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Home / Opinion / Views /  RIL’s $100 billion milestone, powered by diversification

RIL’s $100 billion milestone, powered by diversification

A file photo of RIL chairman Mukesh Ambani. RIL’s consolidated revenues at 792,756 crore ($104.6 billion), put it comfortably within the world’s 100 companies by revenue

  • In 2021-22, the annual revenue of the retail business stood at nearly 2,00,000 crore, accounting for a quarter of RIL’s business.

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For both Reliance Industries Limited and chairman Mukesh Ambani, being at the top is not a new experience. Nevertheless, RIL’s newest record – of cracking the $100 billion mark in revenues – must be a source of some satisfaction not just to Ambani but the lakhs of retail investors in the RIL scrip, whose fanatical faith in the scrip has become a byword in Indian investing circles.

For both Reliance Industries Limited and chairman Mukesh Ambani, being at the top is not a new experience. Nevertheless, RIL’s newest record – of cracking the $100 billion mark in revenues – must be a source of some satisfaction not just to Ambani but the lakhs of retail investors in the RIL scrip, whose fanatical faith in the scrip has become a byword in Indian investing circles.

Despite the ever-weakening Indian currency, which deflated RIL’s rupee numbers by more than 79 times to arrive at the dollar figure, to have reached this peak is a signal achievement. India now has a truly global scale company. And the exhilarating part (or scary, depending on how you look at it) – is that this may just be the beginning.

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Despite the ever-weakening Indian currency, which deflated RIL’s rupee numbers by more than 79 times to arrive at the dollar figure, to have reached this peak is a signal achievement. India now has a truly global scale company. And the exhilarating part (or scary, depending on how you look at it) – is that this may just be the beginning.

RIL’s consolidated revenues at 792,756 crore ($104.6 billion), put it comfortably within the world’s 100 companies by revenue, up there with Korean carmaker Hyundai, US retailer Target and Japan Post for company, with computer maker Dell following close behind.

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But then, RIL has been within the top 100 for some time now. In fact, the Covid pandemic, which wreaked havoc on the toplines of many global and transnational companies, may have just helped accelerate RIL’s race up the rankings ladder, since its principal money earners – petroleum refining, data and telecommunications and retail – are all in essentially recession-proof sectors of the economy.

This has meant that RIL has access to both cash flows and profits at a scale difficult to match by any of its competitors. This makes RIL a virtually unstoppable force if it wants to seriously go after something.

The really interesting trend, however, is not the jaw-dropping numbers by themselves – it is how quickly the parts that make up this staggering total are changing. Consider this: Just five years ago, in 2017-18, RIL’s consolidated turnover of 4,30,731 crore came largely from its core business of refining, petrochemicals and oil and gas, with retail business contributing around 15% and digital business less than 5% to the overall total.

In 2021-22, the annual revenue of the retail business stood at nearly 2,00,000 crore, accounting for a quarter of RIL’s business. The retail arm now operates 15,196 physical stores – it opened 2,566 stores during the previous fiscal alone – and has over 3,61,000 employees, making Reliance Retail one of the largest Indian companies in its own right.

Reliance Jio, too, has been catching up. Annual revenue of digital services is just shy of the 1,00,000 crore mark ( 95,804 crore, or $12.6 billion) and now accounts for 12% of RIL’s total business. And with net profits for Jio Platforms close to $2 billion, it is easily the most profitable telecom operator in the country.

For RIL, this is a significant change in trajectory. So far, its growth has been powered largely by the refining and petrochemicals business. Make no mistake, it’s going to stay that way for quite some time to come. But what the diversifications into data and retail have done is to change RIL from a predominantly B-to-B company into one of the biggest B-to-C players in the country. Reliance Jio’s total customer base as of 31 March 2022 stood at 410.2 million, while the company claims the retail division has more than 153 million registered customers and serves over 1,00,000 customers every hour through its stores.

That level of retail connect gives it the opportunity to quickly scale to dominance in virtually any customer-focused segment it chooses to enter. What’s more, given the speed with which it has achieved profitability in both digital and retail, these two divisions offer the potential to unlock value at a scale that might dwarf even what the petrochem business has achieved so far. In 2020, for instance, Jio Platforms raised a staggering 1,52,056 crore through a dozen equity placements in the space of just 11 weeks – and still retains two-thirds of the company!

The massive cash flows and profits generated by the petrochemicals business were the reason RIL was able to muscle its way to the top dog position in digital and retail as quickly as it did – the competition simply could not come up with the same kind of money. But going forward, future growth may well be driven by the new cash cows of retail and digital.