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Sitting on $12 billion in cash, Reliance set for consumer blitzkrieg

Plans forays into telecom, retailing, financial services
Mukesh ambani 0Enlarge
Mukesh Ambani, Chairman and Managing Director of Reliance Industries Limited, smiles as he attends a press conference with BP Chairman, Carl-Henric Svanberg and BP Chief Executive Bob Dudley (both not pictured) in central London, on February 21, 2011. (BEN STANSALL/AFP/Getty Images)

India's Reliance Industries Ltd., sitting on $12 billion in cash reserves, is planning a blitzkrieg in consumer-oriented business ranging from telecommunications and retail outlets to financial services, the Hindustan Times reports.

The flagship firm of billionaire Mukesh Ambani, RIL on Saturday reported a 16 percent increase in profits for the second quarter ended September 30, earning around $1.14 billion, the paper said.  The oil and gas oriented conglomerate had $12.6 billion in cash -- which it may well use to make some high value acquisitions in consumer-oriented businesses, according to analysts.

On the cards are aggressively priced computing devices, a chain of hypermarkets and a financial services venture, the Hindustan Times said.

The telecom venture would be modelled on the lines of what RIL didi eight years ago, offering tariffs bundled with handsets priced at as low as Rs500 ($10), before an asset division following the death of founder-chairman Dhirubhai Ambani shifted the telecom business to Mukesh’s younger brother Anil’s ADAG Group. After a cooling period that ended a non-compete arrangement, Mukesh's RIL has entered the area afresh.

In the digital space, RIL subsidiary Reliance Infotel, which had acquired pan- India spectrum for broadband wireless access for high speed data access offering speed up to 80 mbps, also plans to create rich content, applications and services.

In announcing its earnings, the company also said it was finalizing the arrangements with various players to launch 4G telecom services.

In addition, its retail business, which involves a mix of retail and wholesale cash-and-carry trade housed in mega stores averaging 150,000 sq ft each, is ready to launch, the paper said. 

“Our first prototype hypermarket was launched in Mumbai this quarter, with more to follow in the coming months,” Reliance said on Saturday.

RIL has already announced plans to buy out the entire 74% stake of Bharti Enterprises in its two insurance ventures with AXA.

A Mumbai-based analyst said RIL’s entry in the mutual fund and asset management space now appeared a logical next step. 

http://www.globalpost.com/dispatches/globalpost-blogs/the-rice-bowl/sitting-12-billion-cash-reliance-set-consumer-blitzkrieg

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