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RIL's reorganisation drive: What's driving the conglomerate's strategy?

Updated : February 23, 2021 05:36 PM IST

Reliance Industries Ltd’s (RIL) oil-to-chemical (O2C) business will be spun-off into an independent 100 percent subsidiary which will constitute the refining, petchem and fuel retailing businesses. The company expects the necessary approvals by the second quarter of the next fiscal year. So, what does this reorganization mean for the conglomerate? The company shared its plans in a presentation to investors, the copy of which has been shared with the stock exchanges.

Firstly, there are four clears pillars emerging - O2C, Jio, Retail & Financial Services. The last one is yet to evolve to the size of the others and is likely to see a deeper focus. The recent reorganisation also opens several avenues for the group, especially in M&A, monetisation and global alliances.

More monetisation avenues

The way ahead for RIL as a group will be defined by the strategic alliances and deals to further boost growth potential and the war chest required for it. More monetisation avenues beyond the Aramco deal is possible from other investors as deal talks with the Saudi Arabia major continues. This will lead to value unlocking and cash generation. Entities with core strength are created for attracting investors looking at the specific sectors and strengths.

Jio Platforms and Reliance Retail has seen marquee global investors like Google, Facebook, ADIA, KKR amongst others. Global ambitions cannot be ruled out with the backing of the tech biggies. Many companies in India are eyeing global listing opportunity and this may provide a platform as investors look for returns from their investments.

Key focus areas

As the global opportunities come calling world-class corporate governance standards are the key areas of focus for RIL. The corporatisation of different group verticals with industry veterans taking charge of different group companies has been in the works with promoters taking a step back in execution roles and giving larger direction to the group. Green-tech focus and reducing carbon footprint is also in the same direction of ESG compliance which has taken a centre stage globally.

While the growth path for each of the verticals is getting laid down and path charted out, an eventual succession planning by the promoters can also be morphed as the conglomerate evolves further.

Disclosure: Network18, the parent company of CNBCTV18.com, is controlled by Independent Media Trust, of which Reliance Industries is the sole beneficiary.

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