From E-Commerce To 5G And Net Zero Carbon, What RIL Said In Its Annual Report
Reliance Industries’ book value jumped by more than half in FY21. Here’s why.
In a year the pandemic decimated demand, billionaire Mukesh Ambani-controlled Reliance Industries Ltd. saw its book value jump by more than half on the back of its consumer-focused retail and telecom units. The focus is now on increasing its e-commerce footprint, fifth-generation telecom network and a net zero-carbon oil-to-chemicals business.
The book value per share, an indicator of a company’s worth, rose 53.3% to Rs 1,086.4 apiece, according to the company’s annual report for FY21.
“Despite unprecedented challenges, we continued to execute on our growth plans across businesses,” Mukesh Ambani, chairman of RIL, said in his statement to shareholders. The company said it expanded customer outreach by growing physical and digital footprint with store additions, strengthening of supply chain infrastructure and launch of JioMart. In digital services business, the company said it increased network capacity and spectrum footprint while rapidly growing its customer base.
The monetisation of retail and digital assets helped the company raise Rs 2.6 lakh crore ($36 billion) in FY21. The group sold stakes in Reliance Retail Ventures Ltd. and Jio Platforms Ltd. to investors, including Facebook Inc. and Google. That helped it pare its debt, helping it achieve a net debt-free balance sheet ahead of the stated timeline of March 2021.
Reliance Retail
Reliance Retail posted gross revenue of Rs 1.54 lakh crore despite operating 80% of its stores and recording 35% lower footfalls than last year. It launched it hyperlocal platform, JioMart, with presence in over 200 cities along with AJIO, its online platform for lifestyle and fashion.
The retail arm expanded partnerships with merchants across the country under its new commerce model.
By the year-end, digital commerce and merchant partnerships business accounted for about 10% of revenue—up from near zero in the preceding year, adding over half the orders on digital platforms came from tier II and smaller tier towns.
The retail venture’s customer base rose by nearly a fourth to 156 million in FY21 and operated 12,711 stores covering 33.8 million square feet of space. It said it runs over two-thirds of its stores in tier II and smaller tier towns, with over half the expansion carried out in smaller tier towns.
Reliance Digital’s online shopping website and app has presence across 1,340 cities, fully integrated for omnichannel experience, it said. It also extended JioMart to consumer electronics to providing a one-stop shopping solution. Growth was led by performance in tier 2 and 3 towns.
Reliance Retail, according to the report, is expanding the new commerce footprint from 33 cities at present, with investments in supply chain and technology.
Jio Platforms
Jio Platforms is working towards setting up its own 5G network ecosystem. It has tied up with Qualcomm Technologies and Radisys Corporation, a subsidiary, to develop open and interoperable interface compliant architecture-based 5G solutions with a virtualised radio access network. This work is intended to fast-track development and rollout of indigenous 5G network infrastructure and services in India. Jio and Qualcomm tested 5G solutions in India, achieving the 1-GBPS milestone on Jio 5G solution.
It’s also looking to increase efforts to move 2G customers to 4G. Since its launch in 2017, JioPhone has upgraded over 100 million users to the digital network.
Jio and Google have agreed to jointly develop an entry-level affordable smartphone. Jio recently opted for Chinese low-priced mobile to stem migration of its feature phone customers.
The unit has been slow in ramping up Jio Fiber, its broadband service, which had over 2.5 million homes connected to it until March 2021. Ambani is targeting to connect 500 million subscribers by 2023. It’s also targeting 500 million mobile customers and 50 million home and enterprise connections. Jio had 426 million mobile customers as on March.
Oil-To-Chemicals
Reliance reorganised its refining and petchem segment into oil to chemicals division during the year. The reorganisation will facilitate value creation through strategic partnerships and attract dedicated pool of investor capital, the company said.
O2C’s goal is to maximise crude to chemicals conversion and create a sustainable growth business, it said. “It will allow Reliance the opportunity to accelerate our own ambitious new energy and new materials business wedded to the vision of clean and green development.”
The company said it’s developing next-generation carbon capture utilisation and storage technologies to convert carbon dioxide into useful products and chemicals. The company plans to participate in the transition from fossil fuel to clean and affordable energy.
It’s progressing in converting the greenhouse gas generated at its Jamnagar refinery into high-value proteins, nutraceuticals, advanced materials and fuels.
The O2C division’s production meant for sale fell by over a tenth year-on-year to 63.6 million tonnes, led by lower demand for transportation fuels as a result of pandemic-induced disruptions.
It’s also investing in autonomous, zero emission transportation services. A subsidiary, Reliance Strategic Business Ventures Ltd., has acquired additional equity stake in the U.S.-based technology company skyTran Inc. With this investment, the company said, it aspires to bring to India high-speed efficient and economical intra- and inter-city connectivity through a “Transportation as-a-Service” platform.