Dr.

Vishwanath Karad MIT World Peace University

MBA PROGRAMME
CASE STUDY

Strategic Management: Case No. 4

Reliance Industries Limited

Reliance Industries Limited (RIL) is an Indian conglomerate holding company headquartered in

Mumbai, Maharashtra, India. Reliance owns businesses across India engaged in energy,
petrochemicals, textiles, natural resources, retail, and telecommunications. Reliance is one of the most
profitable companies in India, the largest publicly traded company in India by market capitalization,
and the second largest company in India as measured by revenue after the government-controlled
Indian Oil Corporation. On 18 October 2007, Reliance Industries became the first Indian company to
breach $100 billion market capitalization. The company is ranked 203rd on the Fortune Global 500
list of the world's biggest corporations as of 2017. It is ranked 8th among the Top 250 Global Energy
Companies by Platts as of 2016. Reliance continues to be India’s largest exporter, accounting for 8%
of India's total merchandise exports with a value of Rs 147,755 crore and access to markets in 108
countries. Reliance is responsible for almost 5% of the government of India's total revenues from
customs and excise duty. It is also the highest income tax payer in the private sector in India.

History
1960–1980

The company was co-founded by Dhirubhai Ambani and Champaklal Damani in 1960s as Reliance
Commercial Corporation. In 1965, the partnership ended and Dhirubhai continued the polyester
business of the firm. In 1966, Reliance Textiles Industries Pvt Ltd was incorporated in Maharashtra. It
established a synthetic fabrics mill in the same year at Naroda in Gujarat. In 1975, the company
expanded its business into textiles, with "Vimal" becoming its major brand in later years. The
company held its Initial public offering (IPO) in 1977. The issue was over-subscribed by seven times.
In 1979, a textiles company Sidhpur Mills was amalgamated with the company. In 1980, the company
expanded its polyester yarn business by setting up a Polyester Filament Yarn Plant in Patalganga,
Raigad, Maharashtra with financial and technical collaboration with E. I. du Pont de Nemours & Co.,
U.S.

1981–2000

In 1985, the name of the company was changed from Reliance Textiles Industries Ltd. to Reliance
Industries Ltd. During the years 1985 to 1992, the company expanded its installed capacity for
producing polyester yarn by over 145,000 tonnes per annum.

The Hazira petrochemical plant was commissioned in 1991–92.

In 1993, Reliance turned to the overseas capital markets for funds through a global depositary issue of
Reliance Petroleum. In 1996, it became the first private sector company in India to be rated by
international credit rating agencies. S&P rated Reliance "BB+, stable outlook, constrained by the
sovereign ceiling". Moody's rated "Baa3, Investment grade, constrained by the sovereign ceiling".
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In 1995/96, the company entered the telecom industry through a joint venture with NYNEX, USA and
promoted Reliance Telecom Private Limited in India.

In 1998/99, RIL introduced packaged LPG in 15 kg cylinders under the brand name Reliance Gas.

The years 1998–2000 saw the construction of the integrated petrochemical complex at Jamnagar in
Gujarat, the largest refinery in the world.

2001 onwards

In 2001, Reliance Industries Ltd. and Reliance Petroleum Ltd. became India's two largest companies
in terms of all major financial parameters. In 2001–02, Reliance Petroleum was merged with Reliance
Industries.

In 2002, Reliance announced India's biggest gas discovery (at the Krishna Godavari basin) in nearly
three decades and one of the largest gas discoveries in the world during 2002. The in-place volume of
natural gas was in excess of 7 trillion cubic feet, equivalent to about 1.2 billion barrels of crude oil.
This was the first ever discovery by an Indian private sector company.

In 2002–03, RIL purchased a majority stake in Indian Petrochemicals Corporation Ltd. (IPCL), India's
second largest petrochemicals company, from the government of India. IPCL was later merged with
RIL in 2008.

In 2005 and 2006, the company reorganized its business by demerging its investments in power
generation and distribution, financial services and telecommunication services into four separate
entities.

In 2006, Reliance entered the organised retail market in India with the launch of its retail store format
under the brand name of 'Reliance Fresh'. By the end of 2008, Reliance retail had close to 600 stores
across 57 cities in India.

In November 2009, Reliance Industries issued 1:1 bonus shares to its shareholders.

In 2010, Reliance entered the broadband services market with acquisition of Infotel Broadband
Services Limited, which was the only successful bidder for pan-India fourth-generation (4G) spectrum
auction held by the government of India.

