RNRL may lead ADAG's new forays

The Anil Dhirubhai Ambani Group's foray into the steel, cement and shipping businesses is likely to be through Reliance Natural Resources, the group's fuel management arm.

ADAG has drawn up plans to invest Rs 65,000 crore (Rs 650 billion) in these three new areas over the next five years. The investment includes Rs 20,000 crore (Rs 200 billion) to set-up a 10 million cement plant and Rs 40,000 crore (Rs 400 billion) towards a steel plant in Jharkhand.   

The group believes that the three new lines of businesses fit more with RNRL than with other companies under the group, an ADAG source said.

Anil Ambani, chairman of RNRL, on September 16, told the shareholders of Reliance Infrastructure, another ADAG entity, that the group's foray into shipping, cement or steel would not be through Reliance Infrastructure.

At present, RNRL is engaged in sourcing, supplying and transportation of various fuels along with exploration, production and distribution of gas. With the current turnover of Rs 200 crore (Rs 2 billion), it is not known how RNRL would fund the ambitious expansion programme with an investment outlay of Rs 65,000 crore (Rs 650 billion).  

RNRL is also engaged in a court battle with Mukesh Ambani-controlled Reliance Industries over the supply of gas from the Krishna Godavari basin in Andhra Pradesh. The outcome of the verdict will determine whether ADAG will get 28 million cubic metres of gas per day from the KG basin for its proposed power plant in Uttar Pradesh.

An ADAG source said the group was planning an investment of over Rs 20,000 crore (Rs 200 billion) to create 10 million tonne per annum (mtpa) capacity of cement plants near its proposed thermal power projects.

The first of the greenfield plants will come up near Sasan in Madhya Pradesh, where its group company Reliance Power is setting up a 4,000 mega watt ultra mega power project.

The coal-fired project is expected to generate about 9 million tonnes a year of fly ash, normally a waste product for coal fired power plants that can be used to make blended cement versions.

Further, the company is scouting for large scale limestone mines in India. Coal and limestone are the basic ingredients for making cement and fly ash, along with slag (a bye product from steel plants), which are used for making blended cement versions, said the sources.

They added that RNRL was also finalising plans to set up a 12-mtpa steel plant in Jharkhand with an investment of over Rs 40,000 crore (Rs 400 billion), and that ADAG is close to signing the memorandum of understanding with the state government.

RNRL is also planning to foray into shipping services, primarily to bring coal for its power projects.

A few months ago, Reliance Power's subsidiary Reliance Coal Resources had acquired three mines -- Srivijaya Bintangtiga Energy, Bryayan Bintangtiga Energy and Sugico Pendragon Energy in the South Sumatra area of Indonesia spread over an area of 40,000 hectares for about Rs 2,400 crore (Rs 24 billion).

The group is also scouting for more mines in Indonesia, Australia and South African to fuel its proposed power plants.