Four Major Factors Driving Reliance’s Breakdown in Top 100 Global Companies

Billionaire Mukesh Ambani-led Reliance Industries has broken into the top 100 global companies and now ranks 96 in the 2020 ranking which has been released by Fortune. Reliance Industries (RIL) has jumped 10 places to break into the world’s top 100 companies on the Fortune Global 500 list. This is the highest-ranking any Indian company has achieved in the Fortune Global 500 list.

In 2012 also, Reliance Industries had broken into the top 100 rankings when it was ranked 99th but slipped in subsequent years to rank 215th in 2016. Since then it has risen steadily, as per the Fortune ranking.  Indian Oil Corporation (IOC), Oil and Natural Gas Corporation (ONGC), State Bank of India (SBI), Bharat Petroleum Corp Ltd. (BPCL), Tata Motors, and Rajesh Exports are the other Indian companies featuring on the list.

Fortune companies are ranked by total revenues through their respective fiscal years ended on or before March 31, 2020.  Fortune also provided the revenues of the companies wherein Reliance had revenue of $86.2 billion, IOC had revenue of $69.2 billion. ONGC had revenue of $57 billion and SBI had $51 billion. According to Fortune, the 2020 list is topped by Walmart with a revenue of $524 billion, followed by three Chinese companies – Sinopec Group ($407 billion), State Grid ($384 billion), and China National Petroleum ($379 billion). Royal Dutch Shell is ranked 5th followed by Saudi oil giant Aramco in 6th position. 

The past few months have been exemplary for the Reliance industries as it has grown leaps and bounds. Here are the four major reasons that have been crucial in Reliance’s prowess.

•  Growth of Reliance Jio

India’s Reliance Jio is the world’s most ambitious tech company. Mukesh Ambani, MD and largest shareholder of RIL, has made it his dream to provide every Indian with access to affordable and comprehensive telecom services, and Jio has so far proven successful, attracting nearly 400 million subscribers in just a few years. Since its inception in 2016, Reliance Jio has been a revolution in the Indian telecommunication market. Over a short period of 4 years, Reliance Jio has become India’s biggest telecom network.

Presently, Jio dominates the Indian telecom market with a 32.1 percent market share, which is expected to reach 48 percent by FY 2025. The unparalleled growth of Reliance Jio Platforms, a subsidiary of India’s most-valued firm (Reliance Industries), has shocked rivals and spooked foreign tech companies such as Google and Amazon, both of which are now reportedly eyeing a slice of Jio which is amongst the world’s largest telecom markets.

·         Diversification of Services

Reliance Industries (RIL) is now shifting away from a focus on its energy business, to create a larger and more diversified conglomerate. The emphasis is on a stable business that is consumer-focused to capitalize on consumer opportunities in the Indian economy. Of course, major investments would still be done in the energy & petrochemical business, but Reliance is keen to develop retail, financial services, telecom, and other infrastructure. Recently, Reliance closed in Rs 27,513-crore deal with Future Group.

Retail Ventures Ltd. has acquired Future Group’s retail, wholesale, logistics, and warehousing assets. This deal is being seen as another step to the company’s transition towards becoming a consumer-focused retail and telecom company. Digital services such as Jio Cinema, Jio Giga Fibre, Jio Music, Jio TV, Jio Health Club, Jio News, Jio Cloud, Jio Switch, etc. are gaining ground at a rapid pace. Moreover, the launch of Jio Mart which recently began in 200 towns and cities has announced Reliance’s arrival in the retail market. According to published reports, total investments in all these ventures would aggregate more than Rs.1, 00,000 crore in the next five years. 

·         The Future Scope

In India, there are 696 million internet users at present and the number is expected to increase to 1 billion by 2025. Thus, the smartphone penetration is expected to rise significantly shortly giving rise to technologies such as 5G, Internet of Things (IoT), etc. Reliance is addressing this need by enhancing its portfolio of services and is prepared to exploit the opportunities provided by the digital transformation.

·         Whopping Investments

This perhaps is the most noteworthy reason behind RIL’s rapid growth in the past few months. Starting with Facebook’s investment of $5.7 billion in April 2020 – many global giants such as Google, Amazon, Qualcomm, KKR, Mubadala, Silver Lake, General Atlantic, Abu Dhabi Investment Authority, Vista Equity Partners, and TPG Capital have invested heavily in Reliance over the past few months – taking the total investment to more than $15 billion.

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