Mukesh Ambani surprises RIL shareholders with 1-for-1 bonus share

Oil to telecom conglomerate Reliance Industries (RIL) announced a bonus share issue, a demand shareholders have been making repeatedly at annual general meetings (AGMs).

"I had committed last year that we would reward shareholders at the completion of our investments," Mukesh Ambani, chairman and managing director, said as he announced the board's recommendation for one bonus share for every one held by shareholders, at the 40th AGM in Mumbai on Friday.

Investments made in recent years, he added, would begin generating revenue in the coming months.

Ambani also shared a road map of RIL's growth targets for the next decade. "Reliance@50 will aspire to become - and will certainly become - one among the top 50 companies in the world. I am confident Reliance's own growth over the next 10 years, and our contribution to the Indian economy, will surpass what it has achieved in the past 40 years."

Those holding RIL shares on the record date, to be fixed later for the purpose, will be eligible for the bonus share. The previous bonus issue announced by RIL was in 2009, preceded by earlier ones in 1997, 1983 and 1980. "This will be the largest ever bonus issue by any company in India," Ambani told the AGM.

A significant portion of Ambani's address was on Reliance Jio, the telecom entity, and its latest offerings. However, a clear timeline on significant revenue and profit generation from it did not come. A forecast on the profitability timeline for Jio was an important Street expectation from the AGM.

Ambani said RIL's energy and materials businesses had annuity-like cash flow potential to reach earnings before interest, tax, depreciation and amortisation (Ebitda) of Rs 100,000 crore within the next few years. "In refining and petrochemicals, our goal is to be a fully integrated producer of refining and petrochemical products, serving the Indian and global markets," he said.

The company also looks to replicate the growth seen in its existing business for its new divisions. "Reliance will build, within a decade, new businesses of the same value as our existing businesses, consolidating its position as one of the world's leading value creators," he told shareholders.

Reliance Retail, the company's organised retail arm, will look to target 30 per cent growth each year in the next decade. Jio, he promised, would become this country's largest provider of data service, products and application platforms. RIL will also invest in new sources of energy, aiming for leading positions in renewables.

Regarding ongoing expansion in the energy business, Ambani said the off-gas cracker complex would be fully operational in a few weeks. "The petcoke gasification project at Jamnagar has made significant progress in the past year. The gasification complex is in an advanced stage of commissioning. The benefits of the project will be immediately visible in lower energy cost and higher gross refining margins."

There would also be focus on improving the financial performance of some of its businesses in the media & entertainment and petro exploration & production (E&P) segments. "We look forward to making our domestic E&P business economically viable in the coming years," Ambani said in his speech.

On fixed-line broadband services: "Jio remains well on track to bring world-class optic-fibre connectivity to enterprises, small businesses, homes and public spaces. Most of Jio's infrastructure for providing these services is already in place. This is the next big monetisation opportunity for Jio."

The AGM was held during market hours. Reacting to the news, the RIL stock ended almost four per cent higher and closed at Rs 1,586.20 on the BSE, taking the calendar year-to-date gain to 47 per cent.