RIL’s 10,000 crore shopping spree for Reliance Jio, Reliance Retail

Mumbai: Acquisitions were not its second nature. But when the yarn-to-telecom conglomerate, Reliance Industries Ltd (RIL) saw that it may be a tad lagging in building its new-age businesses, inorganic growth was the only route plausible. Over the past 11 months, RIL through its web of subsidiaries, has either acquired or struck partnerships with more than two dozen entities to expand Reliance Jio Infocomm Ltd and Reliance Retail, spending nearly 10,000 crore.

In comparison, RIL signed only two deals in 2017 in these segments.

Most of these acquisitions and tie-ups are in the telecom and retail space where RIL wants to strengthen its position.

"Currently, inorganic is the only route to grow in these segments. RIL has never been in these businesses, and to start from a scratch would need a good understanding and gestation period. Acquisitions or tie up would not only give RIL a jumpstart but also room to expand," said an analyst tracking RIL.

He spoke on the condition of anonymity.

RIL, identified as the master builder of successful greenfield projects, including the world’s largest refining complex in Jamnagar, Gujarat, is presently expanding its petrochemicals segment. However, its current acquisitive streak only reflects its interest and the ambition it harbours to emerge as a retail and technology giant.

Since this January, RIL has signed deals with Saavn music app, Eros International Plc, NetraDyne Inc., Karexpert Technologies, Vakt Holdings, Indiavidual Learning Pvt. Ltd, Radisys Corp, Kai OS Technologies and SkyTran Inc. among others.

Most of these acquisitions are to strengthen operations of its offerings via the Reliance Jio app.

“It is clear that RIL does not want be identified only as a telecom operator. The technology firms that it has chosen to tie up with, is indicative of that. These partnerships are clearly to further Reliance Jio’s innovation and tech leadership,” said the second analyst tracking RIL.

Last month, at the India Mobile Congress in New Delhi, RIL’s telecom arm Reliance Jio demonstrated multiple live 5G trials ranging from driverless cars, surveillance drones, and aerial disaster management vehicle SKYSHIP, with facial recognition features for rescue activities.

RIL aspires to be among the top 20 companies in the world and—along with refining and petrochemicals—Reliance Jio and Reliance Retail are the instruments.

"Reliance Jio has the opportunity to digitally reinvent with artificial intelligence and blockchain all sectors of the Indian economy whether it is entertainment, financial services, commerce, manufacturing, agriculture, education or healthcare,” RIL’s chief Mukesh Ambani had said last December.

On the retail front, while RIL acquired Rhea Retail this June, in September it picked up stakes in Genesis Luxury Fashion Pvt. Ltd, GLF Lifestyle Brands Pvt. Ltd, Genesis La Mode Pvt. Ltd, GML India Fashion Pvt. Ltd and GLB Body Care Pvt. Ltd, among others.

"E-commerce and new commerce (cash-n-carry, omni-channel) are likely to be key drivers in the future. Here, it is already testing point of sale machine for local merchants who, it hopes, will plug into its supply chain.

Reliance will need to invest to refurbish existing stores too. We expect annual capex rising to over $1 billion over the next few years," said Jefferies Equity Research in a 1 October report.