Peer Group Learning Programme

on

RELIANCE INDUSTRIES LIMITED

In partial fulfilment of the requirements for the award of the degree of

Masters of Business Administration

Submitted by:
Karan Mangwani A012

Shrey Tekriwal A020

Kritika Baheti A025

Radhika Aggarwal B023

Isha Jain B029

Under the guidance of

Dr Naresh Poturaju

YEAR 2020
PGLP_RELIANCE INDUSTRIES LIMITED

DECLARATION

We the undersigned, students of MBA hereby declare that the PGLP project titled “RELIANCE
INDUSTRIES LIMITED” which is submitted by us to PDSE & FBM, NMIMS, Mumbai in
partial fulfilment of requirement for the award of the degree of Masters of Business
Administration (E&FB) has not been previously the basis for the award of any degree, diploma
or other similar title or recognition, elsewhere.

Mumbai ​ Sign of students

Date : 02.11.2020 Karan Mangwani

Shrey Tekriwal

Kritika Baheti

Radhika Aggarwal

Isha Jain

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ACKNOWLEDGEMENT

We are extremely thankful and pay our gratitude to our mentor Dr. Naresh Poturaju for his
valuable guidance and support throughout the course of this project.

We are taking this opportunity to express our appreciation to those who have helped us, directly
or indirectly, throughout the PGLP project. We are grateful for their support, invaluable
suggestions, constructive criticism and friendly advice. We are thankful to Dr. Naresh Poturaju
for sharing his true and enlightening thoughts on a variety of project related issues.

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TABLE OF CONTENTS

S. No. Title Page No.

1 Introduction 6

2 Company Profile 10

3 Decoding the business model 16

4 Recognition 20

5 Sustainability 22

6 Addressing Setbacks 25

7 Perception of the Company 28

8 Current Challenges 31

9 Future Prospects and Pipeline Projects 33

10 Suggestions 35

11 Conclusions and Learnings 37

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EXECUTIVE SUMMARY

The Reliance Group was founded by Dhirubhai H. Ambani, is India's largest private sector
enterprise and world’s leading fastest revenue generating company, with businesses in the energy
and materials value chain. Reliance Industries Limited (RIL) is a highly diversified group with
businesses in various sectors like oil and gas exploration, petroleum retail, consumer products,
petrochemical and refining and textile products.

Reliance’s vast portfolio of products and services tries to satisfy almost all the needs of people
on a daily basis, across economic and social platforms. With the world’s largest refining plant in
Gujarat of 1.24mbpd capacity, Reliance Petroleum has a network of more than 1,300 fuel retail
outlets spread across the country. Moreover, its segment revenue from oil and gas stood at Rs
3,211 crore (US$ 455.53 million) in FY20.

14 years ago, RIL started its journey towards becoming the top business in the retail sector. Its
retail chain covers approximately 7000 cities and towns with over 12000 stores making it one of
the fastest growing retail chains in the world.

Reliance's product portfolio makes it a very integral part of the indian household. By launching
Jio they join the Industrial Revolution 4 at the very forefront. Their digital network connects over
half a billion people. They have strategically designed and invested in a complete network
solution that truly connects everyone everywhere.

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INTRODUCTION

Reliance Industries Limited, the India’s most profitable company and the top contributor to
India’s GDP, had imagined itself as the top company in India at its very inception, from the start
Dhirubhai Ambani was clear that this was not an ordinary company but a company that will
establish Indian business.

Dhirajlal Hirachand Ambani, born in a poor family in a small village in Gujarat, studied only till
10th class, having 300 rupees as a starting salary changed the Indian way of doing business. He
went on to become the Indian industrialist making petrochemicals, communications, power and
textiles conglomerate, Reliance Industries, the biggest exporter in India and the first privately
owned Indian company in Fortune 500. This was no miracle that happened overnight but was
constant determination, hard work, effort and time which was invested in it.

At a young age of 17, Dhirubhai went to Aden to learn and earn. He started his career as a clerk
at A. Besse & Co., the largest transcontinental trading firm in east Suez in the 1950's where he
learned trading, accounting and other business skills. From there itself he dreamed of becoming
a businessman and started working for it there and then by making contacts and establishing a
network with influencing personalities.

After returning to India in 1958, Dhirubhai started a textile business with his cousin under the
name Reliance Commercial Corporation where they exported spices and rayon to Yemen and
imported polyester. He setted up his first office in a very small area in Masjid Bunder having just
basic necessities. At that time also the business model followed by Dhirubhai was of ‘Low
Margin, Greater Volumes and Best Quality’. Soon the business expanded into making different
types of yarns and was scaling with increased capacity. Dhirubhai Ambani was a risk taker on
the other hand his partner, Champaklal was risk averse which led to breaking their partnership.

A smoothly running busing business faced a problem of funds and investment to which he
strategized and developed a plan to offer an opportunity wherein the loss is completely bared by
him and the profits are distributed between the investor and the firm. Dhirubhai offered a

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staggering rate of interest and gave bonus over and above to its shining investors, which led to
increased trust on the firm from the market.

