Reliance aims to double its value in 5 years as it gets future-ready

Rs 75,000 crore each to be spent on O2C capacities, new energy business

Reliance Industries Ltd (RIL), the country’s most valuable company, on Monday set the tone for the future during its 45th annual general meeting, saying it would aim to double its market value by 2027, the year the company celebrates its golden jubilee.

The company will invest Rs 2 trillion in the roll-out of a standalone 5G network, Rs 75,000 crore in expanding its O2C (oil-to-chemicals) capacities across value chains, and Rs 75,000 crore in new energy as announced last year, RIL Chairman and Managing Director Mukesh Ambani said at the shareholders’ meeting today.

Outlining the company’s plans, Mukesh Ambani said the momentum would be driven by sustained investment in new and existing businesses, including 5G, new energy, oil-to-chemicals (O2C), retail, and fast-moving consumer goods (FMCG).

“Jio will deploy the latest version of 5G, called Stand-Alone 5G, which has zero dependency on our 4G network. With Stand-Alone 5G, Jio can deliver new and powerful services such as low latency connectivity, massive machine-to-machine communication, 5G voice, Edge computing and network slicing, and metaverse,” Mukesh Ambani said at the online meeting.

Mukesh Ambani said standalone 5G services would be rolled out in four metros by Diwali, with a nationwide scale-up planned within 18 months of launch, apart from a push into FMCG and a Whatsapp-Jiomart partnership in new commerce.   

In his presentation to the shareholders, Akash Ambani, who is Mukesh Ambani’s son and is leading Jio, gave a glimpse of 5G services to be launched.

“An exciting possibility of Jio 5G is the ultra-high-speed fixed-broadband. Since you get fiber-like speeds over the air without any wires, we are calling it JioAirFiber. With JioAirFiber, it will be really easy to quickly connect your home or office to Gigabit-speed Internet,” Akash Ambani said.

In new energy, Mukesh Ambani reiterated the commitment of Rs 75,000 crore announced last year. This could be doubled, based on scalability and the evolving environment in the sector.

“We are well on our way to create a manufacturing ecosystem, which will be fully integrated with secure and self-sufficient supply chains. It will be backed by world-class talent and capabilities, built on the pillars of technological innovation through strategic partnerships,” Mukesh Ambani said.

Mukesh Ambani outlined the succession plan for the company, saying his children -- Akash, Isha and Anant -- were confidently taking over the reins across businesses. He also gave clear timelines in green energy, with a 10 gigawatt solar photovoltaic cell and module facility slated to start production by 2024, while green hydrogen production would commence by 2025.

On Reliance Retail, Mukesh Ambani said the subsidiary had achieved the milestone of a Rs 2-trillion turnover and EBITDA (earnings before interest, tax, depreciation, and amortisation) of Rs 12,000 crore.

“Today, Reliance Retail is among the top 10 retailers in Asia. Reliance Retail’s purpose is to serve millions of customers everyday by providing them unlimited choice, outstanding value proposition, superior quality, and unmatched shopping and delivery experience through our physical stores, merchant partner stores, and digital and omni-commerce platforms,” Mukesh Ambani said.

In her presentation, Isha Ambani, who is leading the retail business, said the retail business had a base of over 200 million registered customers, equivalent to the population of the UK, France and Italy, at its physical stores and digital platforms.

“We welcomed 520 million walk-ins to our stores, a growth (rate) of 18 per cent on a year-on-year basis, and 4.5 billion visits to our digital platforms, up 2.3x YoY,” she said.

Shareholders, however, were disappointed with Mukesh Ambani’s road map for the future, in part because specific timelines for a listing of the company’s retail and telecom businesses were not indicated.

Also, Mukesh Ambani did not spell out new plans regarding the demerger of the company’s O2C business, its largest segment, saying that the plan was to integrate the business further.

The next leap

• Jio 5G will offer ultra-high-speed fixed-broadband called JioAirFiber  
• Reliance Retail has achieved a milestone of Rs 2-trn turnover; own brands contribute over 65% to revenues
• RIL to be among top 5 producers of PVC globally; plans to triple existing capacity in India and UAE   
• RIL will work towards establishing 10 GW of annual cell and module capacity by 2024 with REC
• Plans to set up new giga factory for power electronics

The RIL stock closed 0.84 per cent down on the BSE on Monday, at Rs 2,596.80 per share, in an overall weak market, giving it a market valuation of Rs 17.56 trillion.

“RIL’s plan to start a 5G roll-out in four metros by Diwali will increase competitive intensity. And the target of pan-Indian coverage of 5G by December 2023 and the plan to connect 100 million broadband homes would drive growth for Jio over the next three-five years,” Abhijeet Bora, associate vice-president, research at Mumbai-based brokerage Sharekhan said.

RIL also became one of the first companies in the world to broadcast its AGM simultaneously in metaverse, social media and digital channels, coming at a time when technological innovations were expected to spur the next phase of growth for Reliance. Mukesh Ambani also announced a partnership with Qualcomm in his shareholder address at the AGM. Ambani promised to move back to hybrid shareholder meetings from next year.

“We are living in a time when technological breakthroughs are taking place at an unprecedented pace. For businesses that are agile and disruptive, this era offers unimaginable opportunities for growth and value creation,” Mukesh Ambani said.

He also announced the launch of a new gigafactory for power electronics in Jamnagar and said the company would start producing lithium-ion battery packs by 2023. It would also establish a carbon-fibre factory at Hazira, Gujarat, pushing it as a growth lever for its O2C operations in the future.