Reliance AGM Indicators Key Transitions With One Fixed: Household-Led Entrepreneurship

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Long-time observers at Reliance Industries Ltd (RIL) will have noticed the dramatic change the company has undergone over the past decade or more.

Initially, the company decided to move from a business-to-business focus on bulk goods to a consumer-centric one through Reliance Retail and Jio.

Second, it has taken on huge debt (over Rs.300,000 billion) to fund its ambitions, but it has just as rapidly reduced the debt to near zero (net) over the past year just as the markets began to grapple with this enormous burden to care.

Third, from a fossil fuel based petroleum and petrochemical company that is polluting, it is now switching to green energy.

And fourth, it is rapidly evolving from a company that bought technology to build large-scale factories to one that develops new technologies in the digital space.

It uses its pipes (telecom spectrum and fiber) and platforms (Jio Platforms, Jio Mart) to become India’s first mega-corporation to challenge Amazon on domestic terrain. It is still at the beginning of its fifth transformation and presents itself as a friendlier, gentler company that takes care of its employees, its surroundings and its compatriots.

Covid gave her just the right opportunity to make this visible. The blurb for Mukesh Ambani’s speech at the AGM was: “We care – the mantra that inspires new trust.” The company wants to maintain its image at a time when it is an easy political target for the opposition, change significantly.

At the AGM yesterday (June 24th), which was held virtually like last year, Chairman Mukesh Ambani unveiled a new growth vision (read the full speech here) that includes:

#1: Over the next three to four years, Rs. 60,000 billion will be spent building four giga factories to produce and power an evolving solar and hydrogen-based energy system. These include an integrated solar photovoltaic module factory, an advanced energy storage battery system, an electrolyser factory for green hydrogen and a plant for the production of fuel cells for converting hydrogen into propulsion and stationary energy.

# 2: Another 15,000 billion rupees will be spent building a clean energy value chain, including investments in future technologies.

# 3: Around 100 gigawatts of solar energy systems are to be built by 2030.

# 4: In telecommunications, Jio sees the next phase of growth, which involves moving feature phone users to smartphones, by launching the world’s most affordable Android-based smartphones on September 10th.

# 5: A partnership with Google will enable Jio to leverage the Google Cloud to support its 5G launch. JioMart and WhatsApp are testing an integration of their apps to enable e-commerce payments to be seamless.

# 6: As part of the gradual reduction of the dependency on the core product group Oil-to-Chemicals (O2C), the previously announced plan to sell a 20 percent stake in the outsourced O2C business was taken one step further with the appointment of Saudi Aramco’s CEO Yasir Othman Al Rumayyan on the RIL Board as an independent director. Al Rumayyan is also head of Saudi Arabia’s sovereign wealth fund, PIF.

Funding the new vision is the slightest problem facing Mukesh Ambani, who made a whopping $ 44 billion (Rs.324.432 billion) over the past year through a mix of rights issues, strategic equity sales to Jio platforms, and asset monetization. has applied. Facebook, Intel, Qualcomm, and Google were among the major investors in Jio Platforms.

The interesting point about the announcements isn’t the size and scope of Ambani ambitions – that’s old hat – but how it uses Reliance’s traditional strengths to get where it wants.

RIL has always had four major strengths: the ability to scale at the lowest possible cost; the use of economies of scale to reduce costs for consumers and thereby gain enormous market share; borrowing debt well in advance of need and retiring quickly once projects start delivering cash flows; plus great project implementation strengths. But most importantly, the crucial X-factor that delivers for RIL is the entrepreneurial vision, first from Dhirubhai and now from Mukesh Ambani.

Even if entrepreneurial insights are not a matter of course for future generations, Mukesh Ambani seems to make it clear that RIL’s destinies are guided by his family, even if they may employ the best professionals to run their companies and strategies.

This was emphasized again when three family members, twins Akash and Isha Ambani and wife Nita Ambani, spoke at the annual general meeting before Mukesh Ambani made his business plans clear. While daughter and son spoke all 550 words to each other, Nita Ambani spoke extensively over 2,100 words.

While Akash and Isha spoke about the Reliance staff’s special contributions during the pandemic, Nita Ambani spoke about the Reliance Foundation’s contributions in various areas during Covid. The soft side of the sober Reliance was fully on display at the annual general meeting.

This annual general meeting makes it clear – if at all – that RIL and its offshoots will remain firmly in family ownership for the foreseeable future. Nita Ambani was named to the RIL board back in 2014, and twins Isha and Akash joined the boards of Jio and Reliance Retail alongside Jio Platforms at around the same time.

Mukesh Ambani’s other son, Anant, joined the Jio board last year. While Anant did not speak, Mukesh Ambani was referring to him towards the end of his general meeting speech as he spoke about his father’s legacy.

He said, “I have no doubt that the next generation of Reliance leaders, led by Isha, Akash and Anant, will continue to enrich this precious legacy.”

For the record, the word “family” – a reference to the Reliance family, not the Ambani family – appeared 24 times in the annual general meeting speeches of twins Nita and Mukesh Ambani. Just in case anyone misses the point, Nita Ambani also said that Akash and his wife Shloka had a baby boy Prithvi last December.

The unique mixture of family entrepreneurship and professional strength is to be continued.