The business was growing at a faster pace than ever with funds readily available, Dhirubhai
ventured into setting up his own factory of synthetic textiles. This was his first foray in backward
integration. While the factory was running smoothly he faced another problem with the
acceptance of his product in India as wholesalers shunned him in the fear of big mill owners. To
which Dhirubhai decided to go to the retailers himself and offered his knits to them. Here he also
applied his policy of making the customer (retailers) feel safe and build trust in them to which he
asked them to pay only if they were able to sell, whenever and whatever they wanted. This
worked in favor of Dhirubhai, retailers started pushing his products and soon dealt only in
Vimal, the Reliance fabric.

Continuing the policy of backward integration and diversification, Reliance ventured into
petrochemicals, power generation and plastics. He incorporated a private limited company under
the name ‘My Nylon’ in 1973 and later created ‘Reliance Textiles Industries Pvt. Ltd.’ in 1976,
which later amalgamated with ‘My Nylon’. They were selling various products under different
brand names which emphasized on the need and importance of branding at the initial stage.

In 1977, Reliance became public listed due to the shortage of funds as the nationalized banks
refused to finance him. When the company launched its IPO though people were not fully aware
of the share market they wanted to be a part of Reliance which led to over subscription as more
than 58000 people invested owing to handsome dividends the company offered and the founder’s
charisma and vision. In 1983 they started getting international funding through offering
international IPO’s, to which they collected two billion dollars at that time. They changed the
name to ‘Reliance Industries Limited’ in 1985 from the previous one of ‘Reliance Textiles
Industries Ltd.’.

In 1991, Reliance commissioned the petrochemical unit to manufacture HDPE and PVC in
technical collaboration with DuPont and BE Goodrich respectively. In 1994 they ventured into
telecommunication in a joint venture. By the year 1995, Reliance became India’s largest Pvt.
Company. The RIL achieved its distinction by becoming the first company in the country to
undertake a security audit in the interest of its investors.

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There were few rules which Dhirubhai and his company Reliance Industries abide by then and
now :

1. Information and Awareness- Gather information about governments and politics (local, state,
central and international), products, consumers, markets, people and competitors.

His formula was to quickly gather, process, and analyze information and disburse it to his
subordinates when and where required. Through the information, he was able to find new
opportunities.

2. Opportunity- Through the information he had, he would convert it into profit-making

opportunities. According to him, "There is no invitation for making profits." You have to find it.

3. Expertise- The company formula is to no matter where they are currently, just work there.
Master that business, accumulate the same energy and then leap onto another field.

4. Efficiency- Timely completion of all the projects with constant monitoring and techniques.

5. Think Big. Think Global. - The vision of the company was focused on being the best whether
in quality, workplace or at global level.

6. Employee Centric- Reliance has always known to employ the best, top ranking people from
the fields and considers human resource the most important one.

7. Take care of your Shareholders- As we earlier read that Dhirubhai Ambani always took care
of his shareholders by paying them handsomely and rewarding them for their trust, by paying
bonuses and issuing rights in addition to the regular dividends.

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Mission, Vision and Values

Mission

❏ To give the best and the most value-adding advice within their advisory expertise areas.
❏ To be an independent sparring-partner and to provide astounding guidance for clients
within their advisory expertise areas

Reliance’s activities will be of benefit for both - clients and for collaborating partners and
employees.

Vision

❏ To be clients’ first call and desired partner within their advisory expertise areas
❏ To constantly exceed their client’s expectations for professional and value-adding advice

Objective is long-standing and trustful client relationships created via excellent advice and
service.

Values

❏ Quality: They don’t compromise – and have passion for providing the best quality
❏ Innovation: They are innovative and always wish to enthuse their clients
❏ Ambition: They set high goals and push to achieve the best results
❏ Honesty: They are honest towards clients, also when it may be repulsive to hear their true
advice.
❏ Integrity: They keep their word, take care of confidentiality, and maintain high level of
integrity

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COMPANY PORTFOLIO

Petroleum Refining and Marketing

The Reliance Jamnagar manufacturing division is the world's largest refining hub where a wide
variety of crude oils are processed and a range of petroleum products are produced for exports
and supply in the Indian market.

Reliance’s highly integrated petroleum plants and processes, supplement this business's
increased operating efficiencies and productiveness. Moreover, the location of their plants along
the west coast of India, offers the advantage of low transportation costs and proximity to
markets.

Products

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Textiles

With their manufacturing division at Naroda, Reliance supplies premium finished fabrics to over
58 countries and a number of prestigious brands under the brand of ‘Vimal’.
Even so, in 2012, RIL decided to enter into a new joint venture with Ruyi Group, a Chinese
textile firm, with 51% stake, however, the sale was called off due to lack of buyers and a slow
market.