In the same year, Reliance and BP announced a partnership in the oil and gas business. BP took a 30
per cent stake in 23 oil and gas production sharing contracts that Reliance operates in India, including
the KG-D6 block for $7.2 billion. Reliance also formed a 50:50 joint venture with BP for sourcing
and marketing of gas in India.

In 2017, RIL set up a joint venture with Russian Company Sibur for setting up a Butyl rubber plant in
Jamnagar, Gujarat, to be operational by 2018.

Shareholding

The number of shares of RIL is approx. 3.1 billion. The promoter group, Ambani family, holds
approx. 46.32% of the total shares whereas the remaining 53.68% shares are held by public
shareholders, including FII and corporate bodies.

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Listing

The company's equity shares are listed on the National Stock Exchange of India Limited (NSE) and
the BSE Limited. The Global Depository Receipts (GDRs) issued by the Company are listed on
Luxembourg Stock Exchange. It has issued approx. 56 million GDRs wherein each GDR is equivalent
to two equity shares of the company. Approximately 3.46% of its total shares are listed on
Luxembourg Stock Exchange.

It has received domestic credit ratings of AAA from CRISIL (S&P subsidiary) and Fitch. Moody's
and S&P have provided investment grade ratings for international debt of the company, as Baa2
positive outlook (local currency issuer rating) and BBB+ outlook respectively. On the 28th of
December, 2017, RIL announced that it will be acquiring the wireless assets of Anil Ambani-led
Reliance Communications for about ₹23,000 crores.

Operations

The company's petrochemical, refining, oil and gas-related operations form the core of its business;
other divisions of the company include cloth, retail business, telecommunications and special
economic zone (SEZ) development. In 2012–13, it earned 76% of its revenue from refining, 19%
from petrochemicals, 2% from oil & gas and 3% from other segments.

In July 2012, RIL informed that it was going to invest US$1 billion over the next few years in its new
aerospace division which will design, develop, manufacture, equipment and components, including
aircraft, engine, radars, avionics and accessories for military and civilian aircraft, helicopters,
unmanned airborne vehicles and aerostats.

Major subsidiaries and associates:

On 31 March 2013, the company had 123 subsidiary companies and 10 associate companies.

• Reliance Retail is the retail business wing of the Reliance Industries. In March 2013, it had
1466 stores in India. It is the largest retailer in India. Many brands like Reliance Fresh,
Reliance Footprint, Reliance Time Out, Reliance Digital, Reliance Wellness, Reliance
Trends, Reliance Autozone, Reliance Super, Reliance Mart, Reliance iStore, Reliance Home
Kitchens, Reliance Market (Cash n Carry) and Reliance Jewel come under the Reliance Retail
brand. Its annual revenue for the financial year 2012–13 was ₹108 billion (US$1.5 billion)
with an EBITDA of ₹780 million (US$11 million).
• Reliance Life Sciences works around medical, plant and industrial biotechnology
opportunities. It specializes in manufacturing, branding, and marketing Reliance Industries'
products in bio-pharmaceuticals, pharmaceuticals, clinical research services, regenerative
medicine, molecular medicine, novel therapeutics, biofuels, plant biotechnology, and
industrial biotechnology sectors of the medical business industry.
• Reliance Institute of Life Sciences (RILS), established by Dhirubhai Ambani Foundation, is
an institution offering higher education in various fields of life sciences and related
technologies.
• Reliance Logistics is a single-window company selling transportation, distribution,
warehousing, logistics, and supply chain-related products, supported by in-house telematics
and telemetry solutions. Reliance Logistics is an asset based company with its own fleet and
infrastructure. It provides logistics services to Reliance group companies and outsiders.
Merged content from Reliance Logistics to here.

