The Annual General Meetings of Reliance Industries have always been huge affairs, notably so in recent years, when chairman Mukesh Ambani has used the platform to make big ticket announcements. It was in RIL’s AGM in 2016 that Ambani launched its Jio telecom service. A year later the JioPhone was launched at the same venue. In the 2019 AGM, the spotlight was on Jio GigaFiber.
On Wednesday, at AGM 2020, Ambani outlined an ambitious future for RIL that forsees the refining and petrochemicals giant transforming into a new energy and new materials company.
Addressing shareholders at the AGM last year, Ambani had announced a bold target to become net debt free by March 2021. The company has achieved the target nine months ahead of the target, helped by marquee investors pumping in Rs 1.17 lakh crore in Jio Platforms at a time the world is besieged with the COVID-19 pandemic. In April this year, Facebook had announced Rs 43,574 crore investment in Jio Platforms for a 9.99 per cent stake.
The social network giant will be joined by another tech giant Google, which is investing Rs 33,737 crore in Jio Platforms for a 7.7 per cent stake. This is perhaps the first time that the two technology rivals are betting big on the same company anywhere in the world.
With Facebook on board, Jio would get access to an array of social media platforms like Facebook, Instagram and WhatsApp; the latter being a key platform for RIL’s JioMart. With Google on board, Ambani plans a big leap into affordable smartphones, targetting the 350 million 2G feature phone users that India still has.
“Even though we have sold over 100 million JioPhones till date, there are many feature phone users who are waiting to upgrade to a conventional smartphone, if only it were somehow more affordable. So, we have decided to address this challenge head-on. We believe we can design entry-level 4G or even 5G smartphone for a fraction of its current cost,” Ambani said.
It is here that Jio aims to partner Google to build an Android-based smartphone operating system, which could power such a “value engineered smartphone.”
Earlier this week, Google announced plans to invest Rs 75,000 crore in its Google for India Digitisation Fund. Sundar Pichai, the CEO of Google said that getting technology into the hands of more people is a big part of Google's mission to organise information and make it universally accessible, and through the partnership with Jio Platforms, he sees the chance to have a greater impact then either company could have alone.
“I am excited that our joint collaboration will focus on increasing access for hundreds of millions of Indians who don't currently own a smartphone while improving the mobile experience for all,” he said.
Jio Glass, Jio TV Plus, JioMeet and 5G
During the AGM, a new Jio Glass was also announced, which aims to use 3D avatars to make interactions in the virtual world more lively.
Ambani also praised the company's videoconferencing app and Zoom-rival JioMeet, which it said had crossed five million downloads within just two weeks of launch.
In addition, JioTV Plus was also launched, which promises a single log-in to access OTT platforms including Netflix, Disney+ Hotstar, Amazon Prime, SonyLiv and others.
Jio launched in 2016 as a 4G VOLTE telecom network. Now, it has set its sights on 5G. Many developed countries like US and South Korea have started rolling out 5G networks, although its still some time away in India.
Ambani announced that Jio has designed and developed a complete 5G solution from scratch, which will enable Reliance to launch a world-class 5G service in India, using 100 per cent home grown technologies and solutions.
“This Made-in-India 5G solution will be ready for trials as soon as 5G spectrum is available and can be ready for field deployment next year. And because of Jio's converged, all-IP network architecture, we can easily upgrade our 4G network to 5G,” he said.
Furthermore, once Jio’s 5G solution is proven at India-scale, Ambani plans to export 5G solutions to other telecom operators globally, as a complete managed service.
With the investment of Google, Jio Platforms has now raised Rs 1.52 lakh crore. Ambani said, the target for capital raise is now complete. However, as they say, it ain’t over until it’s over.
RIL has also received strong interest from strategic and financial investors in Reliance Retail.
“We will induct global partners and investors in Reliance Retail in the next few quarters,” said Ambani.
RIL is already the largest organised retailer in India, operating 11,784 stores and Ambani clearly sees huge growth opportunities here.
JioMart, its digital platform that connects neighbourhood grocery stores with consumers, is also being scaled up. The platform was launched across 200 towns and cities in May and is now servicing 250,000 orders a day. Now, the company is focusing on scaling the geographical reach and delivery capabilities of JioMart.
Also, in addition to grocery, there are plans to expand JioMart into electronics, fashion, pharmaceuticals and healthcare in the days ahead.
Expanding beyond oil and towards clean energy
The consumer businesses (Jio and retail) now contribute 35 per cent of RIL's consolidated EBITDA (earnings before interest, taxes, depreciation and amortization) and have been key in driving RIL’s earnings last year. This is also because RIL's traditional oil and gas and refining segments were hit hard by falling crude prices, first due to price war between Saudi Arabia and Russia and then as demand for petroleum products collapsed due to the lockdowns various countries had imposed to curb the spread of COVID-19.
RIL was in talks with Saudi Arabia’s Aramco to sell a 20 per cent stake in the oil to chemical (O2C) business last year. The deal, however, hasn’t progressed as planned due to the COVID-19 impact in the energy markets, acknowledged Ambani.
In any case, over the next few years, demand for fossil fuels is expected to fall as countries will step up efforts to fight climate change and therefore push for cleaner and green energy.
Ambani for one is not going to let this “multi-trillion” opportunity pass and aspires to become a new energy and new materials company in 15 years.
“Transforming our energy business to tackle one of the biggest challenges before India and the World is our new growth opportunity,” he announced.
RIL will spin-off the O2C business into a separate subsidiary and will approach the NCLT (National Company Law Tribunal) for the same. This process is expected to be completed by early 2021.
Ambani said RIL will remain a user of crude oil and natural gas, but it is committed to embracing new technologies to convert the carbon dioxide it generates into useful products and chemicals.
“We have already made substantial progress on photosynthetic biological pathways to convert our CO2 emissions at Jamnagar into high value proteins, nutraceuticals, advanced materials and fuels. We will develop next-gen carbon capture and storage technologies. We are evaluating novel catalytic and electrochemical transformations to use CO2 as a valuable feedstock,” he told shareholders.
RIL has technology to convert transportation fuels to petrochemical and material building blocks. However, Ambani also wants to replace transportation fuels with cleaner electricity and hydrogen.
“We will build an optimal mix of reliable, clean and affordable energy with hydrogen, wind, solar, fuel cells and battery,” said Ambani.
His vision envisages a platform company and a large coalition of global financial investors, reputed technology partners and startups working on futuristic solutions.
“It is also an opportunity to make clean and green energy abundantly available at an affordable price to every Indian, every Indian enterprise and every Indian utility,” said Ambani.
Ambani’s father Dhirubhai’s business ambitions had humble beginnings; he had started a small polyester yarn export-import business through a small 500 square feet office in Mumbai in the 1950s. From there, he went on to build Reliance’s textile and petrochemicals empire. His son Mukesh, not only strengthened it, but also made strong inroads in retail and telecom. Under the next generation of Ambanis—Isha, Akash and Anant—digital and clean energy might will drive RIL’s future.