Reliance’s $32B capex coming to a close; big on digital business, eyes cable TV distribution

The mega capital expenditure programme of India's top private company Reliance Industries Ltd is coming to a close and the diversified firm expects the full benefit of its investment cycle to start showing up from next financial year, the company's chairman and managing director Mukesh Ambani said on Friday.

Addressing shareholders in the company's AGM in Mumbai, Ambani said the Rs 2,00,000 crore ($32 billion) investment programme would be completed in 12-18 months and he expects the benefits to accrue from 2016-17 or the year ending March 31, 2017.

Ambani gave a broad segmentation of the overall capex and said half of the total went to support its refinery and petrochemicals business, which remains its core. The other half, he said, is used to push the digital business.

The firm, which has businesses spanning petrochemicals, retail, media and telecom, among others, invested over Rs 1,00,000 crore ($16 billion) last year alone.

"These investments will build new capabilities, strengthen our global positions, improve the return on capital and make our existing refinery and petrochemicals businesses among the most competitive in the world...We are also building a brand new business of digital broadband telecom services under the Jio name," he said.

Ambani spent more time talking about the company's initiative in digital field spanning e-commerce as an extension of its existing offline retail business besides upcoming 4G telecom services launch in December (Click here for more on that) than his core energy and retail business combined.

This shows how he is now stressing on the big investments through Reliance Jio as a pillar for future growth.

In the retail business too the company is looking at the second successive year of big expansion.

Reliance Retail, already the country's top retailer by number of stores and revenues, is looking to expand its presence from 200 cities and towns to over 900 by next year, Ambani said. The firm had last year opened 930 stores or five every two days to take its total store count to 2,600 pan India.

It would seek to extend its lead over Future Retail which has announced an ambitious deal to merge Bharti Retail with itself to give a better fight to Reliance Retail and online retailers.

Ambani also talked about expanding its media business with entry into cable distribution through Reliance Jio. Early this year, Reliance Jio had applied for a pan-India licence to become a multi-system operator to enter broadcast TV distribution.

Reliance has a large exposure to the media business through Network18, a holding firm for various TV channels, including CNBC TV 18 and CNN IBN, among others.

On Friday, shares of Reliance Industries closed at Rs 889.15, up 1.36 per cent on BSE in a flat Mumbai market.

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