Reliance Industries Limited
General Overview
Reliance Industries Limited (RIL) is world’s leading and India’s no: 1 Private Ltd.
Company. RIL group is a highly diversified group and is in to multiproduct business like
oil / gas exploration, retail of petro / consumer products and mfg. of petrochemical /
refining and textile products. Also, in to infrastructure and transportation sectors.
Reliance Industries is India's largest private sector company on all major financial
parameters. In 2004, Reliance Industries (RIL) became the first Indian private sector
organisation to be listed in the Fortune Global 500 list. The company operates world-
class manufacturing facilities across the country at Allahabad, Barabanki, Dahej, Hazira,
Hoshiarpur, Jamnagar, Nagothane, Nagpur, Naroda, Patalganga, Silvassa and
Vadodara.
Reliance has evolved from being a textiles and polyester company to an integrated
player across energy, materials, retail, entertainment and digital services. A quarter of
its revenue now comes from new businesses such as telecom, retail and digital
services. Mukesh Ambani-led Reliance Industries has emerged as the country's biggest
company with revenues in 2018-19 totalling Rs 6.23 lakh crore.
Reliance Industries Limited is engaged in refining, including manufacturing of refined
petroleum products, and petrochemicals, including manufacturing of basic chemicals,
fertilizers and nitrogen compounds, plastic and synthetic rubber in primary forms. The
Company's segments include Refining, Petrochemicals, Oil and Gas, Organized Retail
and Others. The Refining segment includes production and marketing operations of the
petroleum products. As of April 1, 2019, the oil refining capacity of India stood at 249.4
million tonnes, making it the second largest refiner in Asia.The Petrochemicals segment
includes production and marketing operations of petrochemical products, including
polyethylene, polypropylene, polyvinyl chloride, poly butadiene rubber, butadiene,
acrylonitrile, caustic soda and polyethylene terephthalate. The Oil and Gas segment
includes exploration, development and production of crude oil and natural gas. The
Organized Retail segment includes organized retail business in India. The ‘Others’
segment includes textile, Special Economic Zone (SEZ) development, telecom or
broadband business and media.
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Management of the company
Board construction of RIL is concerned there are 8 Non executive managers and four executive
managers. hence RIL is purely following suggestions given by Kumar mangalam Birla commission
sing corporate administration
The number of shares of RIL are 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 Life Insurance Corporation of India is the largest
non-promoter investor in the company, with 7.98% shareholding.
Even with more than 46% share within the family, the company has a very professional based
management, with experienced professional and experts from each field and make a very vibrant
and skillful Management control team for Reliance Industries Limited. The Management Team of RIL
is as -
Name Designation
Mukesh D Ambani Chairman & Managing Director
Nikhil R Meswani Executive Director
P M S Prasad Executive Director
Mansingh L Bhakta Independent Director
Dipak C Jain Independent Director
Adil Zainulbhai Independent Director
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Shumeet Banerji Independent Director
Name Designation
Nita M Ambani Non Exe.Non Ind.Director
Hital R Meswani Executive Director
Pawan Kumar Kapil Executive Director
Yogendra P Trivedi Independent Director
Raghunath A Mashelkar Independent Director
Raminder Singh Gujral Independent Director
Arundhati Bhattacharya Independent Director
Management Control Systems Internal Controls RIL has a comprehensive system of internal
controls to safeguard the Company’s assets against loss from unauthorized usage and guarantee
proper mandate of fiscal minutes. The Company has an thorough budgetary control system to
supervise all outgoes against approved budgets on an on-going footing. The Company’s accounting
procedure is based on unvarying accounting guideline that sets out accounting policies and
important procedures and deadlines on a company broad footing.
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SWOT Analysis
SWOT analysis is a vital strategic planning tool that can be used by Reliance Industries managers to
do a situational analysis of the organization . It is a useful technique to analyze the present
Strengths (S), Weakness (W), Opportunities (O) & Threats (T) Reliance Industries is facing in its
current business environment.
The Reliance Industries is one of the leading firms in its industry. Reliance Industries maintains its
prominent position in market by carefully analyzing and reviewing the SWOT analysis. SWOT
analysis a highly interactive process and requires effective coordination among various departments
within the company such as – marketing, finance, operations, management information systems and
strategic planning.
