Reliance eyes to break into several sectors of the consumer business market with Jio serving as the foundation of these success stories
At the 41st Annual General Meeting (AGM) on Thursday, Mukesh Ambani announced his plans to double the sales of Reliance Industries Ltd (RIL) in the next seven years. He has invested approximately Rs 2.5 trillion in telecom sector – Reliance Jio Infocomm Ltd and through Jio, Ambani plans to dive into e-commerce, healthcare, agriculture and education sectors as well in the next couple years.
RIL’s consumer business rose by 13 per cent in FY17-18 as against 3 per cent in FY16-17
At the AGM that was held in Mumbai yesterday, Ambani declared that along with India’s “high-growth journey to double the size of its economy by 2025,” RIL will be doubled in size in the same period as well.
He added, “Our consumer businesses will contribute nearly as much to the overall earnings of the company as our energy and petrochemical businesses.”
Although in the current scenario, RIL draws 80 per cent of its sales from refining and petrochemicals sector, the company is undergoing change and exploring areas to enhance this sector even more and primarily focus on the consumer business. Evidently, because RIL’s consumer business saw a rise in sales by 13 per cent by the end of the financial year 2017-18 on March 31 as compared to an increase by two per cent in the previous financial year. In the last financial year (2017-2018), Reliance saw a total revenue of Rs 4.08 trillion from all operations with its profits settling at Rs 36,080 crore.
The biggest announcement that RIL made yesterday was the launch of JioGigaFiber fibre-to-the-home (FTTH) broadband services, which Ambani claimed will offer hundreds of megabits per second of data speeds and will let RIL provide smart home solutions, which include digital shopping, security cameras, voice-activated virtual assistants, lights and switches among more. GigaFiber will offer ‘fibre connectivity’ to homes, small businesses, traders and small businesses in the upcoming few months. With its advanced fibre connectivity, GigaFiber will be available in more than 1,100 cities and towns around India.
RIL’s debt might be a concern in the future
Over the course of the last four decades, RIL has experienced a major transformation in its core business and has ventured into several sectors to expand its business. First, it was textiles, followed by polyester, energy and then retail. Although the petrochemicals and refining industry needs more time to gain profitability, Ambani is confident about the same.
“It is our belief that the rapidly increasing demand for petrochemicals maximizing oil-to-chemicals conversion will play a catalytic role in determining the profitability of hydrocarbons businesses of the future,” he said.
He added, “As the world migrates from fossil fuels to renewable energy, we will further maximize this oil-to-chemicals conversion and upgrade all our fuels to high-value petrochemicals,” stressing that this upgradation will occur in a phased way over the forthcoming decade.
However, Jio is highly indebted with around Rs 1.41 trillion as of now. Additionally, prior to heading to the AGM, Jefferies India analysts’ group led by Somshankar Sinha found out that in the last one year, RIL has signed agreements worth US$ 54 billion with various companies belonging to several backgrounds – petrochemicals, retail and not to forget telecom that alone accounted for US$ 36 billion.