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Media and Entertainment

In February 2020, Reliance took the decision of making Network18 an integrated media and
distribution company, including cable businesses of Den and Hathway. This venture involves
giving away 191 shares, 92 shares and 78 shares of Network18 for every 100 shares of Den,
TV18 and Hathway respectively. This would even lead to a reduction in Reliance’s holding in
Network18 from 75% to 64%.

Network18 consists of 56 channels in India spanning news and entertainment and an additional
16 international channels.

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Digital Services - JIO

Jio Platforms Limited (Jio) aims to create digital solutions at the highest quality and affordable
prices. With its services spread across various platforms of digital commerce, connectivity,
manufacturing, media and gaming, financial services, agriculture, education, healthcare and
smart cities, Jio has made investments for more than US$50 billion since its inception.

Reliance’s vision is to combine Jio’s leading digital apps and other digital ecosystems along with
India’s #1 high speed connectivity platforms.

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Reliance Retail

Reliance Retail is the retail initiative of the group and a base of their consumer facing businesses.
It was started in 2006 and has grown to cater to millions of customers, thousands of farmers and
vendors.

Reliance Retail has adopted a multi-prong strategy and operates neighbourhood stores,
supermarkets, hypermarkets, wholesale cash & carry stores, specialty stores and online stores
and has democratized access to all types of products and services across all segments for all
Indian consumers.

There are over 45 subsidiaries and divisions of Reliance Retail. Following is the list of major
divisions:

1. Reliance Fresh
2. Reliance Smart
3. Reliance Digital
4. Reliance LYF
5. Reliance Jewels
6. Reliance Trends, Trends Footwear, and Reliance Living
7. Reliance Market and Reliance Market Wholesale Cash-n-Carry
8. AJIO
9. Hamleys
10. Jio Mart
11. Shri Kannan Departmental Store
12. Future Groups
13. Netmeds

Reliance Retail has emerged as the partner for international brands and has established exclusive
partnerships with many revered international brands such as Armani Exchange, Burberry, Canali,
Pottery Barn, Diesel, Superdry, Hamleys, Ermenegildo Zegna, Marks and Spencer, Paul &
Shark, Brooks Brothers, Steve Madden, Grand Vision and many more.

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Reliance Retail has become the first Indian retailer to cross more than 10,000 stores. It currently
operates 10,415 retail stores in over 6,600 cities covering an area of over 22 million sq ft as on
31st March, 2019.

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BUSINESS MODEL

Reliance Industries is a very diverse conglomerate with its subsidiaries spread in almost every
sector in India with approximately 350 companies under its umbrella. however , the ownership
stakes range anywhere from 40% to 100%. Their business is spread across 6 major sectors
namely:-

● Digital Services

● Retail

● Petro Chemical

● Oil and Gas Exploration

● Media and Entertainment

● Refining and Marketing

Traditional Business Model

Reliance from the start has had a very extravagant approach of doing business. They have very
successfully been able to raise capital through sources like bank debt, public offerings and
foriegn investments to commission the biggest and the best set up in India. By doing so they
have been able to gain strong competitive advantage and capture significant market share. Still to
this day they use this method to set up new businesses and kill competition.

Digital Services

India lacked a pioneer in the telecommunications sector as the people in the country were
unaware of its utmost needs. Affordable Communication services being such a necessity was not
being offered till the time JIO was launched in India. The consumers lacked the knowledge of its
importance while the world was moving ahead with it.

While telecommunications was a sector that excited Muskesh Ambani, he has had a plethora of
problems to tackle. Like lack of infrastructure, semi strong competition, loose laws and unaware

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users. To successfully solve these problems they raised a significant amount of capital. They
used the capital to acquire 4G spectrums from auctions and they also managed to use R Com’s
spectrum. Collectively they were able to score the maximum spectrum in all the 22 circles in
India. This gave them an edge to fight with the existing telecom oligopoly. While launching, they
decided to distribute their service for free. This helped them in many ways. Firstly, they were
able to attract millions of users to their network, secondly, they severely hurt the competition
and lastly, this move allowed them to grab attention across the nation by simply using the BUZZ
word “FREE”. Free is India’s favorite word and reliance used it to the maximum. They launched
a basic phone which was again free but the catch was customers had to pay a refundable security
deposit of Rs 2500 only. The phone was targeted towards rural users. While the scheme worked
excellently, it also provided them a source of interest free capital to use while they were
aggressively distributing everything for free.

They have also aggressively acquired several companies to maximize operating efficiency and
eliminate the time needed to set up a new business. Their major acquisitions under the Jio banner
include Saavan, Hathway (for its fiber line), Den network and various other tech based firms in
AI, Big Data and IoT companies. They acquired these companies to enhance their overall digital
network to capitalize on their world class network infrastructure. Moreover, India majorly lacked
initiatives in these fields and Jio quickly grabbed the opportunity.

Petro chemical, Oil and Exploration, Refining and Marketing

Along with no existing major player in the market in this sector, Reliance found itself capable to
enter into this market and be the leader in the future. Only government companies existing in this
sector was an advantage for them.

