Blog: Reliance Industries

Blog: India

Reliance Industries is the largest company listed at the Nifty 50, and have a weighting of 12,9% of the Index.  The company has a long and interesting history, from the start as a polyester firm, towards today which include a split into two companies, family conflicts, bankruptcies and the inclusion of a number of subsidiaries, to become the leading company it is as of today.

History

Reliance Industries was established in 1966, with the name Reliance Commercial Corporation by Dhirubhag Ambani, as a polyester firm. It was only in 1973 it was renamed Reliance Industries, and had its IPO in 1977. During the 80s and the 90s it started to broaden the focus in the petrochemical area and further into oil and gas.  Among the most important events was:

• Establishment of Hazira Manufacturing Division
• Establishment of Reliance Petroleum
• Entry into the telecom Industry
• Establishment of Reliance Gas

Further came the death of Dhirubhag Ambani in 2002.  He had two sons, Mukesh and Anil which could not agree of the running of the company, ending in a split where Mukesh Ambani was given the oil, gas, petrochemicals, refining and manufacturing parts of the business, and Anil Ambani got electricity, telecom and financial services.

Mukesh have been the most successful, where the main industries in “old” Reliance Industries have kept on bringing a stabile income. In addition to successful subsidiaries. It has brought Mukesh up as the richest man in India and Asia, barely in front of Gautam Adani, owner of Adani group.

The story of Anil Ambani has shown a totally different direction. After being considered as the third richest person in India, in 2008, he had to declare bankruptcy in 2020.  Through the years from 2008, a number of his investments and companies have crashed, and at the end he was saved by big-brother Mukesh who paid of his final debt to Ericsson, stopping Anil from going to jail.

Today

The Reliance Industries of today is having Mukesh Ambani as the main owner with about 50% of the equity. Its core focus is still petrochemicals, refining, oil and gas related operations, with 75 % of its income from refining, and the other three counting for 15%.

In addition, Reliance has established a number of subsidiaries. The most important one is Jio Mobile, which is a company focusing on the mobile industry. Jio was officially launched in 2016, after spending much time and a large amount of money on its 4G mobile infrastructure. When launching it also killed off almost all competition with large cut in the established price levels.

It led to large changes in the mobile industry, players leaving India or unite into larger companies. Per 2022 Jio, Airtel and VI (Vodaphone and Idea Cellular) has 88% of the market. Jio is the largest mobile operator in India, and third largest globally with more than 400 million users.

Reliance retail is another subsidiary of Reliance Industries. It is the largest retailer in India, and after establishing in 2006, it has grown into a giant selling all types of products, both in physical stores and via E-commerce.

Reliance solar is a relative new subsidiary, but one that will be highly relevant in the coming years. Mukesh Ambani is betting high in a market expected to grow many times in the coming decades. To cover Indias need for electricity, and with the opportunities for solar power in India, one should expect that Reliance Solar will challenge the leading solar companies in India like Tata Power Solar going forward.  India just last year announced the goal of carbon neutrality in 2070, and with a share of fossil fuel of about 75 %, we should expect large changes going forward.

Other relevant subsidiaries of Reliance Industries are:

• Reliance Life Science
• Reliance Logistics
• Clinical Research Services
• Network 18
• Reliance Industries Infrastructure

Reliance is as of today the largest company listed at the Nifty 50 and will keep on being a very important player in the Indian market for years to come. Subsidiaries like Jio Mobile and the coming solar focus, will in addition to its core petrochemical industries be central in the large growth expected in India the next 2 – 4 decades.