Ambani's Giga Moves

Second-generation entrepreneur Mukesh Ambani, chairman of Reliance Industries Ltd. (RIL), built long-term cash-generating assets, including petroleum refineries, a 4G digital network, and a Walmart-like retail chain, in the last two decades. For the next few, he is focused on building four Giga factories with an investment of ₹75,000 crore, which can create the capacity to generate at least 100 gigawatts (GW) of electricity from solar energy.

The unrelenting focus on creating giant, cash-guzzling businesses helped Ambani build RIL as India's most profitable company — it posted a net profit of ₹67,565 crore in FY22, a 27% increase year on year. Thanks to the financial performance, RIL's share price also increased 22% in the last one year (as on August 16, 2022), boosting Ambani's wealth to ₹7,54,149 crore.

Even while putting billions of dollars in expanding his business empire, Ambani, who has foregone his salary for the second year in a row in FY22, hasn't shied away from dipping into his humongous piggy bank for an uber-rich status. The Ambani family, which owns the world's most expensive private residential home, Antilia, in Mumbai, private jets and James Bond cars, added new luxury properties to their fold as RIL bought Britain's iconic country club and luxury golf resort, Stoke Park, for an estimated ₹592 crore in April last year. It has also agreed to acquire a controlling stake in Mandarin Oriental New York, a five-star hotel in midtown Manhattan for $270 million (including debt).

"He scouted for business opportunities in every challenge, whether it is Covid-19 or geopolitical tensions post the Russia-Ukraine conflict," says a senior executive. During the pandemic, Ambani executed large-scale digitisation of processes within RIL. He increased the purchase of discounted Russian crude since the start of the Ukraine conflict, pushing RIL's profits in the June quarter.

Since both of RIL's new businesses — retail and telecom — have emerged as leaders in their respective sectors, Ambani has shifted his focus to learning the emerging trends that will shape the world in the next 5-10 years. He believes global energy transition will change the business landscape in India when the country turns self-sufficient in green and clean energy. "During the lockdowns, he spent time chatting with peer businessmen and experts, reading books and creating core groups internally to ponder on innovations to stay ahead of the curve in the energy business," says another executive.

Eventually, Ambani wants to build the renewable energy business as a cash machine like the twin refineries in Jamnagar, Gujarat. RIL has accelerated global collaborations — especially in technologies to manufacture green hydrogen and storage battery and photovoltaic cells — for building Giga factories. Reliance New Energy Solar Ltd. (RNESL), a wholly owned subsidiary of RIL, plans to invest ₹60,000 crore by 2024 to build one of the largest integrated renewable energy manufacturing facilities globally. The company will also invest an additional ₹15,000 crore in value chain, partnerships and future technologies, including upstream and downstream industries.

Ambani has the blueprint ready to build the Dhirubhai Ambani Green Energy Giga Complex on 5,000 acres in Jamnagar. The two refineries and the petrochemical complex are in the vicinity. The Giga factories will comprise an integrated solar photovoltaic module factory; an energy storage battery factory; an electrolyser factory for making green hydrogen; and a fuel cell factory for converting hydrogen into motive and stationary power.

The next big plan is building a 5G ecosystem. In India's biggest-ever auction of 5G spectrum in July, Reliance Jio cornered nearly half of the airwaves sold with an estimated bid of ₹88,078 crore. RIL wants to ramp up the investments by 30-40% in FY23. The ₹99,472 crore capital expenditure for FY22 was nearly 25% higher than the previous year's ₹79,667 crore.

Ambani's growth roadmap is drawn around three hyper-growth engines — Energy and Materials, Digital Services and Retail. He wants his three children — Isha, Akash and Anant — to take charge of one vertical each. As part of the succession plans, Akash has already taken over the chairmanship of Reliance Jio from his father. More such transitional moves are expected in the days ahead.