Reliance Industries goes all in

India's largest company is embarking on its biggest spend ever — but investors wonder if its bets will pay off.
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Mukesh Ambani and his two CFOs are placing India Inc's most ambitious bet
<div style="text-align: left;"> Mukesh Ambani and his two CFOs are placing India Inc's most ambitious bet </div>


Reliance Industries is India’s largest private-sector company, run by India’s richest man, Mukesh Ambani. It is so big that it requires not one, but two CFOs. These three men are about to make the biggest bets India Inc has ever seen.

Reliance Industries is primarily an energy company, operating the world’s biggest refinery complex and producing the greatest supply of polyester and yarn in the world. Not content with being an energy and petrochemical giant, however, it also has ambitions in the telco and retail space.

The empire is overseen by Ambani, but he relies heavily on his CFO lieutenants: Alok Agarwal, an old Reliance hand, and V Srikanth, who came on board in 2010, after working at Citi for two decades.

These two chiefs will oversee the company’s funding plans as it embarks on its next phase — the biggest spending drive in the Indian conglomerate’s history.

“We are now on our next phase of growth,” says Srikanth in an exclusive interview with FinanceAsia at the company’s Mumbai headquarters. “We are planning to spend around $23 billion over the next three to four years, which is twice what we have spent in the same period in the past.”

The audacity of their ambitions is belied by the personal manner of the CFOs. Agarwal is the elder statesman.

Srikanth is younger and tall — not Yao Ming sized, but notable. Both are polite but cautious in their dealings with the press, far more reserved than most businessmen in India. The world comes to them, and they play their cards close to the chest.

The plans they outline, however, are pretty spectacular.

Much of this spending will go towards the company’s key money spinners: its petrochemical, refinery and energy businesses. Reliance is building a massive refinery complex in Jamnagar on the northwest coast of India in Gujarat. The complex has a refining capacity of 1.24 million barrels a day, more than any single location in the world.

It is investing a total of $12 billion in three major refining and petrochemical projects, including a petcoke gasification plant, an off gas cracker and an expansion of its polyester plant. The projects aim to drive efficiency, lift margins and boost earnings.

“Their three projects should lead them to incremental Ebitda of $3.4 billion,” says Morgan Stanley analyst Vinay Jaising. “That is a lot of returns. And they are very good at project execution. They are going back to good profit growth, courtesy of these projects being executed over the next three years.”

See the latest issue of FinanceAsia magazine to read the full story

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