The 44th Annual General Meeting of Reliance Industries Ltd. was held on 24th June 2021. Given that RIL has been the top company by market capitalization in India, it was a keenly watched event. Over the last year, RIL has framed new partnerships with worldwide players like Google, Facebook, Microsoft, Qualcomm, and so on.
Before looking at this year’s AGM and its aftermath, let’s have a look at its last 5 years’ AGM and important decisions which changed the dynamics of the company as well as our country.
The investors were apprised of various developments including its entry into the green energy area, 5G rollout plan, cheaper smartphone, and other initiatives. Here are the key takeaways from Reliance Industries 44th AGM:
Reliance Industries Limited (RIL) has made a substantial commitment of spending Rs. 75,000 crores on clean energy. Out of that, Rs. 60,000 crore will be spent on four ‘Giga factories’– solar photovoltaic module factory, energy storage battery factory, electrolyzer factory, and fuel cell factory to store electricity on 5,000 acres of land at Jamnagar, Gujarat, home to the world’s biggest refining complex.
The remaining Rs. 15,000 crore will be spent on developing a value chain, partnerships, and futuristic technologies. Reliance Industries will also set up two additional divisions—Renewable Energy Project Management and Construction Division and Renewable Energy Project Finance Division—to facilitate the setting up of large renewable plants worldwide and provide finance to developers.
Can this plan be a Jio-like Success?
This picture clearly shows that Ambani’s aim for bridging the digital divide has shown colours. Similarly, the company’s vision with launching the new energy business aims at bridging the green energy divide in India by a three-step plan:
Talking about the opportunities of building a renewable sector in India, there is an installed renewable energy capacity of 94.43 GW (as of February) which has attracted investment worth $42 billion since 2014.
By 2040, it is expected that around 49% of the total electricity in India will be generated by renewable energy, with more efficient batteries used to store power. This will cut solar energy costs by 66%. However, if that happens, the use of renewables in place of coal will save India Rs 54,000 crore annually.
Considering its vast experience and agility to adjust to changing tides along with the existing opportunities, this plan can be pulled off by Reliance Industries Limited.
Another stratagem towards a technically advanced India was taken by RIL in its 44th AGM by unveiling Jio Phone Next (to be launched on the 10th September 2021). This is curated for a niche market segment having around 300 million 2G customers and 350 million feature phone users who can be migrated to 4G by providing economical smartphones. Jio has taken a momentous step in the Android Mission for India and will be the first to embark on this journey with Google in India.
Jio and Google Cloud have also come together in a Cloud partnership through which Reliance will migrate its core retail businesses like Reliance Retail, JioMart, JioHealth, JioSaavn, and others to Google Cloud’s infrastructure.
“The two companies will collaborate to bring a portfolio of 5G edge computing solutions as Jio builds new services across many verticals including gaming, healthcare, education, and entertainment. These will be powered by Jio’s 5G network and Google Cloud’s innovations in AI/ML, data and analytics, and other cloud-native technologies.” the Google blog post added.
Not glossing over the fact how Jio took the telecom sector by storm by attracting 50 million customers anon, it will be highly anticipated for Jio Phone Next to revolutionize the android industry as well. Now, only time will tell what lies in the future for Mukesh Ambani’s “2G mukt, 5G yukt” plan?
Saudi Aramco chairman Yasir Al-Rumayyan was instated on the board of Reliance Industries Ltd. This manoeuvre was a precursor to a $15 billion deal on account of the sale of a 20% stake in its oil-to-chemicals business to Aramco, the world’s top oil-exporting firm, in 2019.
He was inducted in place of Mr. Yogendra P Trivedi who expressed his desire to retire. As to quote Mr. Mukesh Ambani, “Al-Rumayyan joining our board is also the beginning of the internationalization of Reliance”. Public Investment Fund (PIF), governed by Al-Rumayyan, has invested billions of dollars in the RIL venture.
Aramco buying 20 percent in the O2C business would allow Reliance to build financial muscle, as it carves out a space for itself in highly competitive omnichannel retail. Aramco also gets access to one of the fastest-growing markets, a ready-made market for 5 lakh barrels per day of its Arabian crude and offering a potentially bigger downstream role in the future.
In addition to the aforementioned announcements made by RIL, there were a few more on the list.
Shares of Reliance Industries went down by 2.35%, the AGM still being in the process. They were also the worst performing shares on Friday – the day after their AGM. Let’s have a look at some reasons through the following points:
i. People were disappointed by the fact that there was no clarity on the valuations for the Saudi Aramco deal.
ii. Very few updates were provided about the ‘ultra-affordable’ smartphone to be launched in September.
iii. There was no mention of the listing of Jio and Reliance Retail anytime soon.
Despite these short-term views and disappointments, most are of the view that the ‘New Energy’ sector acts as a significant ESG positive for the company and has received a thumbs up on a medium-to-long-term basis.
That’s all for this week! We hope you liked it and would love to know your thoughts in the comment section. This article is written and curated by Muskan Kalani and Kashish Agarwal.