Reliance AGM: Mukesh Ambani sets succession plan in motion

The annual general meeting of Reliance Industries is among the most anticipated events for its shareholders. Over the last few years, Mukesh Ambani, the chairman and managing director of the oil-to-telecom conglomerate, has used the stage to make big announcements, be it the launch of the Jio 4G service, JioPhone or the foray into fast-moving consumer goods (FMCG).

At the 46th AGM (post IPO) on Monday, there were announcements about the upcoming launch of Jio AirFiber, progress on the new energy and retail front, plans to expand Jio Financial Services into insurance and a big bet on artificial intelligence, among other things. However, what was more important was the announcement of the appointment of Isha, Akash and Anant Ambani to the board of Reliance Industries, as Ambani took a big step towards succession planning.

Isha has been a director on the board of Reliance Retail Venture, Reliance Jio and Reliance Foundation. Akash has been serving as the chairman of Reliance Jio Infocomm since June 2022 and is also on the board of Jio Platforms, RIL's digital services business. Anant is on the board of RIL's new energy businesses—Reliance New Energy and Reliance New Solar Energy—apart from being on the board of Jio Platforms and Reliance Retail Venture.

On Monday, the RIL board recommended that the three be appointed as non-executive directors of the company and their appointment will take effect from the date they assume office after getting the shareholder approval.

At the same time, Nita Ambani is stepping down from RIL board and her resignation was accepted by the board of directors. She will remain chairperson of Reliance Foundation and will attend all RIL board meetings as a permanent invitee to the board.

"Over the past few years, Isha, Akash and Anant, as first among equals of our next-generation leaders, have fully immersed themselves in every aspect of Reliance. They have been working with our senior leaders in some of the most exciting projects in consumer businesses, digital enterprises, O2C (oil-to-chemicals), and green energy and green materials. I can proudly say that they have earned their stripes through dedication, commitment and hard work," said Mukesh Ambani.

Teaming up with the other directors, they will work as one single team to provide leadership to the Reliance group and guide the growth of its diverse businesses with a holistic vision, he added.

Mukesh Ambani himself will continue to perform his duties as chairman and MD for five more years while grooming and empowering all the next-gen leaders at RIL.

At the AGM, Ambani also threw light on the newest business of RIL—Jio Financial Services (JFS). The business was only recently demerged from RIL and listed separately on the stock market, with shareholders getting one share of JFS for every RIL share held.

Last month, JFS announced an equal share joint venture with US-based investment manager BlackRock for asset management business. At the AGM, Ambani said the company would expand next into insurance. Here again, it may tie up with global partners. "JFS will enter the insurance segment to offer simple, yet smart, life, general and health insurance products through a seamless digital interface, potentially partnering with global players," said Ambani.

He believes JFS will be an invaluable addition to the Reliance ecosystem of customer-facing businesses. He listed three reasons for this confidence.

The digital-first architecture should give JFS "unmatched head start" to reach millions of Indians, he believes. Secondly, RIL has capitalised JFS with a networth of Rs 1.20 lakh crore to create one of the world's highest capitalised financial service platforms at inception, he pointed out. Furthermore, JFS has a very strong board led by banking sector veteran K.V. Kamath (former chairman of ICICI Bank and former chief of New Development Bank of BRICS countries).

Ambani said a "highly motivated" leadership team was being built at JFS with a combination of financial industry experts and young leaders eager to take on big challenges.

India is among the largest smartphone markets in the world. Millions are hooked to their smartphones thanks to unlimited voice calls and cheap high-speed data. This growing digital ecosystem will be one of the key drivers as JFS looks to scale up and take on the biggies in finance.

Reliance Jio is already the largest player in India's telecom market with over 450 million subscribers. The company began rolling out 5G services in October 2022 and in nine months is already present in 96 per cent of the census towns in the country. Ambani said it is on track to cover the entire country by December this year.

The company had launched Jio Fiber broadband services back in September 2019. The company is now set to launch Jio AirFiber, a hotspot device that will use the 5G network to deliver fiber-like speeds over the air.

Jio AirFiber had been announced at the RIL AGM in 2022 and now it will be commercially launched on Ganesh Chaturthi on September 19.

"Through optical fibre, we can currently connect around 15,000 premises daily. But, with Jio AirFiber, we can supercharge this expansion with up to 150,000 connections per day, which is a 10-fold increase, expanding our addressable market over the next three years to over 200 million high-paying homes and premises," said Ambani.

The company is also augmenting its talent pool and capabilities to swiftly assimilate the latest global innovations in artificial intelligence (AI), said Ambani, adding, Jio Platforms wants to lead the effort in developing India-specific AI models and AI-powered solutions across domains.

Just like Jio, Reliance is also looking to scale up its new energy business rapidly in a big way, as the conglomerate looks to transform from a refiner of fossil fuels to a producer of clean energy and materials.

"We are accelerating our journey to achieve net carbon zero by 2035 through use of renewables and bio-energy for a sustainable and green business," said Ambani.

He noted that the company is well on its way to build the ecosystem of manufacturing solar, wind, batteries, hydrogen and bio-energy platforms.

"This will enable us to speed up development of our renewable generation assets to deliver round-the-clock electricity for our captive requirements as well as to meet the growing needs of Indian consumers," he said.

The first priority Ambani said is to deliver a fully-integrated, end-to-end solar photovoltaic (PV) manufacturing ecosystem. The solar giga factory will include manufacturing of PV modules, cells, wafers and ingots, polysilicon and glass at a single location in Jamnagar and the target is to bring the factory on stream in a phased manner by the end of 2025.

"This will be one of the largest, most technologically advanced, flexible and most cost-competitive solar giga factory globally and will be converting sand into solar PV modules," Ambani informed.

He further said the concurrent priority is to set up the battery giga factory by 2026, which will manufacture battery chemicals, cells and packs, containerised energy storage solutions and also include battery recycling facility.

The company also aims to pursue wind generation. Its foray into manufacturing carbon fibre at large scale provides it with an advantage to further integrate and reduce cost of wind turbines. Additionally, Ambani said the company intends to partner with world's leading technology players in wind equipment manufacturing to deliver cost efficient solutions.

Another area where Reliance has invested heavily in the last few years is Reliance Retail. The company has invested $10 billion in the retail business in the last two years alone and it is the largest organised retailer in the country with 18,040 outlets.

In the last AGM, Reliance Retail announced its expansion into FMCG. The company already has several in-house FMCG brands like Independence, which are being scaled up. At the same time, it has also acquired several home grown brands like Campa Cola and Sosyo and Lotus Chocolates. It has also partnered several multi-national brands like General Mills and Sri Lanka's Maliban biscuits to launch their products here.

Isha Ambani said the new commerce platform JioMart continued to see sustained uptick and its launch on WhatsApp has been a "phenomenal" success, with a 9X growth of JioMart customers on the instant messaging platform since its launch in 2022.

Mukesh Ambani said the group in pursuing its dreams had adhered to certain cardinal principles of value creation. He said he is "supremely confident" that the value RIL will create for all its stakeholders over the next decade will be "multiple times greater than what it has generated over the past 45 years."

Reliance shares ended 1.1 per cent lower at Rs 2,442.55 on the BSE on Monday, even as the broader Sensex closed 0.17 per cent (110 points) higher at 64,996.60.

No big-bang announcement at the AGM disappointed investors' expectations, said Prashant Tapse, senior VP (Research) at Mehta Equities.

"Takeaways from RIL AGM were more about few updates on last FY, which markets already knew about. The launch of Jio AirFiber and Jio Financial Services to enter the insurance sector with global partners was no surprise to the street," he said.