RIL's Consumer Bet
Fortune India|December 2021
Mukesh Ambani has expanded the Reliance empire by betting big on telecom and retail.
Nevin John

Reliance Industries Ltd.

Revenue ₹5,14,217 CRORE

Profit ₹49,128 CRORE

Networth ₹7,00,172 CRORE

* FIGURES FOR FY21

“I BELIEVE, IN THE NEXT 20 years, as a human civilisation, we will collectively achieve more than what has been achieved in the last 300 years,” Mukesh Ambani told shareholders of Reliance Industries Ltd. during a meeting in 2016.

Little wonder then that the 64-year-old RIL chairman managed to turn the tide during the peak of Covid in 2020, at a time when the entire world was grappling with the raging virus.

The billionaire sealed deals worth ₹292,847 crore — ₹2,39,723 crore of investments and ₹53,124 crore of rights issue — during 2020-21.

At one point, the nationwide lockdown in March 2020 had threatened to jeopardise Mukesh’s plans to make RIL net debt free with equity capital from strategic investors as the transportation fuel and retail businesses virtually came to a standstill.

Mukesh, however, made tactical changes in his strategy by channeling the energy and resources of India’s largest private sector company to to face the pandemic head on. First, he put together a cross-functional team, comprising his confidante Manoj Modi, loyalist Pankaj Pawar and RIL chief financial officer (CFO) Alok Agarwal, to start the negotiations with investors. His twins, — Isha and Akash — too, pitched in.

The results were stunning. As businesses struggled to sustain and survive, Jio Platforms Ltd. (JPL), the holding company of the group’s telecom and digital businesses, announced 14 deals worth ₹152,056 crore between April and July 2020.

The back-to-back deals, which started with strategic investment from Facebook and ended with Google [some of them were even announced on the same day], surprised all. JPL, at a valuation of ₹4.4 lakh crore, sold off32.97% stake.

In the meantime, Reliance Retail Ventures Ltd. (RRVL) announced a 10.09% stake sale, raising ₹47,265 crore from eight leading global financial investors within two months and taking the valuation of the retail major to ₹4.3 lakh crore.

Around the same time, RIL initiated India’s largest rights issue in three tranches. On the investment side, it got ₹7,629 crore from its 49% stake sale in fuel retailing business to BP Plc. Brookfield invested ₹25,215 crore in tower infrastructure investment trust (InvIT) and Abu Dhabi Investment Authority (ADIA) and Public Investment Fund (PIF) invested over ₹7,558 crore in optic fiber InvIT.

The conglomerate reported improved profitability despite Covid and the lockdown shrinking topline. Thanks to the booming data business of Jio, RIL’s net profit rose 25% to ₹49,128 crore in 2020-21. Revenue fell 17% to ₹5.14 lakh crore.

The performance was enough for RIL to lead the stock market rebound. It’s share price increased 130% in five and a half months since the market crashed in March 2020. It became the first Indian company to hit $200 billion in market capitalisation in September last year. Thanks to the company’s 13% weightage on the Sensex last year, the index moved up 40% during the same period.

Working on many fronts at the same time, Mukesh has shifted his focus on building a renewable energy giant. RIL’s new subsidiary, Reliance New Energy Solar (RNESL), is eyeing global acquisitions to enter the segment in a big way.

A Year Full Of Action

RIL executed ₹ 53,125-crore rights issue; exited shale gas business.

BP invested ₹ 7,629 crore for 49% stake in RIL’s fuel retailing business

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