Archive for June, 2014

Mukesh Ambani may tie up with Anil Ambani to run a Telecom Venture

June 27, 2014

News regarding the telecom industry is a daily occurrence these days. India represents a phenomenal opportunity for every major telecom player and it’s no surprise why, with over a billion people, there’s an incredible opportunity for growth. As such, some of the most ambitious moves in the industry are being made by Mukesh Ambani’s Reliance Jio Infocomm Limited (RJIL).

India’s newest entrant, RJIL is a subsidiary of RIL and has invested over Rupees 70,000 crore for licenses, infrastructure and other resources that will serve as the backbone of India’s first fourth generation (4G) network. One of the key aspects about Reliance Jio has been the deals inked with many other telecom companies such as Bharti Airtel & Anil Ambani’s Reliance Communication. In fact, Mukesh Ambani signing a deal with his younger sibling, Anil Ambani raised a lot of eyebrows. As such, news regarding a possible collaboration between the Ambani brothers is the latest to hit the already booming telecom sector. They may have had their differences in the past and the brothers might be controlling two of India’s biggest telecom companies, but it seems they would have no problems in functioning as one, by entering into roaming or spectrum sharing pacts once rules permit, after having tied up for sharing infrastructure such as towers and optic fibre.

Many experts in this domain feel that future areas of cooperation between Mukesh’s Reliance Jio Infocomm and Anil’s Reliance Communications (RCOM) could entail maintenance and servicing of infrastructure, common network operating centres, data centres, content and retail outlets, apart from intra-circle roaming agreements involving RCOM’s CDMA (800 MHz) and 3G (2100 MHz) bandwidth and Jio’s 4G (2300 MHz) spectrum. The most important thing to note is that upon combining forces, the Ambani brothers will command 2G, 3G and 4G airwaves in India. From the financial perspective, the two companies could benefit from an expanded network with shared capital and operational expenditure over the remaining part of its licence period.

Buying spectrum and infrastructure in areas of gaps for the two firms will obviously prove much more expensive than tying up with one another, especially once bandwidth sharing and trading are allowed, say analysts.

The new government has already liberalised use of airwaves for any technology. So, for example, 800 MHz spectrum, which till now was used only by CDMA operators, can now be used to offer 4G services as well if the airwaves were bought at market price.

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Nita Ambani’s joins Reliance Industries Limited’s Board of Directors

June 20, 2014

Mukesh Ambani’s wife Nita Ambani has joined Reliance Industries Limited’s (RIL) board of directors. Nita Ambani currently serves as the Chairperson of RIL’s not for profit arm, Reliance Foundation and is also the Chairperson of Dhirubhai Ambani International School, one of Mumbai’s best schools. Mrs. Ambani’s appointment means that she will be first woman on the board of India’s largest Private Sector Enterprise. This comes at a perfect time as a new law has been passed requiring listed companies to have at least one woman in the boardroom to boost gender diversity. RIL, in a statement said, “Shareholders of RIL approved the appointment of Nita M Ambani, Chairperson of Reliance Foundation, as Director on the Board of RIL in the AGM held today.”

Nita Ambani takes the place of Ramniklal Ambani who has retired at the age of 90. Ramniklal Ambani is the elder brother of Reliance Industries’ Founder Chairman, Dhirubhai Ambani. The RIL Board is chaired by Mukesh Ambani, Dhrirubhai’s eldest son. In addition to the Ambani family, the board also comprises of Mukesh’scousins, Nikhil R Meswani and Hital R Meswani. The two key members of the board not to hold any blood relations with the Ambani’s are PK Kapil and PMS Prasad, who was the man in charge of RIL’s ambitious KG-D6 project and has recently taken over as an important executive in Reliance Jio Infocomm Limited (RJIL).

Mukesh Ambani, Chairman of the Board was quoted as saying, “Nita has been engaged in several initiatives that have strengthened Reliance, right from building the world-class township and the ecological development at Jamnagar, next-generation office campuses, designing customer touch points of Reliance Retail, healthcare initiatives, successfully setting up and running institutions such as Dhirubhai Ambani International School and Mumbai Indians to, most importantly, managing Reliance Foundation,” on the appointment.Welcoming her, he said Nita, “as an accomplished individual”, will add significant value to RIL.

Nita Ambani, gracious as always, said she took the position with a sense of humility and responsibility. Mukesh Ambani’s wife has been the face of many key CSR initiatives taken by RIL in the last few years and is no strangers to key RIL personnel. “RIL has always aimed to better millions of lives and my mission will be to bring speed, scale and social contract to RIL’s larger mission. I accept this responsibility as a tribute to millions of RIL stakeholders, as well as to my tireless colleagues at Reliance Foundation,” she said.

