as the oil ministry got reports of difference of opinion between the then special director Vineet Kumar Gupta and the investigating team. On request of the ministry, a preliminary inquiry was registered in November 2009. The investigation team submitted the initial reports in 2011. During the investigation, the available documents were analyzed by the senior officials of the CBI and the legal experts of the government. In addition to this, the team was comprised of members from other ministries as well which handled the case. The inquiry also involved the then retired Gupta. During the course of the inquiry, Gupta stood firm on his point of view that “no case was made out in the matter”. He raised objections on the “criminality” mentioned by the investigating team and said that the approvals to the company were permitted by the oil ministry itself. The attorney general also supported the views of Gupta when the agency had sent the files for opinion last year. Hence the enquiry was closed after the legal opinion. A senior cop associated with the enquiry said, “The probe has been closed as the allegations against RIL and Sibal could not be substantiated. There was nothing irregular”.

The investigating team had also recommended to register a case under Section 120-B, read with Section 420 of the Indian Penal Code, and read with Section 13(1) (d) and 13(2) of the Prevention of Corruption Act against Sibal for showing undue favor to the company by not levying liquidity damages for incomplete work outlined in the first phase of exploration and instead moving to the second phase. Sibal was also charged that he approved the higher field development cost of the ground with gas reserves and the field services. With the inquiry reaching a legal closure on the basis of lack of evidence, the allegations now hold no firm ground.

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Reliance Retail Riding High On Growth Path

August 1, 2013

The retail arm of Reliance Industries Limited (RIL), Reliance Retail is growing at a high speed. This year, it has already crossed revenues of Rs 10,800 crore and achieved a break-even with an EBITA of Rs 78 crore. It is an achievement for the company while other retail players are struggling in this segment.

Furthermore in the last Annual General Meeting, Chairman Mukesh Ambani said that their retail business would grow rapidly in coming years. He expected that its revenue would grow by 50 percent each year, so that the company achieves its goal of annual revenue of Rs40, 000-50,000 crore. To achieve this goal, the key drivers would be from volume generated by cash-and-carry stores, value formats and high margin specialty formats such as Reliance Trends and Reliance Jewels.

“The bottom line of Reliance Retail will come from its specialty formats, while top line growth will be driven by food and grocery segment,” said Bijou Kurien, President and Chief Executive, Lifestyle Reliance Retail.

Going by the figures, this leading retail chain brand grew at an overall CAGR (Compound Annual Growth Rate) of 33 percent in the last year. Its highly profitable areas turned out to be value format brands like Reliance Fresh, Reliance Super, Reliance Mart that grew at a CAGR of 19 percent and contributing Rs6,100 crore in the total revenue.

Apart from this growth factor, another piece of news that is making industry observers happy is that EBITA has turned positive for the company. EBITA is an acronym that refers to a company’s earnings before the deduction of interest, tax and amortization expenses. “It is happy news that Reliance has turned EBITA positive is definitely an achievement but it is just the starting point. Going up to a sales turnover of Rs 10,000 crore has generated enough volumes for it to break even,” says B.S.Nagesh, Vice-Chairman, Shopper’s Stop.

Any retail investment becomes less viable with the cost of rents that come for its stores. For Reliance, its growing retail business won’t turn out to be an asset-heavy model as it owns some properties of Trends and Footprints. Its cash-and-carry stores are prospering also because other multinational companies in this segment are charged with heavy taxes. This comes out to be an advantage for Reliance that will stimulate its profitability. Today, almost 40 percent of Reliance Retail’s sales come from the food and grocery segment. It is a market norm that food and grocery have never enjoyed good margins, but the company has managed a good balance between its food and non-food formats such as apparel, footwear and jewellery.

Mukesh Ambani had announced an investment of Rs 25,000 crore when its retail chain was launched in 2006. Backed by a rich cash-reserve of RIL, the retail chain will face no major down-turns.

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