RIL may enter thermal power, telecom

The end of the non-compete clause between Ambani brothers is hugely positive for Reliance Industries Ltd, which would now look at getting into thermal power and telecom. On his part Anil would mainly focus on growing in the gas-based power space.

Though the two brothers may get into each others core business areas, acrimony will not play spoilsport and the two can have sizeable chunk of businesses divided between them in the common interest areas.

RIL, which is sitting on a huge cash pile with cash accrual to the tune of $5 billion and generates $7-8 billion from treasury operations, can generate cash to the extent of $18-20 billion in the next one year.Since the company has so far failed to make a major acquisition in the field of oil and gas, it now makes sense for it to enter into thermal power and telecom in a big way.Agrees market analyst, SP Tulsian, “It does not make sense for RIL to be present just in oil and gas and petrochemicals. I see them entering into thermal power and telecom, while Anil would mainly focus on gas-based power projects”.

Though the new agreement between the brothers restrains Mukesh to enter into gas-based power generation, it leaves the field clear for him in thermal power. With the government envisaging to award 15 ultra mega power projects, of which three — Sasan, Krishnapatnam and Tilaiya— have already gone to ADAG and the fourth one—Mundra—went to the Tatas. The government is going to prohibit ADAG to bid for more such projects. It makes immense sense for RIL to get into thermal projects and this way the two brothers can carve their niche in this segment.

Since Anil’s growth path is clear in the areas of thermal power, financial services and telecom, the only segment where he would concentrate is gas-based power projects, where the prospects of negotiations for gas supply with RIL now brightens.