The SWOT Analysis framework facilitates an organization to identify the internal strategic
factors such as -strengths and weaknesses, & external strategic factorssuch as - opportunities
and threats.
Strengths
Strong market position in various categories: RIL is the first Indian private sector company to feature
into the Fortune Global 500. With leading market position in many of its businesses, Reliance is a
business giant in India with strong positions in Textile, energy, Retail etc. Reliance has also entered
Telecom industry in India with Jio and is sweeping the market.
Brand Name and financial position allow RIL to expand: Reliance is a strong brand name and capital
position which allows it to expand its businesses and also venture into newer businesses.
The operational advantage in refining: RIL has the world’s largest oil refinery in Jamnagar and is one
of the world’s largest private owned refining companies. With the use of latest technology, Reliance’s
refinery in Jamnagar is operationally efficient which gives great benefits for Reliance as it gets higher
yields.
Expansion in the retail industry: Reliance Retail (RRL) is expanding throughout the country with
putting emphasis on backwards integration. With great improvements in the value chain from
procurement from farmers to selling to customers, Reliance has increased its revenues substantially
and was the largest Indian retailer in FY 2015.
Reliance Jio: Reliance Jio has set the telecom industry by a storm. Reliance has laid out a
superlative infrastructure for 4G wireless services throughout the nation which has provided it with
the immense competitive advantage. Jio has also helped Reliance enhance its brand image and
become a mass popular brand.
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Other major strengths of the company are -
• Successful track record of integrating complimentary firms through mergers & acquisition.
• Strong dealer community
• Strong Free Cash Flow
• Strong Brand Portfolio
• Strong distribution network
• Automation of activities brought consistency of quality to Reliance Industries products
• Good Returns on Capital Expenditure
• Successful track record of developing new products
Weakness
Weakness are the areas where Reliance Industries can improve upon. Strategy is about making
choices and weakness are the areas where an organization can improve using SWOT analysis and
build on its competitive advantage and strategic positioning.
Production declining in exploratory blocks: RIL’s gas production from two of its major plants, KG-D6
project and Tapti Fields is decreasing due to various natural and operational challenges. A decrease
in production affects supply and operational margins.
Recent divesting and relinquishing activities affects growth: RIL recently divested in some of its
production sharing contracts in Dubai, Yemen etc. This affects global expansion plans for RIL.
Legal proceedings and litigations: RIL has been subjected to various legal proceedings and litigations
in the past. Recently, RIL has had to pay a hefty penalty amount to the government. Such instances
impact the reputation of the company.
Other major weaknesses faced by the company are -
• Days inventory is high compare to the competitors –
• Financial planning is not done properly and efficiently. The current asset ratio and liquid asset ratios
suggest that the company can use the cash more efficiently
• Limited success outside core business
• Need more investment in new technologies.
• Investment in Research and Development is below the fastest growing players in the industry.
• Organization structure is only compatible with present business model thus limiting expansion
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Opportunities
New Plants: RIL has commissioned a few new plants recently, for instance, PET resin plant and
Purified Terephthalic Acid (PTA) plant at Dahej, Gujarat. Expanding its operations facilities will further
increase production and strengthen RIL’s position in the market.
Investing in attractive international oil and gas destinations: In 2015, RIL won the bid for Myanmar
Offshore block with 96% interest. RIL should continue making such investments to expand its
operations globally.
CBM as unconventional natural gas: CBM is a natural gas extracted from coal beds. RIL has two
CBM blocks under it and is set to utilise CBM as the unconventional natural gas resource.
New offers in Reliance Jio: Mukesh Ambani’s pet project Reliance Jio has already become one of the
nation’s largest telecom networks. Reliance Jio needs to bring out new offers and a retention policy to
retain the customers who might as well drop Jio for another offer from other telecom giants.
Other opportunities with the RIL are -
• The new technology
• New customers from online channel
• Opening up of new markets The new taxation policy New environmental policies Economic uptick
and increase in customer spending,
• Decreasing cost of transportation
Threats
Intense competition in all sectors: RIL faces strong competition from various state-owned companies
in the Oil, Petroleum and Gas industries. IOC, HPCL and BPC are state owned companies which
are its biggest competitors.
In Retail, RIL faces stiff competition from the Future group, D-Mart etc. Such competition limits
market share.