In a very Reliance way they raised capital to commission the world's largest refinery in
Jamnagar. The scale of the plan was so big that they inherently gained a huge price and
competitive advantage. The vision of the project could not be met using means like acquisitions
or mergers. They tried to innovate their distribution by offering extra service like free windshield
cleaning, welcome music that automatically started playing when a car entered and top quality
petrol/diesel. However, despite enjoying economies of scale they had a very difficult time

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competing with PSUs because they were being provided subsidies while reliance wasn’t. Soon
they had to close down their Gas stations across the country because of high distribution costs.
From 2016, when crude oil prices were made to free float according to the international market,
they started strategically reopening them. They have a very wide product portfolio ranging from
chemicals used in polyester making, tyres, healthcare, exports and much more. This helped them
sustain their business while they could not keep their Petrol Pumps open.

Moreover, during this time Reliance started pivoting from Petrochemicals to Digital Services.
Therefore, it made sense for them to divest from their legacy business to deleverage so that they
could concentrate more on the new OIL which is the Internet.

Common Theme

Reliance has been very proactive to acquire a fully running business to suit its needs. This
strategy helps them aggressively expand into new sectors and significantly cut down the time
required for setting it up from scratch. For example: by acquiring hathway they were able to get a
ready fiber network which allowed them to quickly launch and test their Jio Fiber broadband
network. It can also be seen in The Future Group deal allowing them to gain access to an
additional 295 stores across India and increasing their current presence to 1092 stores in total.
This can also be seen in its Media enterprises also like Viacom 18 is a joint venture between
Reliance Industries and Network 18. They have also acquired a 25% in Ekta Kapoor’s company
Balaji Telefilms. Since the launch of their digital network they have rigorously integrated their
traditional businesses with it. Like they have created a virtual network for Groceries via Jio mart.

They can successfully pull off a strategy like this because they aim for the masses. They use
extremely affordable pricing to attract new customers. Their sheer scale of business allows them
to earn significant operating profits and it also damages the competition. To reduce the amount
of debt they attract fundings from foreign at very lucrative valuations. As recently seen
companies like facebook, google and several other private equity investment firms have invested
heavily in Jio. Similarly, there are ongoing negotiations between Reliance and Saudi Amarco to
sell 20% stake of its Petrochemical arm. Furthermore, this theme can also be seen in Reliance
Retail where KKR investments, Silverlake and many more firms have investment capital. To de

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risk their portfolio of acquisitions, they invest and acquire companies in many companies to
reduce the chance of it failing.

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RECOGNITION

Industry firsts

1. Highest market capitalization

2. Biggest telecom service provider and cheapest in the world
3. Largest refinery in the world
4. Largest retail chain 1092 stores across india
5. Biggest AGMs in the world
6. Successful 5G trials with Huawie

Initiative

1. Biggest exporter of mango (to reduce the pollution from its refinery)
2. Jio- Facebook deal to support over 3 cr local vendors
3. Rural transformation
4. Alliance for Saving mothers and Newborns (ASMAN) joint effort with Tata Trusts, MSD
for Mothers, Bill and Melinda Gates Foundation and United States Agency for
International Development
5. Reliance Foundation Hospital and Research centres
6. Dhirubhai Ambani Scholarship Programs
7. Sports development
8. Disaster response
9. Digital india

Best practices

1. Effort of make RIl debt free (attracting foriegn investment)

2. Timely bill payments and economies of scale

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3. Aggressive acquisitions and backward integration

4. Consistent dividend payout
5. Best in class quality at the cheapest possible price
6. 1.4 lakh people employed through Jio

Innovations, Research and Patents

1. Successful 5G network infrastructure

2. Low cost anti coking and sulfiding additive
3. Waste plastic to road
4. Waste to wealth (biomass and organic waste converted to fuel)
5. Low cost COVID 19 test kits
6. Jio krishi app (helps farmers make decisions based on data)
7. Big data and Cloud computing (setting up data centres across India with microsoft loaded
with state of the art computing)
8. DOT KYC compliant AI, machine learning, haptik applications

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SUSTAINABILITY

RETAIL

Compared to the global giants, Walmart and Tesco, Reliance Retail provides almost triple the
enterprise value to EBITDA ratio than Tesco and double than that of Walmart. The high ratio
increases the value the investor sees in Reliance. Additionally, with the population of India
spending more on merchandise consumption than on services, investors are attracted to see
growth in the consumer product industries.

Reliance retail, being a part of a big conglomerate, enjoys an upper hand against its retail
competitors in India like DMart, Shoppers Stop.

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According to a report, JioMart is foreseen to take over a major stake of online grocery in India,
nearly half a million, which is expected to grow into 5 million orders per day by 2024. Further,
with Facebook and Google investing billions in Jio, also helps the retail arm of Reliance to gain a
competitive edge in the market.

