Who says number thirteen is unlucky? Mukesh Ambani became the new Virat Kohli of India by cracking 13 deals in almost 12 weeks.
When every other businessman is struggling hard to keep their business afloat, its just one person in Asia who has stretched to his maximum to make Reliance Industries debt-free by 2021.
He is the only tycoon in Asia to enter into World’s Top-10 richest person published by The Forbes surpassing Warren Buffet. Let’s find out how in eighty-four days exactly Ambani’s oil to telecom giant managed to raise more than Rs 1,18,318.45 crore amid strict lockdown in the entire world.
Transforming the business:
What started as a textile business in 1970 by Dhirubhai Ambani has transformed itself from oil and petrochemical company to a technology giant. What Reliance has achieved in these years, very few companies are near to it. The company is bringing unmatched potential and capabilities difficult for any company to decode.
When Ambani realized “Data is the new oil” thus began the quest to launch Jio Telecom in 2016. Now it is countries largest telecom sector with around 387 million 4G subscribers. Their turnover and EBITDA have more than doubled since 2016. The fact that Retail is intertwined with technology led to the discovery of India’s very own Amazon around Reliance Retail.
The pandemic has given a ray of hope to Kirana stores whose business was tossed away by the mega entry of online grocery stores and big supermarts. They were the last hope to get all the essential commodities where most of the online stores and supermarts had shut their operations during the pandemic. This was the right time to empower the Kirana store. RIL connected small Kirana shops through Jio-Mart and enter our bedrooms through Jio-Giga Fiber. The brainchild of Jio Isha Ambani said that “It will turn our whole home smart from wall to wall wifi to plug point and switches everything will become smart. Reliance has taken a huge leap from oil fields to local shops and now to our bedrooms as well.
Reliance is not just any firm, it has taken control of our lives. Whatever we buy will have a touch of Reliance on it from streaming to shopping.
Decoding the Master plan:
In an Annual general meeting in 2019, Reliance chairman has announced to make his company debt-free by 2021. What seems like impossible is now a reality. He is much ahead of his ambition. The company was sitting on a debt pile of around INR 1.57 Lakh crore as it transformed its business from oil and petrochemical industry to customer-focused business in retail, telecom, and e-commerce. The rising debt pile demanded crucial attention as the revenues generating from oil and petrochemical business was not enough. Let’s put the pieces of puzzle altogether to analyze how the company reinvented itself.
- The rapid sale of stakes in Jio platform during the lockdown.
- Biggest right issue of INR 53,000 crore.
- Launch of Jio-Mart.
- Significant investment in smart devices, cloud and edge computing, Big Data analytics, artificial intelligence, Internet Of Things, and Blockchain.
- Build a digital society for Indians.
When the share of other companies is on the brink of falling, Reliance has surged almost 17.3% so far this year. After its 13th strike with US-based Qualcomm Venture, the share price closed at INR 1917.70 up by 2% .
If we try to extract something good out of this lockdown it would be curbing pollution and accelerating the digital consumption services in India. That’s why the Jio-Facebook deal was a timely one. It was a win-win situation for both companies. On the one hand, it would help RIL reduce its debt and on the other hand, it would provide more users and databases to Facebook.
The total valuation of the company is now $10 trillion enough to keep money in his pockets after paying a debt of $40 billion to the telecom and digital business segment.
Luring the investors:
Don’t get amused if you witness the never-ending queue of investors to buy the shares of Reliance Industries. A rational investor prefers a debt-free capital structure, strong management, and regulatory principles. All these key points have been checked by Reliance.
And that is the primary reason that the investors around the world are trying to pick a piece of Jio’s pie as soon as it is offered to them. He said that net-zero debt will come up with high dividends, bonuses, and other goodies at an accelerated pace which never happened in history. Then and there started the fundraising spree of Reliance which is the largest in the world.
Recently US based Qualcomm became the third strategic investor after Facebook and Intel in Reliance Jio. Even in such unprecedented times, the company has sold 25.24% of stake in Jio.
It is not just a telecom carrier anymore. What they have tried is to create a super app – from shopping to entertainment all under an umbrella.
When US Fed chairman announced that US Fed rates will remain close to zero throughout 2021 then instead of receiving blank cheque investors started looking out for profitable opportunity and India provided a great ray of hope to them. India is considered as the breeding ground for various technological and digital giants because of its large customer base and easy digital adaptation. Reliance Jio is poised to grasp the data hunger of the young population and add profits to its business segment. Reliance Industries is on the roll because it has tried to capture this digital golden-goose.
Though Ambani has been successful in filling his deep pockets with all sorts of investors but what about those banks and Financial Institutions who provide financing and refinancing facility to the largest company. It has the potential to disrupt the market just like it did in 2016 by launching Jio and once again it is prepared to do so.
The profit margins from traditional business are not enough as the oil business is now in the doldrums. The retail brands like Reliance Digital and Trends would take a while to reach its normal state of operation.
Ambani led Reliance Jio recently launched JioMeet which seems like a copied version of Zoom (Video conferencing app). The interface is a screen by screen intimation of Zoom app. Is it some kind of new business strategy or Mukesh Ambani was too busy getting into every possible business that he did not have enough time to change the user interface.
It would be worth watching how he still manages to be on the forefront where his retail and technological segment requires a lot of Capex and the cash flows from oil and petrochemical business won’t be enough to offset the expenses.