Mukesh Ambani shows his hand: RIL has choices

Mukesh Ambani's annual do with shareholders this year passed on a subtle message for everyone. It is this: if there is not enough encouragement in oil and gas exploration , we will put our money elsewhere and create profits .

That means business segments within Reliance are competing for the $14 billion worth of cash reserves and more being generated every month. The best business case will win funding.

The company has recently asked that the price for its KG-basin gas be linked to international liquefied natural gas. The prices for LNG in some Asian markets is as high as $18 per MMBTU, while Reliance sells its KG basin gas for $4.2 per MMBTU. The company is also in several disputes with the government on recovering the costs incurred on this project.

On the other hand in the US, where Reliance has invested almost $3.5 billion in shale gas joint ventures, the price of gas is seeing record lows. It hovered around $4 per MMBTU. The prices there will not improve unless US starts exporting the gas.

At the thirty eighth annual general meeting of Reliance Industries on Thursday, Ambani, chairman and managing director of the company, spoke in detail about two other areas, the longstanding traditional business of petrochemicals as well as the retail sector. These are where money will flow now unless there is some dramatic change in mood in India's oil and gas exploration sector.

In petrochemicals, Ambani spoke about taking capacity up to 25 million tonnes from 15 million tonnes at present and specifically discussed elastomers, which are elastic polymers. Elastomers are used for seals, adhesives and moulded flexible parts.

Ambani also discussed plans for retail. He targeted a five-six fold growth in the Rs 7,500 crore business today to Rs 40,000 crore to Rs 50,000 crore in three to four years. Investments worth Rs 1 trillion (one trillion equals 100,000 crore) have been promised. There's also broadband wireless access, the 4G play, where the company can invest.