The Next phase of Reliance Industries Limited: New business segment in financial services

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Reliance Industries Limited (RIL) is ready to expand its financial services and made an announcement of carving out a new business segment to add to its already diversified portfolio and moreover they identified financial services as a separate business segment based on the internal reorganization of its business segments.

Financial Services segment comprises management and deployment of identified resources of the company to various activities including non-banking financial services, insurance broking, etc. RIL will initially add non-banking services, including insurance broking and mutual fund products, on the Jio platform, which already caters to its telecom and e-commerce businesses.

The company launched JioMart, an online grocery delivery service, a joint venture between Reliance Retail and Jio Platforms. Jio Platforms launched its video-conferencing application JioMeet, which had a host of enviable features such as free group video meetings with up to 100 participants, for as long as 24 hours.

Jio’s anchor consumer base of 387.5 million and Reliance Retail’s 11,784 stores, should supply a robust distribution channel for its monetary products. RIL additionally holds a 70% stake in Jio Payments Bank, a joint assignment with the State Bank of India.

RIL is also banking on startup accelerator JioGenNext, which along with the National Payments Corp. of India (NPCI) and Jio Payments Bank, plans to collaborate with fintech startups to improve existing payment-related problems and build feasible solutions based on the Unified Payments Interface (UPI) 2.0.

Google will invest ₹33,737 crores in Jio Platforms for a 7.7% stake. This makes Google the 13th investor in the Reliance Industries subsidiary. The investment makes it a zero-debt company. This would be the first time Facebook and Google, competitors for user data will be investors in the same company.

The latest transaction of Reliance Industries Limited gives Jio Platforms an equity valuation of ₹4.91 trillion and an enterprise value of ₹5.16 trillion, the same pricing at which most of the other stake sales in Jio happened.

RIL is the first Indian company to have crossed market capitalization of $150 billion, riding on the success of its mobile digital arm Jio Platforms. Jio Platforms’ fully-owned subsidiary Reliance Jio Infocom Limited has 388 million users.

Among other segments; petrochemicals, refining, oil & gas, and organized retail reported a fall in revenue, while digital services reported a rise in revenue. With the fall in gross refining margins for RIL, the refining segment of the business saw revenue fall to Rs 84,854 crore in the March quarter, down from Rs 103,718 crore in the December quarter. Reliance Jio, the telecommunications arm of RIL, saw its net-profit nearly triple to Rs 2,331 crore in the March quarter.

According to Mukesh Ambani, the company, with its diversified revenue streams and conservative balance sheets, place it in an advantageous position to face any macro challenges it may face.

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