The Hindu Business Line : Reliance for inorganic growth to reach global leadership

RELIANCE INDUSTRIES Ltd (RIL) will look at inorganic growth to achieve global leadership in petrochemicals and refining businesses, said Mr Mukesh Ambani, its Chairman and Managing Director, in a communiqué to the company shareholders on Wednesday that was posted on the company Web site. He also promised that RIL shall represent India's best growth story.

"RIL is well positioned to be amongst the largest value creators in the oil and gas space globally," Mr Ambani said.

Sharing with the stakeholders the critical components of RIL's unfolding growth strategy, he said, "In the more matured markets of petrochemicals and refining businesses, we shall continuously aspire for global leadership. We shall also endeavour to be the lowest producers globally".

Mr Ambani identified the criteria guiding the company decisions on the emerging businesses that the company is `seeding' today:

* Identify new businesses with high growth potential;

* Invest in businesses that can scale rapidly and generate superior returns over an extended period;

* Create a differentiated business model and aspire to be the lowest cost manufacturer/service provider, resulting in gaining market dominance.

The RIL Chairman expressed confidence that the company was well equipped to tap the vast opportunities that the country has to offer, banking on its ability to "... identify exciting new growth engines, scale them up rapidly and build size unmatched anywhere." This was possible as RIL generates sizeable cash flows and had considerable execution skills.

"While tapping emerging opportunities domestically, we shall not fail in our endeavour to take RIL global," Mr Ambani said.

The letter is said to be a directional guidance to the shareholders as to where the demerged company is headed in the days to come. The message also seems to target a section of the shareholders who have complained in the past about not getting any chance to participate in growth opportunities.

"Some time in the first half of 2006-07, Reliance Petroleum Ltd proposes to come out with an IPO of approximately $1.1-1.3 billion (Rs 5,000-6,000 crore). This IPO brings out the unique strategy of creating value for our new shareholders at the same time unlocking value for the existing shareholders of RIL," he said.

The project cost of the refinery, to be set up through RIL's wholly owned subsidiary Reliance Petroleum at nearly $6 billion, will be financed through loans of $3.5 billion and equity of $2.5 billion.