Key takeaways from Reliance chairman's AGM speech

Reliance Industries Ltd is firing up its five growth engines to double the group's size by the end of the decade, RIL Chairman Mukesh Ambani said, as its newer ventures catch up with its established businesses.

Apart from its biggest and oldest unit, oil-to-chemicals, or O2C, the Reliance group's major businesses are in retail, digital, media, and green energy and fuels. “Today, three of these engines have a valuation of over $100 billion each, and they will continue to grow even faster,” Mr Ambani said in a virtual address to shareholders at the conglomerate’s 47th annual general meeting on Thursday.

“The new energy revenues in five years will be similar to what the O2C business achieved in four decades.” The O2C business earned ₹5.64 trillion in revenue in FY24, out of the group's consolidated revenue of ₹10 trillion.

1:1 bonus issue

Just before Mr  Ambani began his annual address, the RIL announced its plan to issue bonus shares in the ratio of 1:1, its sixth bonus share issue since it went public in 1980, and the first since 2017. Directors of RIL will meet on September 5 to approve a resolution on the plan, the company said, even as it rose 1.5% on the BSE to reach a market capitalization of ₹20.57 trillion.

In the run-up to the AGM, multiple media reports had indicated a likely announcement on the listing of RIL's retail and digital arms; however, Mr  Ambani was silent about any such plan.

Mr Ambani’s AGM address reflected a renewed focus on the group’s new energy business and digital ventures under Jio, headed respectively by his sons Anant and Akash. Daughter Isha Ambani heads the group’s retail business, which is valued at over $100 billion based on private investments in its shares.

While Mr Akash and Ms Isha updated shareholders on the group’s plans for Jio and retail, Mr Anant did not brief shareholders on new energy, for which Mr Ambani has already announced an investment of ₹75,000 crore over the next few years.

`Jewel in Reliance's crown'

“Our new energy business will be the new jewel in Reliance's crown. I foresee it becoming as big and profitable over the next five to seven years, as our O2C business which we had built over the past 40 years,” said  Mr. Ambani. “And, I am confident that green fuels and AI-based solutions will become long-term growth engines for Reliance,” he said.

Like many other conglomerates, the RIL plans to leverage India’s net-zero transition plan.

The RIL, which primarily competes with the Adani and Tata groups in new energy and aims to get a net-zero status by 2035, is currently building a new energy equipment manufacturing facility in Jamnagar, Gujarat spread across 5,000 acres, named the Dhirubhai Ambani Green Energy Giga Complex. This will manufacture photovoltaic panels, fuel cell systems, green hydrogen, energy storage, and power electronics.

Jamnagar facility to be world's energy capital   

Mr Ambani said by the end of this year, the RIL will start producing solar photovoltaic (PV) modules. In the following quarters, the RIL will complete the first phase of its integrated production facilities which include modules, cells, glass, wafer, ingot, and polysilicon, with an initial annual capacity of 10 GW, said Mr  Ambani.

He said the RIL had started building an advanced chemistry-based battery manufacturing facility with a 30 GWh annual capacity at Jamnagar, with production beginning by the second half of next year. Ongoing developments at the Giga complex will make Jamnagar the energy capital of the world, said Mr Ambani.

“By 2025, Jamnagar will also become the cradle of our new energy business,” said Mr Ambani.

The RIL’s use of new-age AI-based technologies, complete ownership, and automation of “integrated value chains” will enable it to maximise margins that are higher than those of stand-alone, non-integrated players in the new energy space, he Ambani.

Ambani said RIL has begun work on establishing a “fully automated, multi-GW electrolyzer manufacturing facility on the west coast of India, which will be ready by 2026. Electrolyzers play the most critical role in producing green hydrogen, a sub-segment of new energy coveted by Indian conglomerates.

“This Giga-factory will be fully adaptable, capable of supporting various technologies such as alkaline, PEM, and AEM. The facility is built using Industry 4.0 standards and will be expandable in a modular fashion to meet market demand,” said Ambani, while Akash announced an array of upcoming new digital and entertainment services under Jio in the next few months.

Under Jio, RIL offers both telecom and digital services. After the O2C business, RIL’s largest revenue contributors are retail and Jio.

On Wednesday, the Competition Commission of India cleared RIL’s proposed deal to merge Jio’s media and entertainment businesses with Disney + Hotstar, a deal that will create the country’s largest media entity worth at least $8.5 billion.

Doubling down on deep tech

Mr Ambani said Jio's network, with at least 49 core users, carries 8% of global mobile traffic and offers data prices that are one-fourth of the global average and just 10% of those in developed countries.

The RIL is doubling down on deep tech to further extend Jio’s competitive edge after the business clocked revenues of ₹1 trillion with a net profit of over ₹20,000 crore in fiscal 2024, Mr Ambani said.

While aiming to double Jio’s revenues in 3-4 years, Mr Ambani said the RIL is planning to add a million homes to its broadband service every 30 days.

“With this momentum, we are confident of reaching our target of 100 million home broadband customers at record speed. We are also targeting over two crore small and medium businesses…But what excites us the most is the potential to connect India's 15 lakh schools and colleges, over 70,000 hospitals, and 12 lakh  doctors,” he Ambani.

The RIL’s retail arm too aims to double its business by enhancing the range of retail offerings in the coming years.  

“With the strong foundation we have built, I am confident that we will achieve our goal of doubling our retail business in the next 3-4 years,” said Ms Isha. “We are building our presence through an omni-channel strategy across multiple formats, like Tira, Sephora, Kiko Milano, and Blushlace. We are also enhancing our beauty and personal care offerings across our existing formats—grocery, fashion, and pharma—both online and offline. Our investment in Insight Cosmetics is enabling us to create our own brand portfolio,” she said.

Reliance Retail, which owns around 19,000 stores in India, recorded revenues of ₹3.06 trillion and net profit of ₹11,101 crore in FY24. The company acquired Metro India Cash & Carry and raised $2.1 billion in FY24.

Investing in new capacities

Mr Ambani said RIL’s biggest business, which is O2C, will be investing in new capacities to meet demand growth and enhance its financial performance while focusing on sustainability. The RIL, which recycles over 2 billion PET bottles in India, is on track to reach a capacity of 5 billion bottles per annum by next year, he said.

“Over the past year, we faced a complex global landscape, characterised by geopolitical conflicts and weak economic growth in Western countries, leading to subdued demand,” said Mr Ambani.

Mr Ambani said despite the challenges, RIL’s O2C business achieved revenues of ₹5.64 trillion in FY24 and became the country’s first company ever to cross ₹10 trillion in annual revenues.

With the adoption of “deep-tech” and advanced manufacturing, going forward, the RIL, which took over two decades to be among the top 500 companies globally, will earn a place in the world’s Top-30 league soon, according to Mr Ambani.

Key takeaways from Reliance AGM

--Reliance Industries aims to double its group size by the end of the decade through rapid expansion in various sectors.

--Three of Reliance’s major businesses (retail, digital, and media) already have valuations over $100 billion and are expected to grow even faster.

--Reliance is investing heavily in new energy ventures, aiming to match the revenue of its O2C business within five years.

--Reliance announced a 1:1 bonus share issue, its sixth since going public.

--While there were speculations about listing these arms, Ambani remained silent.

                                                     (By arrangement with livemint.com)