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Reliance Foundation starts a new school in Navi Mumbai

June 12, 2014

The Dhirubhai Ambani International School in Bandra-Kurla Complex, Mumbai has been regarded as one of India’s best schools. With skilled, experienced teachers and an incredibly diverse curriculum, the school has gained a great reputation among established Universities both, India and abroad, educationalists and parents & students alike. One criticism of the school has been its location in Bandra-Kurla Complex which unfortunately meant that it was a far travel for suburban school-going children. Those fears have been put to rest with the inauguration of Reliance Foundation’s first school in Navi Mumbai. This school will be based out of an eight-storey complex on a two-acre campus at sector 14 in Koparkhairane. The school, which has admitted 450 students, will follow the CBSE curriculum.

One School, Multiple Campuses:

Education has become one of the highest priorities for Indian parents. In fact, parents are spending more than ever to ensure that their children get quality education without any compromises. As a result, many iconic schools have started to branch out into the suburbs. In Mumbai, prominent schools such as the Podar group of schools, Jamnabai Narsee, Cathedral & John Connon School, etc., have kicked-off the process of acquiring land and collaborating with other local institutions to offer education to children based out of suburbs. Nita Ambani, when asked about the new Reliance Foundation School in Navi Mumbai was quoted as saying, “This is, in fact, our 13th school since I took the initiative of starting our first school at Patalganga in 1992.” Nita Ambani, in fact has been involved in the education sector for some time now. “Education is all about igniting young minds and enabling them to attain their fullest potential. At Reliance Foundation schools, we lay special emphasis on value-based education, sports and overall development of students. That is why the teacher-students ratio is kept at a healthy 1:20 so that all children get proper attention in class,” said Ambani.

The new school at Navi Mumbai has started functioning with classes up to Grade 8. There are plans for this to go up to Grade 12 in the near future and enable students to directly seek admission for their undergraduate courses. The two computer centres have 72 computers with independent workstations for every child. From lower KG to fifth standard the annual school fee is Rupees 57,800 per head, and from sixth to eighth standard it is Rupees 64,000.

An interesting thing to note is that Reliance Foundation has taken special care to ensure that the weaker students in class have enough of additional teaching so that they don’t fall back. . “For relatively weaker students, special additional classes will be arranged in the school itself,” added Mrs. Ambani. On the opening day of the school on Wednesday, Ambani was seen interacting with the kindergarten students and also held a storybook reading session in one of the KG classes.

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Relief for RIL & ONGC – Govt., Likely to Approve Higher Gas Prices

June 9, 2014

The Oil & Gas sector in India isn’t the most promising of the lot. Add to this the crippling shortage of gas the country faces and the cringe worthy fact India still imports 25-30% of its needs at $12-15 per million British Thermal Unit (mmBtu). On Friday 6th June though, the Ministry of Petroleum, a core part of the Government of India recommended a hike in prices paid to local suppliers such as ONGC, Reliance Industries (RIL) and Cairn. The move is in keeping with the December 2012 recommendations of the Rangarajan committee. Based on the formula, today’s price will be in the $8.50-9 per mmBtu.

The approval for raising these prices has been pending since the start of year when the UPA was in charge. However, with the elections, things obviously got delayed. The likely approval and as such, implementing the Rangarajan formula is the top item of the presentation to be made by the petroleum ministry to Prime Minister Narendra Modi any time over the next few days. Insiders remain tight-lipped about the fact that the petroleum ministry may have to go to the cabinet.

The Biggest Beneficiary – Govt., of India:

The rise in gas prices when first suggested by the Rangarajan committee surprised a lot of people and popular perception was an imminent price rise with respect to various commodities. Also, some elements have been responsible for suggesting that this will raise electricity and fertiliser prices. This is not true at all! For one, the biggest beneficiary of the rise in gas prices will be the Government of India. The Centre stands to gain more royalty/cess and hence, can subsidize the affected sectors such as electricity.

Also, India’s gas imports are estimated to rise from the 25-30% levels now to 42% in FY17. Even though GAIL’s gas from the US is priced at the Henry Hub price of $4.50, once liquefaction, degasifying and transport costs are added, the price will be $11-12 per mmBtu.

Benefit for Local Players:

At the end of the day though, the government and any entity involved in such a decision-making process understands that raising the gas prices to $9-10 will be cheaper than importing gas, which is the only other alternative. A study by global consulting firm IHS Cera says 85% of India’s natural gas is viable only at prices above $10 per mmBtu — ONGC, for instance, has asked for a price of $13 if it is to develop its Mahanadi block. Even then, there is no sign of complaint from RIL about the $8.5 suggested price.

The other benefit is that of increased capital. If the gas price hike is approved, an investment of $15-20 Crores can be expected over the next few years. In fact, RIL is again leading the charge in this case. The Mukesh Ambani owned company has committed to invest $8-10 billion over three to four years.

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