Questions for case

1. Analyse the corporate strategy of Reliance industries limited. Why reliance has taken such a
route? What are the alternative ways you can suggest for growth?

This tenacity and challenging behaviour of Mukesh Ambani set the firm apart. Instead of
focusing on conventional charge-the-customer for the call, it created an entirely different
portfolio of retail chains. This led to even robust growth of Reliance Retail whose 34% of
revenue in FY20 came from JIO billing and sim card sales (strong network effects). In the
last five years, Reliance Retail has piggybacked on the growth of Jio and quadrupled to
11,784 stores from 2621 stores in 2015. Thus, witnessing substantial revenues from
grocery, lifestyle, and fashion segments. However, with all the success still not being
enough; Mr Ambani is already financing the deal, as we write, to buy another successful
retailer-Future Group founded by Kishore Biyani.

From a business perspective, RIL is conventionally an organisation with 90% of its cash
flows in the past decade coming from the petrochemical business. Something ubiquitous
for the owners of the largest refinery of the world. But in FY20, the firm generated 35% of
its cash flows from the consumer business. This was done by combining the power of 387
million strong 4G Jio Subscribers with its modern retail platforms. Today JPL’s valuation is
more than the start-ups like Zoom, Uber, Twitter that entered way before Jio in the
market. No wonder, it is an organisation which has strategic partners like Microsoft,
Google, and Facebook, three of the biggest firms in the world.

2. What are the strengths and weaknesses of Reliance strategy of acquisitions? Does organic
growth matter more than inorganic? What are the future options available for Reliance for
growth?

Strength

 Reliance Industries is the largest company in India by revenue and market capitalization.
 Reliance Industry has a strong brand name in the market.
 Reliance Industry had a strong financial position.
 The company operates in many industries such as textile, petrochemical,
telecommunication and retail.
 Reliance Company has a strong return on capital expenditure.
 Reliance Industries had a strong market position many of its businesses are leading in
their category.
 Reliance owns Jamnagar Refinery which is the world’s largest private oil refining
company.
 Reliance Industry owns retail businesses which had a strong distribution network.
 Reliance Industries owns Reliance Jio which is India’s biggest telecommunication
company.

Weakness
  Reliance Industry is subjected due to various legal procedures. Sometimes it had to pay a
hefty penalty to the government.
 Reliance had invested very less in Research & Development.
 Reliance Industries had weak financial ratios.

Opportunities

 Reliance can open more plants

 Reliance Industry can invest in the international oil and petrol destinations
 Reliance Jio can launch new offer to its customers
 Reliance Industry can expand its business in more emerging industries.

Threats

 Intense Competition in retail and telecommunication.

 Government Regulation and strict guidelines can interpret operations

Future Plan of Reliance Industry

 Reliance Industry is Planning to Introduce its own E-Commerce Giant, Jio Mart. Jio Mart is
now delivering essential goods in some cities of India.
 Reliance Industries is planning to become a debt-free company in the next 18 months.
 Reliance is partnering with Some International leaders to expand its Telecommunication
and retail business.
 Reliance is planning to create an ecosystem in small merchants by creating Point of Sale
(POS) Solution – Jio Prime Partner POS.
 Reliance is planning to launch JIO Fiber commercial very soon.
 Reliance’ Jio Microsoft joint venture planning to open a world-class data centre in India
powered by Microsoft’s Azure cloud platform.