Reliance Retail has not only acquired a stake in the online pharmacy Netmeds and lingerie
retailer Zivame, but is also looking to close the acquisition deal with the company which runs the
chain of Big Bazaar stores all over India, Future Retail.

PETROLEUM

In 2019, Reliance’s per outlet turnout at 342 kilolitres per month was nearly double of the petrol
pumps operated by Indian Oil Corp (IOC) and Bharat Petroleum Corp Ltd (BPCL). With this,
Reliance has achieved the number one position in terms of revenue, profit and market
capitalisation.

Further, with focus on customer satisfaction and improved services and due to the superior
product mix and high asset utilisation of Reliance’s oil refining plants, it showed an 11% and
15% growth rate in diesel and petrol sales as compared to the industry growth rate of 0.2% for
diesel and 7.1% for petrol in the year 2019.
Moreover, the sales of its Aviation Turbine Fuel (ATF) also went up because of new customer
acquisitions, increased share from existing customers, improved logistics and optimisation of its
supply sources.

TELECOM

After Jio hit the telecom industry in 2016 with free calls and cheap data packages, only Airtel
and Vodafone Idea were left to compete with the company. However, now Vodafone Idea is also
cutting back coverage to save expenses and might rely on the government to stay in business.

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In the last couple of years, investments from Facebook, General Atlantic, KKR & Co., Silver
Lake Partners and Vista Equity Partners have helped Jio raise more than $10 billion. This led to a
huge profit in 2020, valuing Jio Platforms Ltd. at more than $65 billion as against Airtel’s $40
billion market value.
In 2019, Airtel also suffered a loss by charging for the fees while holding down tariffs in an
attempt to reduce the customer shift to Jio. However, it is often said that ​“There will always be
room for two operators” ​as on one hand, Jio heads in absolute numbers, on the other hand, Airtel
leads in terms of high-bandwidth and high-value customers.

RELIANCE DIGITAL

There are four key focus areas of Reliance Digital, namely; store ambience, affordability, ease of
access and technology assistance by experts.

By being the only retailer which offers its services both in-store and at home through its own
service arm-resQ, Reliance Digital has become the leader in India’s electronics’ retail. It has
gained an edge over its competitors, like Croma, by ensuring round the clock consumer
experience and providing tech assistance across all products and brands, both at home and in
store, with the help of the team of resQ experts.

E-COMMERCE

Even though AJIO, the digital fashion extension of Reliance, faces stiff competition from
Flipkart, Myntra and other e-commerce sites in the online fashion market, it is growing at a fast
pace and moving ahead of other competitors like Snapdeal and Tata Cliq.

AJIO enables the customers to browse and place orders for products even when they are
currently unavailable in the store. The platform offers a number of additional and innovative
services like ‘pick at store’ and ‘drop at store with cash refunds’ options. In order to promote

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Reliance’s offline-to-online approach, AJIO also provides direct deliveries from Reliance Retail
stores of 350 Trends and 70 Trends Footwear.
With Reliance’s backing, AJIO offers great discounts and is also focussed on bringing in more
national and international luxury brands.

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ADDRESSING SETBACKS

Such a big business in terms of its portfolio and revenue, Reliance Industries Limited is bound to
have faced some setbacks and challenges in its journey. Though the government encourages
private sectors in some fields they may be conscious in others for public welfare. The family also
plays a major role in running a family owned business. Emerging to be the biggest Indian
company it has taken a long road and many investors to come up and have tie ups with but this
doesn’t go as planned always as we can see below are some examples of the setbacks that
Reliance have gone through.

A. After the death of Dhirubhai Ambani, Mukesh Ambani became the chairman and
managing director of Reliance Industries Limited while Anil Ambani was made vice chairman,
there only the drift between two brothers started to fall. It was very well visible in the media and
by the public, a demerger was done after the intervention of Kokilaben Ambani. The demerger
was approved by all except few shareholders classified it as family arrangement rather than
business separation. Mukesh Ambani got Reliance Industries and IPCL, while Anil was given
control of Reliance Infocomm, Reliance Energy and Reliance Capital.
Later in 2006, Anil Ambani’s Reliance group challenged the gas contract signed by Mukesh
Ambani’s company, Mukesh's exploration company was reportedly going to sell gas to Anil's
power company at a reduced rate. This agreement was objected to by the government as the
company’s don’t have the right to trade the government's gas at discounted rates. This started a
feud between them as Anil accused Mukesh of manipulating and eluding the contact with the
help from the government. Meanwhile he also filed a defamation suit of $2.12 billion against
Mukesh for his remarks in The New York Times. Reliance Communications also lost a deal with
MTN as there were legal and regulatory issues along with Mukesh’s claim on the shares of Anil's
telecom firm. While this was happening Anil bent his way by publicly alleging Reliance of
siding with the government. Much later, the government intervened and forced their companies
to enter into a gas supply agreement as it had become a matter of national interest and impacted
the market. Brothers went to supreme court over the gas dispute, meanwhile the government
filed an appeal at the court saying that gas is state-owned and can't be claimed by corporate
entities. The ruling was in Mukesh’s favour and RIL could sell the gas now at government set

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prices which were higher than the agreed one to Anil Ambani’s Reliance Natural Resources Ltd.
Again it was Kokilaben who made peace between them, the defamation was also withdrawn and
a non compete agreement was again signed between the two.
Learning it the hard way, Mukesh Ambani now plans to set up a ‘family council’ before giving
his business to his three children like global multi generational family owned business, assuring
all family members are on board for the conglomerate's future.

