Sunday, June 16, 2024

Why as a Reliance investor, I fret over their lack of word!

I am an investor in RIL. I may be a tiny speck of dust in the vast community of RIL investors but I am equally discomforted by its recent share price movement

RIL for a long time was known for its refining and petrochemical business. The businesses were solid, high margin (even though refining in India was low margin business) with high volumes.

Then RIL went into petroleum retailing. In whichever trading area (TA) it opened retail outlets, it outsold its rivals by 4:1.

Unfortunately due to pricing of petrol/ diesel, RIL’s fuel retail business plateaued early and even dipped.

It is coming back to life in its Jio-bp avtar. I am sure it will do well as soon as the market is TRULY deregulated.

RIL’s telecom is its biggest success story, after initial hiccups and failure of Anil Ambani led Infocomm arm. Today Jio is ruling the telecom turf.

Anil Ambani, 

So why is RIL losing on the bourses? The reason is definitely due to profit booking by the institutional investors.

However my worries are RIL’s lack of communication with the investing community. There is so much confusion in people’s mind.

There are so many news items that talk of Reliance buying a toy company here and a jewellery company there; a chain of stores and a musical company in India; a software company in Bengaluru and a news media company in Mumbai.

I am unable to appreciate some of the diversifications of RIL that are unrelated to its core business.

For example I don’t know Reliance’s rationale behind franchisee partnership with ‘Pret a manger’, a British sandwich + coffee selling outlet. Where is the synergy? In selling Pret sandwiches through its stores?

I am equally baffled at Reliance foray in the soft drink market with ‘Campa Cola’ brand.

Cola markets need high investment. Huge outlays are needed in setting up plants & distribution chains like Coke or Pepsi, have set up. Mind you the margins are wafer thin.

So there’s lot of clarity that shareholders need.

RIL needs to talk to its shareholders. They should share with us what’s happening with their Life Sciences division, something that will become a gold mine I am told in the next one decade or so. 

Reliance Industries Limited corporate communications should tell us more about RIL social initiatives and about its ESG strategy. 

We want to know about the Hamley, Reliance Jewels and hospitality acquisitions. 

As shareholders we would love regular updates on RIL’s Betterpack production and on green Hydrogen energy. 

Devdutt Pattanaik had said in an interview that RIL’s visionary Chairman Mukesh Ambani thinks of a 50-year perspective. I would like RIL‘s corporate communication to leverage on Chairman Ambani’s vision and dovetail it with a great communication strategy to bolster the confidence of RIL’s shareholders.

(Dr Sudhir Bisht (PhD) is a long-time presence in national and international companies in oil retail sector as well as in Telecom infra sector. He has also been an author and a consummate writer in the digital world, including on rediff.com, for over two decades now)

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