Reliance

RELIANCE INDUSTRIES PRIVATE LTD.

Adan Fatih PG Ops Md. Asif PG Ops

Anoop Janardanan PG Ops 129 Swapnil Joshi PG Ops 130

Company Profile

• Founded by Mr. Dhirubhai Ambani in 1932• Currently India’s largest Private Sector Enterprise• Annual revenues exceed $66 Billion• Ranked 99 on Fortune Global 500 list as of 2013.• 2nd largest publicly traded company in India by market

capitalization• Contributes to 14 % of India’s total exports• Largest polyester yarn and fibre producer in the world

Business Portfolio

Type 1• Oil and Gas Exploration

and Production• Petroleum refining and

marketing• Petrochemicals

Type 2• Reliance

Communications• Reliance Power• Reliance Retail• Reliance Infrastructure

RIL Vision, Mission & Values Vision: To create economic value for

stakeholders by offering competitive goods and services in the energy value chain and new economy domains

Mission: Create value for all stakeholders, grow through innovation, ensure energy security of the nation, foster rural prosperity

Values: • Care • Citizenship • Fairness •Honesty • Integrity • Purposefulness • Respect • Responsibility • Safety • Truth.

Core competencies:• Ability to conceptualize and implement

complex, multi-billion dollar projects• Largest in-house pool of intellectual

capital• Unique financial engineering capabilities• Attracting and retaining the best people,

and nurturing the ‘entrepreneurial’ spirit• Absorption of diverse and complex

technologies and optimal operation of plants

Differentiation Strategy• Market reputation and customer relationships

are key long term advantagesStrategy is built around:• World class quality of products • Widest range of product grades • Reliability of supplies at competitive prices• Extensive nation-wide distribution network• Technology and product development support

Reliance Backward Vertical Integration

1• Trading in textiles and yarn

2• Manufacturing textiles

3• Manufacturing polyester yarn and fibre

4• Petrochemical manufacturing

5• Petroleum refining and retailing

6• Oil and gas exploration

Why vertical integration?• Started with textile trading which became a thriving

business and gave highest sales• Great potential of textile industry lured Reliance into

textile manufacturing• Problems on the distribution side led Reliance into retail

business• Market potential coupled with political influence

enabled Reliance enter petrochemical industry• Near collapse of Indian oil industry in 1997 gave

Reliance opportunity to enter petroleum refining• The drive to control enter energy supply-chain pushed

Reliance more behind into oil & gas exploration and production

Most recent acquistion• Acquired Network 18-one of the biggest

media houses in the country Rs 40 billion in May 2014

• Enables RIL to control web content via , IBNlive.com, Moneycontrol.com, Firstpost.com, Cricketnext, Homeshop18, bookmyshow.com

• Enables RIL to control TV content via channels such as Colors, CNBC TV18, CNN-IBN, IBN7 and CNBC Awaaz

Reasons for acquisition• Reliance Jio Infocomm’s impending roll out of 4G

services will be assisted by Network 18’s huge content in Broadcast Digital E-commerce

• Help differentiate Reliance’s 4G services by providing a unique amalgamation at the intersection of telecom, web and digital commerce via a suite of premier digital properties

• Complete control over one of the largest media companies in the country, with a presence across television, print and digital, helps to put across one’s point of view Capture Audience Attention

• Network18 was substantially undervalued considering its portfolio and size of the group

3-test approach to diversification• Attractiveness test(Industry must be

structurally attractive or capable of being made attractive)

License-permit Raj created anomalous duty structures

States levied high duties on inputs at every stage of production

Reduce the impact of cascading duties by integrating vertically

Absence of competition spurred Reliance into backward vertical integration.

3-test approach to diversification(Contd.)

• Cost of Entry Test(The cost of entry must not capitalize all future profits)

Absence of competition encouraged Reliance that its profits would not be offset

Vast capacities dictated the need to control the entire supply chain from one end to the other to offset the possibility of shortage of supplies of raw materials at any stage for Reliance

• Better Off Test (Either the new unit must gain competitive advantage from its link with the corporation or vice-versa)

• Created bigger and bigger agglomerations of businesses in order to build size and scale in an India protected by tariff walls

• size enabled him to raise more and more capital, both from lenders and the equity markets

• capital enabled him to create global-scale capacities at lower cost than his competitors despite high import tariffs on capital goods, plant and machinery.

