Reliance Industries Ltd raising $20 billion during a global pandemic is already the stuff of legends. But its annual general meeting showed that the fund raising was just a means to execute the vision of transforming all its businesses to be future ready.
Tellingly, the focus is going to be on creating intellectual property and cutting edge technology. “Intellectual property is going to be an important pillar of our value creation journey,” RIL chairman Mukesh Ambani told shareholders at the AGM.
As COVID-19 ravages the world, geopolitical equations change and international trade takes a backseat, it is important that Indian companies go beyond their famed jugaad (of quick-fixes and circumvention) skills and embrace innovation wholeheartedly. India still lags most large economies, and many smaller ones too, when it comes to innovation. Thus, it is heartening to hear a large company talk about creating intellectual property.
Nothing exemplifies this intent more than the announcement that Jio has developed 5G technology from scratch and that it would be ready for trials in India as soon as the government allocates spectrum. Now, at least from Jio’s point of view, it has become irrelevant whether or not India will ban Chinese technology company Huawei, a leading provider of 5G infrastructure. Moreover, Jio would also be able to sell its 5G technology to other telecom companies across the world, opening a new revenue stream. It is commendable that this made-in-India technology has been developed by a company with a 4-year history and no state backing, subsidies or easy financing like Huawei.
Along with this Jio also has inducted many strategic partners and start-ups to develop cutting edge technologies in areas such as big data analytics, machine learning and artificial intelligence, block chain and so on. Moreover, Jio will also partner Google – which will invest $4.5 billion in Jio Platforms - to build an Android-based operating system that will be the backbone for an entry level 4G or even 5G smartphone. The market size for such an entry level smartphone would be huge given that millions in India are still waiting to upgrade from feature phones.
This move is in one sense reminiscent of Reliance’s backward and forward integration in the textiles business many decades ago. By striking these partnerships, Jio Platforms aims to touch all aspects of a consumer’s digital life spanning communications, entertainment, news, commerce, education and healthcare. This range will only grow as internet of things technologies mature and 5G comes into the picture.
The technology focus is also a logical step as Reliance transforms itself from a hard-assets business to a consumer-facing business. Technology and intellectual property can give it an edge over rivals. Even in the organized retail business, where RIL is ahead of rivals in size and profitability, the focus is on tech-enabled partnerships that will help reduce inefficiencies and boost productivity.
Even in the legacy oil-to-petrochemicals business, technology is in focus as newer sources of energy such as hydrogen, solar, wind and fuel cells gain critical mass. RIL wants to become a net-carbon zero firm by 2035, and reinvent itself as a new energy and new materials company. “Transforming our energy business to tackle one of the biggest challenges before India and the World is our new growth opportunity,” said Ambani. He said Reliance already has proprietary technology to convert transportation fuels to valuable petrochemical and material building blocks. The challenge Ambani is referring to is of course, climate change, already one of the overarching narratives of our times.
This constant reinvention (apart from delivering shareholder returns) has been one of the hallmarks of Reliance Industries ever since it started life as a polyester firm a few decades ago. Its vision for the next couple of decades follows this trend. That’s precisely the reason why marquee investors are making a beeline for Jio as it presents a unique set of technologies and platforms under one entity and why sworn rivals such as Facebook and Google are sitting at the same table.
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Disclaimer: Reliance Industries Ltd., which also owns Jio, is the sole beneficiary of Independent Media Trust which controls Network18 Media & Investments Ltd.
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