Mukesh Ambani disappointed the crowds of shareholders, investors, fund managers and analysts who had expected some big ticket announcements at RIL’s 36th annual general meeting. The past fortnight had been rife with speculation on the Mukesh’s next move — rumoured to be in telecom, healthcare, power and even finance.
The build-up came to a nought and markets also showed their disappointment. The stock that was up 1.4 per cent before the meeting started ended the day down. Stocks of younger brother Anil’s firms were also hit figuring amongst the top losers of the day.
The company, which is swimming in cash and cash equivalent of Rs 21,874 crore, would place Reliance at an advantage in a capital-constrained world.
“It could pursue its organic growth charter and the ability to capitalise on inorganic growth opportunities,” said Mr Mukesh Ambani, chairman and managing director, RIL.
In the power sector, apart from building a powerful presence in the shale gas business, RIL is drawing up plans for mega investments in clean coal-based power generation, hydel and nuclear power projects.
The power business will be one of the growth engines for RIL, Mr Ambani said.
Mr Ambani kept his cards close to his heart when it came to talking about his plans in the advanced communications technology after his acquisition of 95 per cent stake in Infratel Broadband. He merely said that the strategy would be to be “asset light and partnership heavy.”
The retail sector was the only one in which he gave some figures. For the financial year 2010, the retail arm had revenues in excess of Rs 4,500 crores. He expects this to increase tenfold in five years.
Analysts were generally disappointed at the low key AGM announcements after the media and market hype. Even diehard supporters of the RIL stock like Mr S.P. Tulsian said that Mr Ambani talked of projects where it was not required.
For example he said retail would grow 10 times from the Rs 4,500 crore in five years but did not say how he could achieve the Rs 45,000 crore considering the slow pace of growth in three years. He did not even say how he was going to ramp up production from the KG Basin or give a road map on when the shale gas fields will start producing.
Last year Mr Ambani was gung ho about overseas acquisitions but there was no mention of it this year.
Mr Satyender Khatter, telecom analysts at Elara Capital, was of the view that adopting an asset-light approach puts RIL in a competitive position in telecom as it provides a better bargaining power to RIL to secure infrastructure at competitive prices and it keeps the balance sheet light.