• ensured high share prices by two ruses: creating companies and then merging them into Reliance; and by ensuring his share prices remained high by constantly feeding his investor base with the prospect of higher returns.

3-test approach to diversification(Contd.)

BCG Matrix for Reliance Industries’ Portfolio

-PETROLEUM REFINING & MARKETING-OIL AND GAS EXPLORATION & PRODUCTION -RELIANCE POWER

-RELIANCE RETAIL-RELIANCE CAPITAL

-RELIANCE INFRASTRUCTURE

-RELIANCE PETROCHEMICALS - RELIANCE COMMUNICATIONS

-VIMAL

GE-Mckinsey Matrix for RIL

-PETROLEUM REFINING AND MARKETING

-OIL AND GAS EXPLORATION

-RELIANCE RETAIL

- RELIANCE CAPITAL

-RELIANCE INFRASTRUCTURE

-RELIANCE POWER

-RELIANCE INFRASTRUCTURE

Vertical Integration at a glance

Vertical Integration at Reliance• A great example of vertical integration in

modern business• Reliance's backward integration into

polyester fibre from textiles and further into petrochemicals was started by Dhirubhai Ambani.

• Reliance now has a complete vertical product portfolio from oil and gas production, refining, petrochemicals, synthetic garments and retail outlets- - to be fully integrated along the materials and energy value chain.

Vertical Integration Advantages• Reduce transportation costs if common ownership

results in closer geographic proximity.

• Improved supply chain coordination.

• Provided more opportunities to differentiate by means of increased control over inputs.

• Capture upstream profit margins.

• Increase entry barriers to potential competitors, for example, Reliance has gained sole access to a scarce resource i.e. oil fields.

• Lead to expansion of core competencies

Vertical Integration Disadvantages• Capacity balancing issues. For example,

Reliance needed to build excess upstream capacity to ensure that its downstream operations have sufficient supply under all demand conditions.

• Higher costs due to low efficiencies resulting from lack of supplier competition.

• Developing new core competencies has

compromised existing competencies.

Acquisition vs Organic Growth• Benefits of acquisition by Reliance in this

case– Existing product or service– Existing customer base– Existing operation, revenue, employees– Existing market recognition– Existing culture– Knowledge of a completely new field– Suits the future interests of RIL indirectly

CSR at Reliance• Health At its various project sites , Reliance industries sites

runs medical facility center, physiotherapy center, and mobile medical vans that dispenses free medicines and provide free health check-ups. Also periodically company come up with health camps like general health check up camps, gynaecology camps, eye check up camps and corrective surgery camps for disabled children

CSR at Reliance• Drishti Project Drishti, a nation-wide

grafting drive to bring light into the lives of visually challenged from the underprivileged segment of society, has restored the gift of sight to over 5,500 Indians. A unique joint initiative of Reliance Industries Limited and National Association of Blind (NAB), Project Drishti has undertaken over 5,500 keroptoplasty surgeries in less than 4 years since it was started - all free of cost. It is now the largest corneal grafting surgery project enabled by a single corporate entity in India.

CSR at Reliance• Environment

Reliance further integrated its safety and environment performance in the overall business plan and strategy. A management system approach, consisting of gap analysis, planning, implementation, and review has percolated to all business plans through ISO 14001:2004 at all manufacturing locations.

Through its annual environment plan and business targets, the Company identifies projects and takes action to achieve these targets with the ultimate goal of becoming water positive, carbon neutral, with maximum possible recycling and reuse of hazardous and other wastes.

CSR at Reliance• Reliance Kargil Scholarship

Scheme• The Scheme to support educational

needs of the children of defence personnel who sacrificed their lives or were disabled during Kargil war, instituted with the generous contribution from Reliance employees. During the year 87 children received financial support for their education from standard IV to XII under the scheme.

CSR at Reliance• Dhirubhai Ambani Hospital , LodhivaliReliance also operates the Dhirubhai Ambani Hospital, Lodhivali and renders quality medical services to the rural population and highway accident victims

• Mobile DispensariesReliance also operates free medical diagnostic and therapeutic services at neighboring villages of several of its manufacturing locations.

• Blood Donation DrivesThe Company’s employees organize and participate in blood donation campaigns every year across its manufacturing divisions and offices.

• Sports for the physically challenged Reliance has joined hands with the organizing team of Special Olympics Gujarat (Bharat) for the physically challenged children of Gujarat. Several hundred children participated in the events that were organized at the Reliance Sports Complex, at Vadodara.

THANK YOU !!