A CASE STUDY ON

RELIANCE INDUSTRIES LIMITED

Submitted to Prof. Sushil Khanna
By
GROUP 3
Aditya Dhakar(1207)
Niranjan Reddy(1208)
BPV Mani Theja (1210)
Srinjay Dan(1211)
T M Hemanth(1214)
Y Avinash (1226)
Anukalpa Roy (1232)
Mohit Mahavar (1234)
Swapnil Mishra (1241)
Anuj Nair (1249)
Veerendra Naidu Kandi (1247)
Adithya Sagar Kota (1258)
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 • Introduction
• Timeline
• Reasons for Phenomenal Growth
• Strategies followed
• Financing
AGENDA • Organization Structure

• Diversification Options
• Telecom
• Power
• Electronics

• Organizational and Structural Changes

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 RELIANCE INDUSTRIES LTD -
INTRODUCTION

• Reliance Industries Limited (RIL) is an Indian multinational conglomerate

headquartered in Mumbai.
• Founded by Dhirajlal Hirachand Ambani – popularly known as Dhirubhai Ambani
• RIL was the foremost Indian non government company by every measure
• “Growth has no limits” – Dhirubhai
• Dhirubhai believed that RIL can be Rs.300 billion company by end of 20th century
• Dhirubhai awarded the businessman of the year in 1993

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 RELIANCE INDUSTRIES LTD - TIMELINE

Reliance Textiles
held its Initial Public
Engineers Pvt. Ltd. was
Offering(IPO)
founded
as a polyester firm

1958 1973 1994

1966 1977

Reliance Commercial
renamed as Reliance Successful bid for
Corporation with an
Industries Ltd production of Oil
initial investment of
and Gas
Rs.15000
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RIL GROWTH BETWEEN 1977 AND 1993
Parameter 1977 1993
Turnover 1.2 billion 41.06 billion
Operating Profit 150 million 8.81 billion
Net profit 25 million 3.22 billion
Net worth 140 million 26.13 billion
Asset base 310 million 46.41 billion
Share holders 58000 3.7 million

Amt in Rupees*

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QUESTION-1

REASONS FOR PHENOMENAL

GROWTH OF RIL 6
Effective Advertising
• RIL was the trend-setter in advertising in the Indian market
• First hoardings, radio & press then invaded the consumer’s mind through television
ads
• Used unconventional means such as organising fashion shows across the country
• RIL has always had the highest advertising budget among all promoted products in
India

Import-Export Amalgamation
• Used Export replenishment license to import goods in demand and export their
produce
• RIL’s strategy was always focussed on the changing demand in the market
• They adapted to the changes and made the most out of government schemes time-
to-time

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Early-bird Technology adaption
• RIL always laid emphasis on staying technologically more advanced than competition
• They tracked the consumer demands and then imported the best available technology to not
only meet the consumer demand, but provide them with the best they could get.

Pacifying the power of Wholesalers

• RIL was dissatisfied with the conventional structure: Manufacturer-Wholesaler-Retailer.
• They opted to bypass wholesale trade by opening Retail stores and showrooms, both
company-owned and Franchises
• By 1980, Reliance Fabrics were available at 20 company owned outlets, 1,000 franchised
outlets and 20,000 regular retail outlets.

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Ambitious goals
• Stayed ahead of the curve,
• Credit to Dhirubhai’s ability to recognize the latent demand
• Removing the redundancies by taking into account value of Time
• Also used Demand creating Activities by organizing business groups to ensure supply demand
balance in market

Coincidence with Government policy

• RIL faced allegations in 1986,July by Indian Express for using political influence for financial
gains
• Getting approvals faster than the others to getting policies formulated in favor that just so
happens to coincide with upcoming project needs

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Resource Saturation
1. Patalganga Project Floods -21 day
restoration
2. 14 day retrieval of Compressor
3. Du Pont sent back
Creating Demand
1. Artificial demand creation in
Domestic & International Markets
2. Customer & Market acquisition
through penetration
3. Wide range distribution network
Trusted Decision Making
1. Managers report directly to Ambanis
2. No time to develop; they are more
focused on growing
3. Same level can draw cheques of 9 digits &
little numbers
Immense Information
1. Vast dependency on Information
2. Trending with every bit and piece of
information
3. Includes Operations & development
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 STRATEGIES FOLLOWED BY RIL

Economies of scale
• More focus on International standard and sizes.
• “World Scale” capacity instead of “Safe” capacity that could meet the cost and quality standards on a global basis

Technology at RIL
• Purchasing technology from best foreign source, avoiding Joint Ventures
• Reliance wants to create exclusivity for global as well as its own brands to attract consumers to its portal.