B. Gas output from D1 and D3 fields in the KG-D6 block was supposed to be 80 million
standard cubic metres/day but actual production was only way below. The output continued to
drop in the subsequent years and the fields ceased to produce in February 2020 much earlier than
the expected life​ .
The Production Sharing Contract allows contractors to recover all their capital and operating cost
from the sale of oil and gas discovered and produced from a block before sharing profits with the
government. The government disallowed cost recovery for alleged under-utilisation of capacity
due to failure to comply with the approved development plan. While the company was content
with any such provisions in PSC, they served an arbitration notice to the central government to
resolve the dispute. Reliance-BP had blamed unanticipated sand and water ingress for shutting
down one well after the other, leading to a drop in production.
After a ten year long dispute which still remains to be finalised and addressed the potential
liability of RIL to the government pertains to the additional petroleum profit is estimated to be in
the range between USD 200 million and USD 400 million.

C. The launch of Jio industries no doubt was like a boon to many especially in terms of
easy access of internet, bridging the gap in the education line, easy availability of resources
at cheap prices, alas it was a major setback for various people to:
❏ The first group are the shareholders of other telecom companies. On announcement,
the market capitalization of the three main competitors of Jio fell by about Rs.
13,000 crore.
❏ The second is the Government of India. The big money the Indian Government was
raking in selling cellular bandwidth was actually coming from the pockets of the

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cellular consumers. Through its aggressive pricing, Jio had shifted the power back to
the consumer. One cannot help but think that this would impact the revenue the
Government can expect to get from future auctions.
❏ Finally the affected people are the shareholders of RIL. On the announcement of Jio,
the stock price of RIL fell. Its market capitalization decreased by Rs.9,357 crore.
The stock market thought that the money RIL is investing in Jio is unlikely to
provide an adequate return to its shareholders.

D. For RIL, the major concern stems from the underperformance of its refining business. Hit
by volatile crude prices and trade wars, RIL’s refining margins have consistently been declining
for the past seven quarters. The refining margin of RIL has fallen to $8.2 a barrel in Q4FY19,
registering a slip for the sixth straight quarter. To defend itself RIL’s talked about selling 25% of
its stake to Saudi Aramco. Similarly when such an incident occurred in 2011, when production
had depleted, RIL had sold 30% of its hydrocarbon assets to British giant BP Plc for $7 billion
(Rs 51,000 crore).

E. Until 2012, RIL was debt-free on a net basis, but since then it has witnessed a 438%
increase in its gross debt. As Reliance Industries ended FY’19 with net debt of Rs 1,54,478
crore, chairman Mukesh Ambani has been trying to convince the investors over the group’s
rising debt levels.

In August 2019, he declared that RIL would be a zero-net-debt company in 18 months,

announcing a number of asset sale plans, prompting analysts to call it everything from a
‘debt-diet’ plan to Reliance’s ‘great deleveraging’.

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PERCEPTION OF THE COMPANY FROM THE POINT OF VIEW OF :

1. Government

Reliance industry is one of the biggest tax payers in India. By the financial year 2018 they
became India’s largest tax payer of Goods and Services Tax (GST), Excise and Customs Duty,
and Income Tax in the private sector.
Reliance industry provides employment to a huge number of people , It reported over 195
thousand employees in FY2020.
The ‘Digital India’ movement of our Prime Minister Shri Narendra Modi would also be uplifted
by the synergy between Jio and Facebook. As JioMart – Jio’s digital new e-commerce platform,
and Whatsapp will empower nearly 3 crore small Indian Kirana shops to digitally transact with
every customer in their neighbourhood .
This will help small Kiranas to grow their businesses and create new employment opportunities
using digital technologies.
Reliance industries are very important for the government as they need big industrialists to take
their plans forward.
At the same time Reliance is also a threat in the long term as in whichever industry reliance
operates its business model is to create monopoly for itself.

2. Competitor

Reliance is the market leader in many industries . Reliance is the biggest retailer in India. In the
financial year 2019-2020, the company reported revenue of ₹1.62 trillion. It has recently
announced to acquire Future group, this makes them the market leader in the retail segment.
In Jio it came as a disrupter to already existing companies in the market as it offered free services
for months after its launch. Which forced its three rivals - Bharti, Vodafone and Idea - to cut
prices and accept lower profits as well as sparking a wave of consolidation in the sector so their
perception of Jio is of aggressive nature.