In telecom, Jio is up against the giants of the industry like Vodafone, Airtel and Idea. These
companies are looking for a chance to regain customers lost to Jio.
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Other threats faced by RIL are -
• Increasing trend toward isolationism in the American economy can lead to similar reaction from other
government thus negatively impacting the international sales.
• New technologies developed by the competitor or market disruptor could be a serious threat to the
industry in medium to long term future.
• Rising pay Levels
• The demand of the highly profitable products is seasonal
• Growing strengths of local distributors
• No regular supply of innovative products
Competitor Analysis
MARKET
SALES NET TOTAL
COMPANY CAP.
TURNOVER PROFIT ASSETS
(RS. CR.)
RELIANCE
781,166.04 384,904.00 35,163.00 570,029.00
INDS.
ONGC 180,967.33 85,004.10 19,945.26 241,199.37
IOCL 138,105.73 516,681.56 21,346.12 172,150.37
BPCL 73,895.50 277,162.22 7,919.34 59,069.62
HPCL 40,655.52 244,085.13 6,357.07 45,020.78
Reliance Industries, being one of the major players in the Oil & Gas sector faces competition, but by
limited players due to various entry barriers in the sector. Due to high investment requirements and
the large volitality in the sector, the most of the other players in the industry are public sector
companies. The major competitors as the above tables can be mentioned as –
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• Oil and Natural Gas Corporation
• Indian Oil Corporation Limited
• Bharat Petroleum Corporation Limited
• Hindustan Petroleum Corporation Limited
Oil and Natural Gas Corporation
This Public Enterprise Represents India's Energy Security Through its Pioneering Efforts.
Maharatna ONGC is the largest crude oil and natural gas Company in India, contributing around
70 per cent to Indian domestic production. Crude oil is the raw material used by downstream
companies like IOC, BPCL, and HPCL to produce petroleum products like Petrol, Diesel, Kerosene,
Naphtha, and Cooking Gas-LPG.
This largest natural gas company ranks 11th among global energy majors (Platts). It is the only
public sector Indian company to feature in Fortune’s ‘Most Admired Energy Companies’ list. ONGC
ranks 18th in ‘Oil and Gas operations’ and 183rd overall in Forbes Global 2000. Acclaimed for its
Corporate Governance practices, Transparency International has ranked ONGC 26th among the
biggest publicly traded global giants. It is most valued and largest E&P Company in the world, and
one of the highest profit-making and dividend-paying enterprise
Indian Oil Corporation Limited
With a 33,000-plus work-force, extensive refining, distribution & marketing infrastructure and
advanced R&D facilities, lndianOil plays a significant role in fuelling the socio-economic development
of the country. With a mandate to ensure India's energy security and self-sufficiency in refining &
marketing of petroleum products, lndianOil has in the past six decades provided energy access to
millions of people across the length and breadth of the country through its ever-expanding network
of over 50,000 customer touch-points.
With a turnover of Rs. 6,05,924 crore and a net profit of Rs. 16,894 crore in 2018-19, lndianOil is
recognised as one of India's most valuable companies .
The Company continues to be the largest contributor to the national exchequer in the form of duties
and taxes. During the year 2018-19, Rs. 1,93,422 crore was paid to the exchequer as against Rs.
1,90,670 crore paid in the previous year.
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Bharat Petroleum Corporation Limited (BPCL) is a Government of
India controlled Maharatna oil and gas company headquartered in Mumbai, Maharashtra.The
Corporation operates two large refineries of the country located in Kochi and Mumbai. The company
is India's 2nd largest downstream oil company and is ranked 342nd on the Fortune list of the world's
biggest corporations as of 2016. BPCL ranked 672 in the Forbes 2018 list.
Hindustan Petroleum Corporation Limited (HPCL) is an
Indian oil and natural gas company with its headquarters at Mumbai, Maharashtra. It has about 25%
market-share in India among public-sector companies (PSUs) and a strong marketing
infrastructure. Oil and Natural Gas Corporation, also the promoter of the company, owns 51.11%
shares in HPCL and others are distributed amongst financial institutes, public and other
investors. The company is ranked 367th on the Fortune Global 500 list of the world's biggest
corporations as of 2016. HPCL got delisted from NIFTY 50 in March 2019
A Look at the financials of the company would give a good comparative look of the current positions
of various competitors.
