Mumbai, June 3: Reliance Chairman and MD Mukesh Ambani today said the country's biggest company by market value aims to be debt-free by the end of this fiscal on back of robust cash balance and expected proceeds from stake sale in gas blocks to British oil major BP.
"With a cash balance of Rs 42,393 crore (USD 9.5 billion), RIL is in a very strong position financially and the company will be completely debt free, net of cash balances within this year," Ambani told shareholders at the company's 37th annual general meeting here today. He said 30 per cent stake sale in 23 oil and gas blocks to BP is likely to fetch Rs 32,400 crore, which will also help in paying off debts.
"All these reflect a robust financial position and a sound balance-sheet, which will help the company finance emerging opportunities," he said.
The company is also eyeing to expand into new business areas, Ambani said.
On the strength of the record turnover of Rs 2,50,000-crore, Reliance posted its highest-ever net profit of Rs 20,286 crore in 2010-11.
The company will receive USD 7.2-billion (Rs 32,400 crore) as BP is acquiring a 30 per cent participating interest in its 23 oil and gas blocks including the currently producing KG D6 block. In addition, performance payments of up to USD 1.8-billion will follow based on future exploration successes.
The funds will help finance new ventures, he said.
The company had an outstanding debt of Rs 67,397 crore (USD 15.1 billion) as of March 31, 2011, against Rs 62,495 crore (USD 13.9 billion) a year ago.
The company is betting big on polyester, petrochemicals, oil and gas, organised retailing and broadband wireless services.
RIL will partner world leaders for entering new businesses in the country, particularly by ramping-up its existing oil and gas and retail businesses, Ambani said. RIL added significantly to its financial strength and its enterprise value has grown to over USD 75-billion, Ambani said.
Though Ambani continues to see big opportunities across the board, he was quick to add that higher commodity and input prices will remain a challenge going forward. The company plans to invest aggressively in its retail business and will launch cash-and-carry format stores to offer numerous national and international brands for small traders across the country, he said.
Asserting that Reliance Retail has already become the largest food retailer in the country, Ambani said that all the speciality formats of the company would attain top positions in their respective segments in the next two years. The petrochemicals business has vaulted Reliance to the global league. "Our decision to double the size of our petrochemical business stems from the confidence reposed by the Indian market," he said.
The recovery of the global economy resulted in a surge in demand for RIL's refined petroleum products. Both its refineries operated smoothly, processing a record 66.6-million tonnes of crude oil last year, to achieve an average utilisation rate of 107 per cent.
Reliance remained the single largest investor in the oil and gas sector in India in the last decade and had the largest acreage amongst the private sector operators in India, Ambani said.
The partnership with BP marks the entry of the first global major into India's E&P sector and that too with a substantial and diverse portfolio of acreages spanning six major basins.
He also said the company will try to sustain and augment production of natural gas at the D6 block in the Krishna-Godavari basin in partnership with BP PLC. Ambani said he expects government approval for its deal with BP Plc in the next few weeks. After government approval, Reliance and BP will "jointly assess" problems of the KG-D6 fields that have seen output dip to about 48-49 million cubic metres per day from 61.5 mmcmd instead of rising to planned 69 mmcmd.
On the company's broadband foray, he said the company would develop its broadband business plans over three to five years. "We are in the process of conceptualising our products and services. It is a once in a generation opportunity to improve the productivity and way of life of the consumers," Ambani said. PTI