MUMBAI (Reuters) - Reliance Industries Ltd aims to make its consumer businesses as big as its core energy operations, chairman Mukesh Ambani said in its annual report, as he seeks to reshape the industrial powerhouse.
The company, primarily an oil and gas refining, marketing and petrochemicals conglomerate, counts telecoms, retail and media and entertainment as part of its consumer businesses that together contribute barely a tenth of total operating profit.
However, buoyed by the success of Reliance’s fledgling telecoms start-up Jio, which turned a profit within a year of operation, Ambani is hoping to see rapid growth from the consumer divisions in future.
“Our aim is to have the consumer businesses contribute on par with the energy and materials business over the next decade,” Ambani said in a letter to shareholders in the annual report.
“The year saw our consumer businesses attain a threshold, wherefrom they will start contributing meaningfully to consolidated profits,” he said.
In May, Reliance announced that Jio posted its second straight quarterly net profit since its launch in September 2016 as its cut-price plans continued to attract subscribers.
With more than 186 million subscribers, Reliance Jio Infocomm Ltd, or Jio as it is commonly called, is the fourth biggest telecoms carrier in India and boasts of having added more customers in the 2017 fiscal year than its rivals combined.
Jio triggered a price war among operators as they moved to compete with Jio’s low-cost data plans, driving down margins and spurring consolidation in India’s telecom industry.
It plans to cover 99 percent of the country with its network by the end of the year, giving it reach to households and enterprises, Jio’s head of strategy Anshuman Thakur said in May.
Ambani, India’s richest man, spearheaded the company’s consumer-led diversification a decade ago with its entry into organised retail. While that business turned an operating profit within six years, its contribution to overall profit remains minimal. The retail business accounted for 4 percent of the company’s consolidated net profit in the 2017-2018 fiscal year.
Reliance runs the world’s largest single-location crude oil refinery and petrochemical complex, in western India. That contributes 90 percent of the company’s overall profit and revenue.
Reporting by Promit Mukherhjee and Sankalp Phartiyal; Editing by Jason Neely and Mark Potter