India's oil-to-telecom conglomerate Reliance Industries Ltd' annual general meetings are quite akin to the bigbang Apple launch events during Steve Jobs’ time. And not unlike Steve Jobs, Mukesh Ambani usually pulls a surprise in his 90-minute plus speech. At RIL's 42nd AGM, Ambani focused on the three core areas that will lead the group's growth in the coming years. Here are the top 10 takeaways from the AGM.
RIL to be debt free by March 31, 2021
For RIL, the last few years have been about capital expenditure and rapid expansion, especially across Jio and Retail. With the company now coming to the end of its capital expenditures cycle, Mukesh Ambani expects to make RIL a zero net debt company by the end of FY21. As on FY19-end, RIL had a net debt of Rs 1.54 lakh crore. This will be done via value unlocking deals across its businesses. This includes Saudi Aramco deal for oil-to-chemicals business, JV signed with BP, divesting stake via INVITs in telecom fibre and tower business and unlocking value in Jio, Reliance Retail, real estate assets and financial investments of the company. In addition, Ambani says that with the Capex cycle now at the tail end, RIL will see an EBITDA growth of 15 percent in the next 5 years.
Saudi Aramco to buy 20 percent stake in RIL's oil-to-chemicals biz
In what will be the biggest FDI in the country, Saudi Aramco, one of the largest natural gas and petroleum industries in the world by revenue, will buy 20 percent stake in RIL's oil to chemicals business at an enterprise value of $75 billion. For this, RIL will carve out the oil to chemicals biz into a subsidiary and sell to Saudi Aramco. The deal, which is subjected to due diligence and regulatory approvals, is expected to be completed by March 2020. In addition to the investment, Saudi Aramco will supply 500,000 barrels of crude oil a day to RIL's Jamnagar refinery on a long term basis.
Deal with BP key to growth
Mukesh Ambani has also clarified that the recently signed JV with BP for fuel retail, will bring in up to Rs 7,000 crore into RIL and will play a key role in the expansion plans of RIL's oil and gas businesses including the operations of its flagship KGD6 ops.
Jio and retail: Listing in five years and value unlocking
Reliance Industries has till date invested Rs 3.5 lakh crore in creating and building its telecom infrastructure. Ambani says that a bulk of investment in Jio has been done and now only incremental investments are likely. Jio currently has 340 million subscribers. With Reliance Retail also touching a turnover of Rs 130,000 crore, Ambani hopes to unlock value of both Jio and Reliance Retail by bringing in strategic and financial investors. In addition, a listing of both these business in five years’ time is also on the anvil.
Consumer biz to be 50 percent of EBITDA in the years to come
Ambani talked about how many were sceptical that Reliance Industries could make a splash in the consumer sector. But he believes that he has proven those 'sceptics' wrong with the growth of Jio and Reliance Retail. Currently consumer buisiness contributes to 32 percent of RIL's consolidated EBITDA. Ambani believes that this will rise to 50 percent in the years’ to come.
Jio Fiber commercial launch on September 5
After 12 months of trial and receiving feedback from customers, RIL has announced the commercial launch of its Jio Fiber business. Jio Fiber will be launched on September 5, Jio’s third anniversary, and will be priced between Rs 700 - Rs 10,000/ month. The base plan for Jio Fiber will start at 100 Mbps and will go up to 1 Gbps.
Ambani said he is ready to shine focus on 4 more lines of connectivity revenue areas. This will include, IOT (for which services will start by January 2020), home broadband services, broadband for small and medium businesses and large enterprises broadband.
The Jio set top box will be another big bet which will offer conference calls, free landline voice calls, significantly cheaper international calls for fixed line, gaming and unlimited data.
Jio-Microsoft partnership to set up data centres using Azure platform
In what will be another big bet in the technology space, Jio has announced a partnership with Microsoft to set up data centres across the country. The collaboration will accelerate innovation to create more affordable offerings for Indian SMBs and startups, including a new range of solutions for one-stop IT capabilities and allowing front-end applications on mobile devices, desktops and other tools. Jio will build new custom solutions on Microsoft Azure for large enterprises who have already benefited from our technology platforms. Companies will also have easy and affordable access to best-in-class technologies like data analytics, AI, cognitive services, blockchain, IoT and edge computing to accelerate India's digital transformation and enable grassroots innovation.
New commerce: The big bet for retail
RIL also indicated a massive opportunity coming from new commerce. Ambani clarified that Reliance Retail will soon unveil the Reliance new commerce initiative which will digitally connect kirana stores across the country. The company said that it has already completed the trials of Reliance Retail digital commerce venture which have delivered positive results. The move is expected to impact 3 crore kirana stores.
Big boost for start-ups
Ambani also announced his intent to scale up focus on advanced technologies like blockchain, edge computing and virtual reality/ mixed reality content and cloud infrastructure. In a boost for start-ups, he announced that Reliance Industries will offer free connectivity and cloud infrastructure services for start-ups. He urged start-ups to register for custom design packages at the Jio website. For MSME's a subsided package starting at Rs 1,500 is also being introduced
Slowdown is temporary, says Ambani
With economic volatility, tightening of liquidity and slowdown blues, a lot of fear has engulfed the financial markets and businesses. Addressing this, Ambani spoke about his views on slowdown. He believed that the slowdown is temporary and that he was confident that structural reforms and political stability will propel the country forward.
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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