Mr Big Picture

Mukesh Ambani Is Betting On Consumer Businesses To Take Ril's Story Forward.

- Nevin John

The right decisions are always the toughest to make. Billionaire Mukesh Ambani took almost three years to make up his mind about investing in telecom business in 2010. It took another six years to design and build the digital ecosystem for the disruptive foray of Reliance Jio with 4G. India’s most profitable company, Reliance Industries (RIL), has invested nearly 3 lakh crore in its subsidiary Jio so far. But Jio made a profit of 723 crore in its first year of operation on an operational revenue of 20,154 crore. According to the company, it made a profit of 2,124 crore in the first nine months of this financial year on a revenue of 27,732 crore.

The success story is not limited to Jio. While building the 4G network, Ambani made a farsighted investment of 1.5 lakh crore to expand the petrochemical capacity at Jamnagar, Gujarat. It was the rise in petrochemicals margin that offset the sharp fall in gross refining margins (GRMs) in the last five quarters from $12 to $8.80 a barrel. The segment earnings before interest and tax (EBIT) of petrochemicals grew 63 per cent in the last financial year and 64 per cent in the nine months of this financial year. For the first time in the history of RIL, petrochemicals EBIT will overtake refining this financial year.

“Competitive cost positions and integration benefits is core to our oil to chemicals (refining and petrochemicals) business, driving sustained performance even in challenging global business environment,” Ambani recently said. Buoyed by the growth of petrochemicals and telecom, RIL’s consolidated profit grew 20.6 per cent to 36,075 crore in the last financial year, on a revenue of 4,30,731 crore, which went up 30.5 per cent. In the first nine months of this financial year, the profit grew 14.4 per cent to 29,226 crore, while revenue grew 55.6 per cent to 4,69,326 crore.