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 • Reliance Clinical Research Services (RCRS), a contract research organisation (CRO) and
wholly owned subsidiary of Reliance Life Sciences, specialises in the clinical research
services industry. Its clients are primarily pharmaceutical, biotechnology and medical device
companies.
• Reliance Solar, the solar energy subsidiary of Reliance, was established to produce and retail
solar energy systems primarily to remote and rural areas. It offers a range of products based
on solar energy: solar lanterns, home lighting systems, street lighting systems, water
purification systems, refrigeration systems and solar air conditioners. Merged content from
Reliance Solar to here.
• Relicord is a cord blood banking service owned by Reliance Life Sciences. It was established
in 2002. It has been inspected and accredited by AABB,and also has been accorded a licence
by Food and Drug Administration (FDA), Government of India.
• Reliance Jio Infocomm Limited (RJIL) previously known as Infotel Broadband, is a
broadband service provider which gained 4G licences for operating across India.
• Reliance Industrial Infrastructure Limited (RIIL) is an associate company of RIL. RIL holds
45.43% of total shares of RIIL. It was incorporated in September 1988 as Chembur
Patalganga Pipelines Limited, with the main objective being to build and operate cross-
country pipelines for transporting petroleum products. The company's name was subsequently
changed to CPPL Limited in September 1992, and thereafter to its present name, Reliance
Industrial Infrastructure Limited, in March 1994. RIIL is mainly engaged in the business of
setting up and operating industrial infrastructure. The company is also engaged in related
activities involving leasing and providing services connected with computer software and data
processing. The company set up a 200-millimetre diameter twin pipeline system that connects
the Bharat Petroleum refinery at Mahul, Maharashtra, to Reliance's petrochemical complex at
Patalganga, Maharashtra. The pipeline carries petroleum products including naphtha and
kerosene. It has commissioned facilities like the supervisory control and data acquisition
system and the cathodic protection system, a jackwell at River Tapi, and a raw water pipeline
system at Hazira. The infrastructure company constructed a 71,000 kilo-litre petrochemical
product storage and distribution terminal at the Jawaharlal Nehru Port Trust (JNPT) Area in
Maharashtra.
• LYF, a 4G-enabled VoLTE device brand from Reliance Retail.
• Network 18, a mass media company. It has interests in television, digital platforms,
publication, mobile apps, and films. It also operates two joint ventures, namely Viacom 18
and History TV18 with Viacom and A+E Networks respectively. It has also acquired ETV
Network and since renamed its channels under the Colors TV brand.
• Reliance Eros Productions LLP, joint venture with Eros International to produce film content
in India.

Employees

As on 31 March 2013, the company had 23,519 employees of which 1,159 were women and 83 were
employees with disabilities. It also had 29,462 temporary employees on the same date. As per its
Sustainability Report for 2011–12, the attrition rate was 7.5%. But currently, the same attrition rate
has gone up to 23.4% in 2015 as per latest report released by the organization.

In its 39th Annual General Meeting, its chairman informed the shareholders of the investment plans of
the company of about ₹1,500 billion (US$21 billion) in the next three years. This would be
accompanied by increasing the staff strength in Retail division from existing strength of 35,000 to

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120,000 in next 3 years and increasing employees in Telecom division from existing 3,000 to 10,000
in 12 months.

Awards and recognition

• International Refiner of the year in 2017 at Global Refining and Petrochemicals Congress
2017
• International Refiner of the Year in 2013 at the HART Energy's 27th World Refining &
Fuel Conference. This is the second time that RIL has received this Award for its
Jamnagar Refinery, the first being in 2005.
• According to survey conducted by Brand Finance in 2013, Reliance is the second most
valuable brand in India.
• The Brand Trust Report ranked Reliance Industries as the 7th most trusted brand in India
in 2013 and 9th in 2014.
• RIL was certified as 'Responsible Care Company' by the American Chemistry Council in
March, 2012.
• RIL was ranked at 25th position across the world, on the basis of sales, in the ICIS Top
100 Chemicals Companies list in 2012.
• RIL was awarded the National Golden Peacock Award 2011 for its contribution in the
field of corporate sustainability.
• In 2009, Boston Consulting Group (BCG) named Reliance Industries as the world's fifth
biggest 'sustainable value creator' in a list of 25 top companies globally in terms of
investor returns over a decade.
• The company was selected as one of the world's 100 best managed companies for the year
2000 by IndustryWeek magazine.
• From 1994 to 1997, the company won National Energy Conservation Award in the
petrochemical sector

Questions:

1. Trace Reliance’s growth from a small partnership to a global conglomerate.

2. What diversification strategy does the company use? Explain using Ansoff’s extended matrix.
3. What strategy is used - Red ocean or Blue ocean?
4. Which of Porter’s Generic Strategy is being used?
5. What are the core competences of Reliance that are being leveraged?
6. Map all the SBUs (strategic business units) on the BCG matrix – which are question marks,
stars, and cash cows?

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