On July 31, 2002, in the first board meeting of Reliance Industries Ltd (RIL), after the demise of the group patriarch Dhirubhai Ambani, company directors unanimously elected his eldest son Mukesh Ambani as the chairman and managing director of the petroleum giant. His younger brother Anil Ambani became the vice chairman.
The world of Ambanis changed forever since then. The brothers separated the business after a public spat. The legal battles for assets followed until 2010. Then a truce, turmoil, and bankruptcies in Anil's business, and the metamorphosis of RIL as a consumer focused firm.
In the last 20 years, Mukesh Ambani meticulously executed his business plans that catapulted the fortunes of RIL, which is the most valued Indian company with a market capitalisation of ₹16.7 lakh crore. He created many businesses and attracted foreign capital as investments. What are the hits and misses in his 20 years of journey as group head?
Six Hits
Jio's 4G & free voice play: It was Ambani's twin children Isha and Akash who seeded the idea of starting a data focused telecom network. Reliance Jio, which launched in 2016, has completely disrupted the telecom industry and many telecom companies shut shop, including Reliance Communications of Anil Ambani, Aircel and Tata Docomo. Vodafone was merged with Idea Cellular of Aditya Birla group, but failed to compete with Jio and is now neck-deep in debt.
Massive fundraising from Facebook, Google and global private equity investors: When most parts of the world went for lockdown after the breakout of the Covid-19 pandemic in March 2020, Ambani was in talks with investors to attract strategic investments in Jio Platforms Ltd (JPL) and Reliance Retail Ventures Ltd (RRVL). Despite the lack of clarity in the post pandemic business environment, the investors were ready to bet on Ambani's firms, which raised ₹2.4 lakh crore from the stake sale to Facebook, Google, BP Plc, and a slew of PE firms. RIL also raised ₹53,124 crore through rights issues to achieve net debt zero target.
Farm to fork model of Reliance Retail: When RIL launched its retail business in 2006, the anger against organised retailing was at its peak. The protesters with the support of political parties attacked Reliance Fresh stores. Reliance Retail struggled to break the clutter for nearly 10 years. Finally, it toppled the rivals--Kishore Biyani's Future Group; Bharti-Walmart venture, and 'More' of Aditya Birla group, and Reliance Retail emerged as the largest retailer because of Ambani's conviction in the business.
Road map for new energy & NBFC: Ambani said in the 2021 annual general meeting that RIL will invest ₹75,000 crore in the renewable business, mostly for 100GW solar energy capacity creation. It plans to build four giga factories--- one each for photovoltaic panels, energy storage, green hydrogen, and fuel cell system--- at Jamnagar. RIL is now acquiring companies and technologies to complete the project. RIL has set a target to become net carbon neutral by 2035. RIL has also floated a subsidiary Jio Financial Services Ltd for starting non-banking services. The entity will be listed on stock exchanges.
Investing consistently in petrochemicals: Even while RIL was investing heavily to build the telecom business Jio about five years back, Ambani, who is a chemical engineer by profession, was never ready to take his focus out of the petrochemicals business. He invested ₹1 lakh crore between 2014 and 2017 to set up a huge refinery-gas cracker and petcoke gasification unit. It started yielding results when the demand returned.
Construction of second petroleum refinery at Jamnagar: The export oriented refinery commissioned in 2009 near the old refinery has doubled the refining capacity of RIL. It got Chevron as the startegic investor, but the American company exited soon after.
Six Misses
Oil and gas exploration and production: With a dream to become one of the world's biggest oil and gas producing companies, RIL started investments at Krishna- Godavari (KG) Basin about 15 years ago. But the difficult exploration terrain below deep water and the unfavourbale gas pricing mechanism delayed the process. After nearly 10 years of slow moving phase at the E&P front, RIL and its joint venture partner see a turnaround now as prices have been revised. The production is now increasing with the commissioning of new fields.
Shale investments: RIL invested to build a shale gas portfolio in the U.S. about 10 years ago to de-risk its petroleum business when crude prices were rising. But the business failed to turn profitable when crude prices became cheaper than shale. RIL divested most of its assets.
Investments in semi-conductor business: In 2008, RIL had a plan to invest ₹30,000 crore in semi-conductor manufacturing and submitted a proposal with the government. But it failed to materialise. Last year, Reliance Strategic Business Ventures Ltd (RSBVL) came up with a similar plan for electronics manufacturing and formed a joint venture with US-based Sanmina Corporation.
Deal with Saudi Aramco: The Saudi Arabia-based public petroleum and natural gas company has cancelled its mega plan to acquire a 20% stake in Reliance Industries Ltd (RIL) for $15 billion. Consequently, RIL has withdrawn the application with the NCLT for segregating oil to chemicals (O2C) business under the new entity Reliance O2C Ltd. RIL and Aramco had signed a non-binding Letter of Intent in August 2019.
Investments in gas transportation: This was another business that Ambani planned in a big way. As the KG Basin production dipped, the pipeline business failed to pick up steam. RIL sold the assets to Brookfield for an enterprise valuation of ₹13,000 crore.
Brush with bankruptcy: Trevira GmbH, the German textile company of RIL filed for bankruptcy in 2009 after the slowdown in European markets. That's one of Ambani's rarest brushes with bankruptcy.
