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Reliance Industries Ltd discards fresh investments

At a time when the petrochemical industry in India is in dire need of fresh investments and innovation, Reliance Industries Ltd.’s chairman, Mukesh Ambani, has ruled out fresh investments from Reliance Industries for another three years to come! The first indication of this came on September 1st, 2016, when Mukesh Ambani’s address to the shareholders at AGM did not have a word on investment plans. This announcement by Mukesh Ambani has raised a lot of questions like: Why is the company, which has a heavy balance sheet and huge cash reserves of upto ninety thousand crores not making any fresh investment plans? Why has the company which has been aggressive on investing for the past five years suddenly gone silent on investments? The answer could lie in the fact that Reliance Industries Ltd. prefers to follow a pattern on investments. It prefers to invest aggressively for five years and then take a break and consolidate for three years before making fresh investments again. Besides this fact, Mukesh Ambani has made commitments to shareholders for better rewards. On questioning the announcement, company officials said that, “while on the policy front all right steps are being taken by the government, implementation is a different story”!

During the past five years, the investments made by Reliance Industries Ltd. have exceeded the cumulative investments it had made during the previous 35 years! The biggest investment made by Reliance Industries Ltd. was on Reliance Jio where it had invested about 1,50,000 crores and the next biggest investment was in refining and petrochemicals expansion where it had invested 1,10,000 crores. Reliance Industries Ltd. has had a rough run in its oil and gas exploration business, while the refinery journey has been smooth sailing. The strategy adopted for the recently launched telecom business has made its competitors nervous. The investments made in telecom and oil & refinery will start fructifying in the coming financial year and strengthen the company’s balance – sheet further! Read more on Investments.

The petroleum industry in India is in dire need of investments and innovation to further advance the existing technology. Oil extracting and refining techniques have to be made more efficient to reduce our dependency on foreign oil imports. Reliance Industries Ltd.’s decision to not make any fresh investments for another three years is not helping the situation. It is partly because of its policies, partly because of Mukesh Ambani’s promise to his investors and partly because of the government’s inefficiency in implementing its schemes. The government of India should realize that it is not enough to just announce great schemes. It should also implement them effectively to realize its five year plans. Otherwise the economy of India will suffer, established and startup companies will be discouraged from making further investments and nobody will respect the government’s promises. Read more on Startup News

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Reliance Industries Ltd discards fresh investments
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