REINVENTING RELIANCE

In a quarterly video conference with executives in 2012, Reliance Industries (RIL) Chairman Mukesh Ambani started with a warning — “What has brought us here will not take us to the future.” He was concerned that Reliance’s mainstay business of crude oil refining and petrochemicals could lose sheen amid push for renewable energy, electric mobility and growing global trade tensions.

So what should RIL do? About a year back, in 2011, Ambani’s daughter Isha had sowed the seed of a new business, though. Home from Yale University for a holiday, Isha decried poor broadband speeds in India. Until then, even though Ambani had already planned entering telecom by acquiring Infotel Broadband Ltd in 2010, his mind hadn’t quite zeroed in on the huge digital and telecom opportunity due to pent-up demand. Isha’s statements connected the dots.

Ambani concluded ‘Data is the New Oil’. Thus began the relentless transformation of RIL that continues till date. The company took four years to build the digital infrastructure to launch Reliance Jio in September 2016. Today, it’s the country’s largest network with 387 million 4G subscribers. It was in the process of building Jio that Ambani understood how modern retail is intertwined with technology, a realisation that generated an idea to build India’s very own Amazon/Alibaba around Reliance Retail.

In the next five years, while Reliance Retail quadrupled its footprint from 2,621 stores to 11,784 stores, it also created an ideal launchpad for an ambitious e-commerce platform, Jio Mart, launched in 200 cities on May 23.

Thanks to the thrust on these consumer businesses, the company, which was primarily an oil and gas and petrochemicals player, generated 35.1 per cent of its cash flows from consumer businesses in FY20. RIL’s revenue and profit jumped 70 per cent to ₹6.59 lakh crore and ₹39,880 crore, respectively, in this period.

35.1 PER CENT Proportion of cash flow generated by RIL’s consumer businesses in FY20

Veteran investment banker Hemendra Kothari, a family friend of the Ambanis since Dhirubhai’s time, recalls his chat with Mukesh five years ago. The billionaire spoke about progression in digital evolution, future software offerings and business opportunities. “He is a dreamer and foresees changes in human life and society much before time. He is capable of converting dreams into reality,” says Kothari.

So, what is this transformation all about?

Petrochemicals and refining have been RIL’s core for decades (contributing close to 90 per cent cash flows). This is changing. Consumer businesses now account for more than one-third cash flows. Ambani now calls RIL a technology company. But the larger objective behind the transformation is: build three strong pillars of global scale in refining & petrochemicals, digital & telecom, and retail; untangle their financial inter-dependence; and