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In the petrochemical segment a lot of products of reliance come under top five production in the
world. In MEG India’s 80% of domestic production is done by Reliance .
Hence in the petrochemical sector also It is leading the market.
So competitors are scared of reliance because it has got big pockets and works to create
monopoly for itself.

3. Shareholde​r

The value of it’s share is increasing constantly and the company is a dividend paying company
and the dividend yield being 0.31%. the price of the share as on 1January 2000 was 58 and on 23
October 2020 is 2135, hence the return is 3581%.
Also the company has clear future growth plans , Its new venture Jio is consistently doing well
and has met its break even earlier than expected and has attracted major foreign investors also.
To conclude shareholders are having a bull strategy towards its stock. And there is quarter on
quarter increase in revenue.

4. Bankers

The company has shown growth over the years and it has never defaulted in payments. The
company has sufficient assets in its balance sheet to create charge over its assets and also
currently Reliance is a net debt free organization so it has no interest payments obligations
making it less riskier to give loans to reliance . So banks want to work with reliance and it is one
the most secure companies in the world .

5. Customers

In petrochemical industry it’s mostly B2B model, there perception is good in the market they are
market leader, firms prefer their products and the market is filled with there products

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In Jio customers have a positive perception but at the same time it hasn’t come as a premium
brand yet.
Reliance Retail is the biggest due their expanded business and number of subsidiaries but at the
same time none of their subsidiaries is outshining exceptionally.
For AJIO it has a very good perception in the fashion industry and they provide a lot of brands
exclusively .

6. ​ Suppliers

Reliance works on backward integration strategy. Reliance Textile was started in 1966 as a
manufacturer of polyester textile. Its main raw material was polyester fiber. The company
integrated backwards by making a foray into the polyester filament yarn business. Fiber and yarn
come from petrochemicals; accordingly the company moved further backward and entered in the
petrochemical business and later into plastics. Reliance’s backward integration did not stop at the
petrochemicals rather it moved back into petroleum refining. The raw material for the petroleum
refining is crude oil which is to be explored. To complete the entire chain, it went on to integrate
backward by moving into oil and gas exploration.
Suppliers want to work with reliance majorly on account of two factors
Timely payment of its bills and bulk orders giving them economies of scale .
Also recently In import of crude oil Saudi Arabian Oil Co (Aramco) bought 20% stake in
Reliance Industries oil-to-chemical business which will help it regain the position of being the
biggest supplier of oil to the world’s fastest-growing oil market.

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CURRENT CHALLENGES FACED BY THE COMPANY

❏ RELIANCE JIO
There are certain issues which are quite consistent with the new subscribers:

1. Voice Call Mistakes: Reliance jio is stuck in a dispute with incumbents over
interconnectivity points. The company accused Bharti Airtel, Vodafone, and Idea
Cellular of providing insufficient interconnectivity points leading to call dropouts.

2. Internet Speed Decreased: As the number of users on the network increased, the
speed of Jio's 4G data services decreased dramatically.

3. Buggy Jio App: The Jio apps have not shown consistent performance, although the
idea of free content suits the Indian audience quite well. The Jio TV app is prone to
frequent crashes and has a long launch time, which is also the case with most of the
apps released by Jio. It has been seen that Jio4GVoice is one of the most glitchy Jio
apps. Often it doesn't charge and when it does the experience is pretty slow.

4. Lack of VOLTE support in older phones: Anyone who does not have VOLTE
technology supported phones cannot make voice calls without using the Jio4GVoice
app which, as mentioned above, seems buggy. This drawback renders the profitable
free voice calling feature obsolete for most new consumers. Aside from VOLTE
support, most Indian smartphone users are still stuck with 3G phones. Jio sims will
not benefit them in any way.

5. Battery drain: One of the constraints with 4G services is that they take a toll on the
phone's battery, forcing the user to charge it repeatedly. Without the 2G or 3G
options, the user cannot switch to a slower connection to save battery.

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❏ RIL's core business was impacted by falling demand due to covid in India and abroad.
The current scenario is expected to have an adverse effect on businesses such as petrochemicals,
refining, oil and gas and retail (non-food) for a short to medium period of time.

❏ Low crude oil prices could lead to delays in the agreement between RIL and Aramco:
Mukesh Ambani announced RIL's plan to sell 20% of its petrochemical and refining business
last August for $ 15 billion to Saudi Aramco, as part of its plan to deleverage RIL's budget. Since
August 2019, crude oil has fallen by 64.52%. From $ 58.23 a barrel on August 15, 2019, it is
now hovering around $ 20.66. So, at the price of crude oil given, realizations will shrink and
therefore valuation will also be under pressure. RIL was exploring this deal to de-leverage their
balance sheet, if valuation is affected by current market conditions, they could dilute a higher
holding percentage or postpone the transaction to more normal times.

❏ Amazon has recently sent a legal notice to the promoters of Future Group for allegedly
breaching a non-compete contract over the Future group’s deal with Reliance Industries, which
can lead to delay in the deal .

