CHENNAI: Reliance Industries chairman Mukesh Ambani's address to shareholders at the 44th Annual General Meeting (AGM) of the company on Thursday has made it clear that the company, which once derived the majority of its business from the petroleum sector, is preparing for a world without fossil fuels. After having forayed successfully into telecom with Jio, Ambani announced that Reliance will now begin a new clean and green energy business.
The company, which had announced a collaboration with US tech giant Google to build an affordable smartphone last year, is also ready to launch the product. One Ambani said "will be extremely affordable". While no other specifics on its pricing have been disclosed, the Jio Phone Next -- operating on a specially designed Android operating system -- will be launched on Ganesh Chaturthi this year, September 10.
New energy venture
While the Jio-Google developed mobile is expected to challenge the status quo in India's smartphone market dominated by foreign manufacturers, Reliance's new clean energy venture is arguably the more transformative announcement.
According to Ambani, Reliance will spend Rs 75,000 crore on the new energy business over three years and has already begun work on building a 5,000-acre hub in Jamnagar, Gujarat. "Jamnagar was the cradle of our old energy business," Ambani said, "Jamnagar will also be the cradle of our new energy business."
The Dhirubhai Ambani Green Energy Giga Complex will be amongst the largest integrated renewable energy manufacturing facilities in the world, he claimed, and will support Reliance's three-phase plan for its new venture.
As part of its strategy, Reliance is planning to build four "Giga factories": a solar manufacturing units, a fuel-cell manufacturing facility, a battery factory to enhance energy storage, and an electrolyzer unit to produce green hydrogen. All these facilities will be provided infrastructure and utility support from the planned green energy complex.
Reliance will invest Rs 60,000 crore in these facilities over the next three years, with an additional Rs 15,000 crore investment planned for developing the value chain, into partnerships, and future technologies, including upstream and downstream industries. "Reliance will thus create and offer a fully integrated, end-to-end renewables energy eco-system," Ambani said.
RIL's new energy strategy will also involve the creation on two more supplementary divisions: a dedicated Renewable Energy Project Management and Construction Division, and a dedicated Renewable Energy Project Finance Division. The company is planning to set up 100 GW of solar energy capacity by 2030. Ambani had made a commitment last year that Reliance will be net carbon zero by 2035.
"The age of fossil fuels, which powered economic growth globally for nearly three centuries, cannot continue much longer," Ambani told shareholders.
Ambani also said that the new venture will only enable the legacy oil-to-chemicals (O2C) business to transform into a sustainable one.
"First, we will use solar energy on an economically attractive basis to decarbonise our existing O2C business and accelerate our journey to become net carbon zero. Second, we will use Green Hydrogen and CO as raw materials to develop a road map for new Green Chemicals, Green Fertilizer, and e-fuels. Third, we will commercialise with global partners our own world-beating proprietary Multi-zone Catalytic Cracking (MCC) Technology to optimise the fossil fuel transition to sustainable chemical and material building blocks," he said.
Reliance's revenue from its oil-to-chemicals business stood at Rs 3,20,008 crore in FY21, down 29.1% compared to the previous year, and the unit's earnings before interest, tax, depreciation, and amortization (EBITDA) for the period fell 29 per cent to Rs 38,170 crore, according to its annual report for the year.
"We will transform our legacy business into sustainable, circular and net zero carbon materials business. One that will provide growing returns over several decades. And we will do this by repurposing our existing assets to extend their economic life and earning capacity. In doing so we will have no legacy asset write-downs in the coming years," he said.
Jio Phone Next
The new smartphone announced on Thursday, meanwhile, is set to enhance Jio's muscle in the telecom market at a time when competitors have begun catching up, in terms of both user additions and revenue shares. According to Ambani, the smartphone will be "ultra-affordable", run on an extremely optimised version of the Android Operating System, and support the entire suite of applications from both Google and Jio.
Google CEO Sundar Pichai told Reliance shareholders that the phone "will offer language and translation features, a great camera, and support for the latest Android updates".
"It is built for India… And it will open up new possibilities for millions of new users who will experience the internet for the very first time…," Pichai said.
Pichai also said that the two companies will be taking their collaboration further with a "new 5G partnership between Google Cloud and Jio". However, while Ambani asserted that Jio will be the first to launch a 5G network in India, no firm timelines were disclosed for its commercial launch.