IOC BPCL HPCL
Reliance
Mar '19 Mar '19 Mar '19 Mar '19
Sources Of Funds
Total Share Capital 6,339.00 9,181.00 1,966.88 1,524.21
Equity Share Capital 6,339.00 9,181.00 1,966.88 1,524.21
Share Application Money 0.00 0.00 0.00 0.00
Preference Share Capital 0.00 0.00 0.00 0.00
Reserves 398,983.00 99,476.00 34,770.80 26,650.61
Revaluation Reserves 0.00 0.00 0.00 0.00
Networth 405,322.00 108,657.00 36,737.68 28,174.82
Secured Loans 157,195.00 83,260.00 27,209.32 25,110.33
Unsecured Loans 0.00 0.00 0.00 0.00
Total Debt 157,195.00 83,260.00 27,209.32 25,110.33
Total Liabilities 562,517.00 191,917.00 63,947.00 53,285.15
Reliance IOC BPCL HPCL
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Mar '19 Mar '19 Mar '19 Mar '19
Application Of Funds
Gross Block 203,188.00 142,307.00 53,553.85 50,475.20
Less: Accum. Depreciation 0.00 0.00 0.00 0.00
Net Block 203,188.00 142,307.00 53,553.85 50,475.20
Capital Work in Progress 111,557.00 0.00 0.00 0.00
Investments 331,536.00 49,756.00 15,991.61 11,818.63
Inventories 44,144.00 71,470.00 21,544.65 20,193.42
Sundry Debtors 12,110.00 15,448.00 6,670.72 5,652.64
Cash and Bank Balance 3,768.00 92.00 95.41 95.61
Total Current Assets 60,022.00 87,010.00 28,310.78 25,941.67
Loans and Advances 69,442.00 36,635.00 17,771.01 15,515.35
Fixed Deposits 0.00 0.00 0.00 0.00
Total CA, Loans & Advances 129,464.00 123,645.00 46,081.79 41,457.02
Deffered Credit 0.00 0.00 0.00 0.00
Current Liabilities 209,962.00 112,769.00 48,423.43 48,238.52
Provisions 3,266.00 11,022.00 3,256.82 2,227.18
Total CL & Provisions 213,228.00 123,791.00 51,680.25 50,465.70
Net Current Assets -83,764.00 -146.00 -5,598.46 -9,008.68
Miscellaneous Expenses 0.00 0.00 0.00 0.00
Total Assets 562,517.00 191,917.00 63,947.00 53,285.15
Contingent Liabilities 111,869.00 0.00 0.00 0.00
FUTURE OUTLOOK
Reliance Industries Ltd (RIL) aims to double sales in about seven years, even as the company
explores ways to boost profitability of its mainstay refinery and chemicals businesses.
Ambani, however, does not plan to rely solely on refinery and petrochemicals, and is placing
outsized bets on new consumer businesses to drive growth. RIL has invested about ₹ 2.5 trillion in
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telecom unit Reliance Jio Infocomm Ltd, through which Ambani wants to venture into e-commerce,
healthcare, education and agriculture in the next two years.
As India starts on its high-growth journey to double the size of its economy by 2025, I the size of
Reliance is expected to be more than double in the same period
RIL currently derives 80% of its sales from refining and petrochemicals. This however, is undergoing
a change as the company focuses on consumer-facing businesses. RIL saw operating profit from its
consumer businesses rise to 13% of the total in the year ended 31 March from 2% in the previous
year. RIL’s consolidated revenue from operations was at ₹ 4.08 trillion last fiscal and net profit
at ₹ 36,080 crore. The future with the deal with Saudi Aramco seems quiet prosperous.
On the consumer side, Ambani’s immediate bet is on optical fibre-based fixed-line broadband which,
he claimed, offers hundreds of megabits per second of data speeds and will allow RIL to offer smart
home solutions.
Still, there are some concerns about the company’s growing debt (about ₹ 1.41 trillion) on account of
Jio.
Generating reasonable returns (say a 10% post-tax return on capital employed) off a balance sheet
of R-Jio’s size (current levels) needs the company to generate an Ebitda (we compute it to be $8
billion) that is higher than the peak historical annual Ebitda ever generated by the aggregate Indian
telecom industry, including the home broadband and enterprise data players, per our math.
The company is the biggest company is India and the future outlook seems that it is likely maintain
it’s Position.
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