MUKESH AMBANI is unstoppable when it comes to finding business opportunities and building deep-tech ecosystems around it. During a recent conversation with Nvidia CEO Jensen Huang, Ambani said Reliance Industries (RIL) wants to build artificial intelligence (AI) infrastructure in the country to make the technologies available at affordable cost. “We have to repeat a Jio for intelligence to be really affordable, available to the common people,” Ambani said at the Nvidia AI Summit at the Jio World Centre in Mumbai.

Ambani expects India to grow as one of the biggest AI markets. He wants to empower RIL’s operations with the intelligence for amplifying production, enhancing supply chain and quickly responding to market needs.

Capital has never been an issue for Ambani. RIL spent ₹1.3 lakh crore towards capital expenditure in FY24, compared with ₹1.4 lakh crore in the previous year for the expansion of 5G network and the retail business. It augmented oil and gas production, and invested in projects in the oil-to-chemicals (O2C) segment.

In the last three years, the giant refiner has been building its 5G network and expanding its retail footprint with the addition of stores and brands. It has also ventured into financial services and FMCG businesses. The construction of the Green Energy Giga Complex in Jamnagar, Gujarat, with five Giga factories — for integrated manufacturing of solar photovoltaic modules, energy storage battery, electrolyser, fuel cell, and power electronics — is in full swing. The solar energy venture is expected to make RIL carbon-neutral by 2035.

All these reflect in the conglomerate’s financials as well. In March 2024, RIL became the first Indian company to cross ₹1 lakh crore in pre-tax profit. Market capitalisation had already crossed ₹20 lakh crore a month before. Meanwhile, Abu Dhabi Investment Authority invested ₹4,967 crore in Reliance Retail Ventures Ltd. (RRVL) in October last year, valuing the company at ₹8.4 lakh crore.

The accelerated expansion of Jio’s subscriber base and the expansive omni-channel presence of Reliance Retail helped RIL improve its performance in FY24. It posted ₹69,621-crore in profit (4.38% increase YoY) and ₹9.22 lakh crore in total income (0.23% increase). In the first half of the current fiscal, revenue increased 5.9% YoY to ₹5.16 lakh crore, while profit fell 3.6% to ₹36,768 crore.

RIL’s performance is a reflection of the robust growth in digital services and upstream businesses, Ambani said in the Q2 press statement. “This helped partially offset weak contribution from the O2C business, which was impacted by unfavourable global demand-supply dynamics,” he added.

Customer Centricity

A decade ago, Ambani’s attempt to build a telecom company drew a lot of scepticism. The Indian market was abuzz with around 10 telecom players, and critics did not expect Jio to disrupt the segment and overtake incumbents Bharti Airtel and Vodafone Idea.

From almost zero in mid-2016, Jio Platforms Ltd. (JPL), the holding company of RIL’s digital and telecom businesses, posted a profit of ₹21,423 crore in FY24. Revenue went up to ₹1.29 lakh crore as the company added 42.4 million subscribers during the fiscal. In fact, its 478.8 million customer base in September 2024 was the largest in India. Average revenue per user (ARPU) rose to ₹195 during the month, from ₹182 a year ago, mainly due to the impact of tariff hike.

Jio focused on deep-tech innovation right from the beginning, Reliance Jio Infocomm chairman Akash Ambani said after the Q2 results. “The ongoing transformation created by Jio True5G and JioAirFiber in India’s digital landscape is a testament to this approach. AI is creating the next runway for this transformation, and Jio is committed to developing the world’s best AI ecosystem in India, for all Indians.” According to research agency DAM Capital, Jio remains the strongest asset in RIL’s kitty, offering a multi-year growth opportunity both in wireless and home broadband sectors.

Isha Ambani-led Reliance Retail Ventures Ltd. (RRVL), meanwhile, delivered a resilient performance with gross revenues of ₹3.07 lakh crore in FY24, a 17.8% growth year-on-year. Net profit increased 20.9% YoY to ₹11,101 crore. The retail chain has 18,946 stores across consumer electronics, fashion and lifestyle and grocery segments, and is investing in technology and infrastructure to build the foundation for future growth, director Isha Ambani had said earlier.

The company is also closing down non-profitable units, besides betting big on the FMCG space and foraying into quick commerce. It is currently running a pilot project, offering to leverage its own store network. A ₹3,900-crore investment in the FMCG company, Reliance Consumer Products Ltd., through a combination of equity and debt, is also on the cards.

“Reliance Retail expects its pan-India store infrastructure to serve as an advantage over its competitors and the company is looking to improve its delivery speed without any major fixed-cost investments,” JP Morgan says in its research report. Digital commerce contributed 17% to RRVL’s total revenue in Q2 FY25. The company is looking to widen its product catalogue by onboarding external brands.

New Ventures

Riding high on telecom and retail, RIL is set to kick-start its new energy venture in the coming months, beginning with the first phase of its 20GW solar photovoltaic (PV) manufacturing facility. “The company has set an ambitious target to scale up the new energy business to the size of its O2C business ($7.5 billion EBITDA in FY24) in the next five-seven years,” CLSA says in a report. It is looking at acquisitions and JVs with companies, including REC Solar, Caelux and others, to produce the more advanced heterojunction (HJT) technology modules, the report adds.

In fact, Ambani wants to set up an integrated manufacturing firm in the solar value chain — for manufacturing polysilicon to PV cells and finally energy storage — which will help the country reduce its import from China. In 2025, RIL plans to commission the 20GW solar power generation project. The output will be fully utilised for green hydrogen production and Ambani envisages to provide green hydrogen at $1 a kg. The project will commence RIL’s transition from grey to green hydrogen.

The company had initially earmarked ₹75,000 crore to build the Giga factories in a 5,000-acre land in Jamnagar. However, Ambani later announced it was ready to double the investment to further scale up the new energy manufacturing ecosystem that intends to produce 100 GW of solar power infrastructure by 2030. RIL has two refineries and a petrochemical complex near the location.

To boost its portfolio, Reliance New Energy Solar (RNESL), in which Ambani’s younger son Anant is the director, has made a host of acquisitions, including REC Solar ($771 million), Sterling Wilson (40% stake for $240 million), and Faradion ($100 million). It also invested $30 million in Germany-based solar wafer producer NexWafe, and signed an agreement with Denmark-based Stiesdal A/S for technology development and manufacture of hydrogen electrolysers. RNESL has also invested $50 million in Ambri Inc., an energy storage company based in Massachusetts, U.S.

Oil & Beyond

Ambani expects carbon emission from refineries and petrochemical plants to be neutralised at the net level with the commissioning of renewable projects. However, old businesses will continue as a cash cow for at least a decade.

A relief for RIL in the last two years has been the turnaround of its hydrocarbon assets in the Krishna-Godavari (KG) basin, in which Britain’s BP Plc holds a 33% stake. The company’s gas production grew 53.2% to 268.6 billion cubic feet (BCF) equivalent in FY24, resulting in a robust EBITDA growth of 48.6%. The Hydrocarbon division’s revenue went up 48% to ₹24,439 crore, mainly on account of higher gas and condensate production.

In the media business, RIL has finalised the merger of its media properties with Walt Disney’s India operations. The JV is valued at ₹70,352 crore. RIL will invest ₹11,500 crore in the venture with Nita Ambani as the chairperson.

On the family front, Ambani has laid out a succession plan and elevated his three children as non-executive directors to RIL’s board. He plans to spend the next five years of his chairmanship preparing them to take charge of RIL’s transformation into a digital, consumer and green energy behemoth.