Reliance bets on Jio to double sales in 7 years
BUSINESS STRATEGY Ambani seeks to focus on company’s consumer market
MUMBAI: India’s richest man Mukesh Ambani said Reliance Industries Ltd aims to double sales in about seven years, even as the company explores ways to boost profitability of its mainstay refinery and chemicals businesses.
Ambani, however, does not plan to solely rely on refinery and petrochemicals and is placing outsized bets on new consumer businesses to drive growth. RIL has invested about ₹2.5 lakh crore in telecom unit Reliance Jio Infocomm Ltd, through which he wants to venture into e-commerce, healthcare, education and agriculture in the next two years.
“As India starts on its high growth journey to double the size of its economy by 2025, I assure you that the size of Reliance will more than double in the same period,” Ambani told shareholders on Thursday at the company’s 41st annual meeting in Mumbai.
“Our consumer businesses will contribute nearly as much to the overall earnings of the company as our energy and petrochemical businesses,” he added.
RIL currently derives 80% of its sales from refining and petrochemicals. This however, is undergoing a change as the company focuses on consumer-facing businesses. RIL saw operating profit from its consumer businesses rise to 13% of the total in the year ended March 31 from 2% in the previous year. RIL’S consolidated revenue from operations was at ₹4.08 lakh crore last fiscal and net profit at ₹36,080 crore.
Over the past 40 years, RIL has periodically transformed its core business through backward integration. First it was textiles, then it was polyester, Ebit from oil and gas business was negative at ₹1,536 crore in the last financial year KG-D6 will begin gas production in 2020 KG-D6 will reach full production of 30-35 million standard cubic metres per day by 2022
RETAIL
Revenues crossed ₹69,000 crore, up 100% year-on-year Operates Over 4,000 new over 7,500 stores were stores in opened more than during
4,400 cities the year followed by chemicals and then refining. In the past few years, a major lateral shift has happened with focus on telecom, data, broadband and retail.
But, the energy business is now under threat due to a shift from fossil fuels to renewables and Ambani ackowledges that.
“It is our belief that with the rapidly increasing demand for petrochemicals maximising oil to chemicals conversion will play a catalytic role in determining profitability of hydrocarbons businesses of the future,” Ambani said.
“As the world migrates from fossil fuels to renewable energy, we will further maximise this oil to chemicals conversion and RIL’S gas marketing JV with BP will look for opportunities to source and distribute gas in India
TELECOM
RIL has invested over ₹2.5 lakh crore in telecom so far
Capacity utilization of the Jio network is less than 20%
Our consumer businesses will contribute nearly as much to the overall earnings of the firm as our energy and petrochemical businesses MUKESH AMBANI, chairman of RIL
upgrade all our fuels to highvalue petrochemicals,” he said, adding that this upgradation will happen in a phased manner over the next decade. On the consumer side, Ambani’s immediate bet is on optical fiber based fixed-line broadband, which he claimed, offers hundreds of megabits per second of data speeds and will allow RIL to offer smart home solutions.
“The big story for Reliance Jio from here on is going to Fiber Connectivity,” said Mayuresh Joshi, a fund manager at Angel Broking Ltd.
In the coming months, Jio will extend fiber connectivity to homes, small businesses, traders and small businesses. Leveraging on its advanced fiber bandwidth network, Jio will be offering this service in over 1,100 cities and towns across India.
For homes, this could mean ultra HD entertainment, multiparty video conferencing, digital shopping, security cameras, home appliances, voice-activated virtual assistants, lights and switches.