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FUTURE PROSPECTS

➢ Launching 5G in India as soon as the spectrum is available.

➢ Affordable 4G smartphone.
➢ With investments from Google, taking help and developing an Android based operating
system for Indian needs.
➢ Make the retail venture even bigger.
➢ Expanding Jio Mart into different sectors covering electronics, Fashion and
Pharmaceuticals.
➢ Reliance retail shaping into an O2O model - offline to online.
➢ Reliance is looking forward to buying companies like TikTok, Urban Ladder, Milk
basket.
➢ Future of Digital India.
➢ Their 15 yr vision is to build themselves as the world's leading new material and new
energy company.
➢ By 2035, it aims to become a net carbon zero company.
➢ They also aim to make their operations more clean and customer centric.
➢ Aims to create value from plastic waste.
➢ Aims to Transform Jamnagar refinery to chemicals from a producer of transformation
fuels.

PIPELINE PROJECTS

➢ Taking over of the Future Group and closing the deal.

➢ Using carbon dioxide (a pollutant) into high value added products such as proteins,
capsules and petrochemicals.
➢ Expansion of Jio Mart in other industries.
➢ Fixing and finalizing the deal with Saudi Aramco.
➢ They are planning to launch an IPO for their JIO venture soon in the upcoming future.

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SUGGESTIONS

❏ The first suggestion could be that the company could improve the user interface of their
Jio App and make it more attractive and easy to use. Rather than just expanding their
businesses and aggressively investing into new ventures, it would be beneficial to invest
in infrastructure and improve their services. They should also work on providing better
network connectivity and the speed of the Internet which they promise while their
Marketing & Advertising.
❏ Reliance has a very dominant position in the market by the market share, net profit, sales
turnover and many such indicators prove that. Though competitors can determine the
dominancy easily, it is not sufficient to keep them away. Reliance needs to gear up their
marketing skills more and develop better marketing strategies as we can see the drop in
share prices currently.
❏ The family has a history of feud in them hence, it is advisable if they react to it by
addressing the anticipation of the similar fights in the upcoming generation of leaders by
incorbing the family dispute handle council.
❏ The retail sector of reliance though having a strong financial record is not very quality
oriented and liked by the customers as they now have much better options readily
available. They should focus on improving the quality and customer satisfaction in its
retail sector.

LEARNINGS

❏ In order to de-risk their portfolio of acquisitions, to stay ahead of competition and reduce
the chance of failing, Reliance invests and acquires huge stakes in a number of
companies and different sectors. This also reduces the time taken to setup a new business
from scratch.
❏ Reliance always tries to attract the masses by using affordable pricing. Moreover,
economies of scale enables the company to earn significant operating profits while giving
it a competitive edge.

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PGLP_RELIANCE INDUSTRIES LIMITED

❏ RIL takes utmost care of the well being of all its stakeholders and is always willing to
provide extreme value in return to all its shareholders, customers and suppliers.
❏ Reliance's goodwill and strong business model enables it to increase its market share by
providing a single platform for a consumer’s varied needs, eliminating competition and
creating value for customers through low cost and high quality products and services.

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PGLP_RELIANCE INDUSTRIES LIMITED

CONCLUSION

Reliance has a very diverse portfolio of companies under its banner with at least one major unit
in almost every sector. According to the latest trends and data it seems like they are transitioning
from their legacy businesses of oil and petroleum to digital services. It is evident according to the
recent deals and fund raising they are aggressively developing a digital infrastructure to integrate
its entertainment, retail and other businesses. Moreover, they are heavily investing into
developing rural friendly user interfaces with strategic partnerships with companies like google,
facebook and amazon.

1. With the ever increasing growth of digital interactions, Jio Platforms is focusing on providing
digital solutions for 60 million MSMEs by allowing users to purchase goods and services
through WhatsApp and Facebook Messenger from JioMart.

2. The deal between Facebook and Jio has enabled both the companies to increase their market
share in India’s growing e-commerce segment by providing direct connectivity between users
and merchants and engaging customers online, especially during the lockdown due to social
distancing measures.

3. The proposed acquisition of Future Group’s retail business will boost RIL’s financial profile
and competitive position, strengthening the company’s retail footprint.
While Reliance’s acquisition of the Group’s warehousing and logistics business will help in the
expansion and growth of JioMart, Future Group’s well-established retail stores, including Big
Bazaar, Central, FBB in first tier cities will aid Reliance’s footprint in second- and third-tier
cities as well.

However, a Singapore arbitration court has ordered a hold against this deal as per the case filed
by Amazon against the Reliance-Future Group deal.

Reliance Industries is gearing for the future by investing in cutting edge technology of tomorrow.
By making the internet and technology easily accessible to the general public they are offering

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immense value for money across all its products and services. With effective management,
strategic decision making and mass appeal approach they have uniquely positioned themselves to
gain substantial and sustainable competitive edge.

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