Reliance AGM Signals Key Transitions With One Constant: Family-Led Entrepreneurship
This AGM makes it abundantly clear that RIL and its offshoots will remain firmly in family control in the foreseeable future.
Long-time watchers of Reliance Industries Ltd (RIL) will have noticed the dramatic transformation the company has achieved over the last decade or more.
First, the company decided to transform itself from a bulk-commodity business-to-business focus to a consumer facing one through Reliance Retail and Jio.
Second, it raised huge amounts of debt (over Rs 300,000 crore) to finance its ambitions, but equally quickly cut debt to near zero (at the net level) last year, just when the markets were beginning to worry about this huge burden.
Third, from a fossil-fuel based petroleum and petrochemicals company, which are environmentally unfriendly, it is now transitioning to green energy.
And fourth, it is rapidly evolving from a company that bought technology to build factories with scale to one that is creating new technology in the digital sphere.
It is using its pipes (telecom spectrum and optic fibre) and platforms (Jio Platforms, Jio Mart) to become India’s first megacorp to challenge Amazon on domestic turf. But even as it does this, it is in the initial stages of its fifth transformation, and projecting itself as a kinder, gentler company, one that cares for its employees, its surroundings and its countrymen.
Covid gave it just the right opportunity to make this visible. The blurb to Mukesh Ambani’s Annual General Meeting (AGM) speech had this to say: “We care – The mantra which energises new Reliance.” The company wants to clearly change its image at a time when it is an easy political target for the opposition.
At the AGM yesterday (24 June), held virtually this year like last year, Chairman Mukesh Ambani spelt out a new growth vision (read the full speech here) which includes the following:
#1: Spending Rs 60,000 crore over the next three to four years to set up four giga factories to produce and supply to an evolving solar and hydrogen-based energy system. These include an integrated solar photovoltaic module factory, an advanced energy storage battery facility, an electrolyser factory for green hydrogen, and a facility to make fuel cells for converting hydrogen into motive and stationary power.
#2: Another Rs 15,000 crore will be spent on building a clean energy value chain, including investment in future technologies.
#3: Around 100 Gw of solar energy facilities will be set up by 2030.
#4: In telecom, Jio is eyeing the next phase of growth, which involves converting feature phone users to smartphones, by launching the world’s cheapest Android-based smartphones on 10 September.
#5: A partnership with Google will allow Jio to use the Google cloud to support its 5G launch. JioMart and WhatsApp are testing an integration of their apps to facilitate e-commerce payments seamlessly.
#6: As part of the gradual reduction in dependence on the core oil-to-chemicals (O2C) product group, the already-announced plan to sell a 20 per cent stake in the demerged O2C business took one step forward with the induction of Saudi Aramco chairman Yasir Othman Al Rumayyan on the RIL board as independent director. Al Rumayyan is also head of the Saudi Arabia's sovereign wealth fund, PIF.
Funding the new vision is the least of Mukesh Ambani’s problems, having raised a massive $44 billion (Rs 3,24,432 crore) last year through a mix of rights equity, strategic sales of equity in Jio Platforms, and asset monetisation. Facebook, Intel, Qualcomm and Google were among the big investors in Jio Platforms.
The interesting point about the announcements is not the size and scale of the Ambani ambition – that’s old hat – but how it leverages the traditional Reliance strengths to get where it wants to.
RIL has always had four great strengths: an ability to build scale at the lowest possible cost; leveraging scale to bring down costs to consumers and thus taking huge market shares; raising debts far ahead of need and then retiring them quickly once projects start delivering cash flows; plus great project execution strengths. But, most important, the crucial X factor that delivers for RIL is the entrepreneurial vision, first of Dhirubhai and now of Mukesh Ambani.
While entrepreneurial insight is not a given for succeeding generations, Mukesh Ambani seems to be making it clear that RIL’s fortunes will be guided by his family, even though they may hire the best professionals to run their companies and strategies.
This was stressed once again when three family members, twins Akash and Isha Ambani, and spouse Nita Ambani, spoke at the AGM before Mukesh Ambani made his business plans clear. While daughter and son spoke all of 550 words between them, Nita Ambani spoke at length, over 2,100 words.
While Akash and Isha talked about the special contributions of Reliance staff during the pandemic, Nita Ambani spoke of the contributions of the Reliance Foundation in various spheres during Covid. The soft side of hardheaded Reliance was on full display at the AGM.
This AGM makes it abundantly clear – if at all it was needed - that RIL and its offshoots will remain firmly in family control in the foreseeable future. Nita Ambani was inducted onto the RIL board as far back as in 2014, and twins Isha and Akash joined the boards of Jio and Reliance Retail, apart from Jio Platforms, around the same time.
Mukesh Ambani’s other son, Anant, joined the Jio board last year. While Anant did not speak, Mukesh Ambani made a reference to him towards the end of his AGM speech when he talked of his father’s legacy.
He said: “I have no doubt whatsoever that the next generation of leaders at Reliance, led by Isha, Akash and Anant, will further enrich this precious legacy.”
For the record, the word “family” – a reference to the Reliance family and not the Ambani family – occurred 24 times in the AGM speeches of the twins, Nita and Mukesh Ambani. Just in case anyone missed the point, Nita Ambani also said that Akash and his wife Shloka had a baby boy Prithvi last December.
The unique blend of family entrepreneurship and professional power looks set to continue.
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