Speed
• RIL had built up a reputation for setting up projects quickly.
The real secret of speed lay in two things:
1. Careful planning to quantify tasks.
2. Saturating the task with resources. 11
 FINANCING THE GROWTH

 Reliance approached the public directly to fund its growth.

 First initial public offering of equity in1977
 In 1979 RIL offered partially convertible debentures to finance setting up entry into manufacturing of
wool blend fabrics.
 Convertible debentures have become a major form for mobilizing funds in India.

Tax Planning at RIL

 Never paid tax even the profits continued to grow
 Continuous investments in expansion of its facilities helped in setting off taxes.
 RIL known to be zero tax company.
 RIL changed its accounting practice to accommodate the new tax laws.
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 THE ORGANIZATION STRUCTURE

There is a constant flux in status and role of manager. There is no formal

Organizational Structure in Reliance

Chief Executives heading different business department used to report to the

Ambanis

This resulted in a structure with high ambiguity and high level of flexibility.

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QUESTION-2

DIVERSIFICATION IN SEVERAL SECTORS IN

1993-94
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ENTER INTO TELECOM
SECTOR
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 STRENGTHS WEAKNESS
• Brand name of RIL
• People need to be educated
• Track record of the company in to use cellular network but
big sectors this will be again be shared
• Ability to provide service at among all the providers
competitive cost

OPPORTUNITIES THREATS
• Liberalisation • Too much of competition due
• National Telecom Policy, 1994 to open market
• Sector widely open for private • Possibility of unfavourable
investments government regulations
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• NTP 1994- License • Less substitutes
for 10 years available owing to
• Maximum 2 service only 2 service
providers per cycle
providers per circle
• Declining stage of
New
Substitute postcards
Entrants

Competition
expected to be very high

• Pioneer in Supplier Buyer • Buyer info is low

importing Power Power • Buyers reluctant to
technology from upgrade to cellular
foreign countries network in the early
1990s

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ENTER INTO POWER SECTOR
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 STRENGTHS
• Already running 100 MW
captive power plants
• Availability of sophisticated
technology
• EPC Division estd. In 1966
OPPORTUNITIES
• Deficit of 50000 MW
• Attractive return on equity (16%)
• Exchange rate protection
WEAKNESS
• Lack of experience in mega
projects in the power sector
• Government regulates prices
THREATS
• Risk of oil price rise
• Opportunity Cost
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 In the early 1990s, the
• High switching cost major substitute
• Entry barriers high hydroelectric power
facilities were on the
New
Substitute decline
Entrants

Competition
Demand is always more than the supply
hence it doesn’t matter

• High supplier power Supplier Buyer • Government regulates

of Coal India Power Power the charges
• Many equipment • Industrial customers
supplier companies have high demand, low
arose, reducing the bargaining power
supplier power

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DO NOT ENTER ELECTRONICS
SECTOR
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 STRENGTHS
• Brand name of RIL
• Ability to attain economies of
scale mega projects
• Good financial position
WEAKNESS
• Infrastructure deficiency in
India in the 1990s
• No prior experience in this
sector
• Lack of skilled labour in India

OPPORTUNITIES
• 90% of the Consumer
THREATS
electronics (38.7% of whole • Existing
electronic sector) dominated by competition is too
the private sector in early 1990s high
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The market allowed Too many substitutes
technocrat entrepreneurs since the market is
with limited resources to already dominated by
enter the field private players
New
Substitute
Entrants

Competition
Onida, BPL, Bharat Electronics Ltd, Videocon

Semiconductors mainly Supplier Buyer Availability of too

imported from foreign Power Power many substitutes and
countries. many private players
Due to high demand, made the buyer
supplier power was high power high

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DIVERSIFICATION-PERFORMANCE
GRAPH

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ORGANIZATIONAL AND STRUCTURAL
CHANGES OWING TO DIVERSIFICATION
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 ORGANISATIONAL CHANGES

• Flexible to going into joint ventures with foreign companies

• Develop formal employee training programs

• Create an effective Human Resource Management system

• Benchmark against competition

• Align training with management’s operational goals

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 STRUCTURAL CHANGES

• Divisionalisation structure in the company

• Flexible in adding non-family members in the top management.

• Incentivise horizontal collaboration

• Build a shared culture between different units

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THANK YOU

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