In the situation of lockdown and pandemic, the one company that continues its journey to achieve its goal is Reliance, and there is strong learning from its way of work strategies.
Here, we tried to explain one.
The goal set
In August 2019, Mukesh Ambani announced his plans to make Reliance a zero net debt company by 2021. He set the tough target, which most people thought impossible to achieve.
What’s the reason behind it?
By March 2019 Reliance was under a mountain of debt as huge investment made to launch and establish its telecom- digital company Jio. The outstanding net debt of 1.53 lakh crore as of June 2019 was creating a lot of pressure for the company. And revenue from Jio was not sufficient enough to reduce this burden.
How planning is done to achieve the target?
Planning started even before setting the target. Reliance planned the monetization of assets to repay debts.
- Firstly, a deal with Brookfield, Canada to sell mobile network towers for around Rs.25,215 crore, made in July 2019.
- Then RIL agreed to sell 49% stake of its fuel retail network business to British Petroleum for Rs. 7000 Cr.
- And the biggest deals amongst all was made to sell 20% stake in its petrochemical and refinery business(Oil to Chemical- O2C business) to Saudi Aramco for $15billion(Ar. Rs.1.12 lakh crore).
- The company also planned to bring strategic investors in its retail and Jio Infocomm business.
But the obstacles came in planning execution
These planned deals are yet to get through fully. And except British Petroleum deal, none is executed so far by the end of April 2020. Many reasons have played spoilsport. The Brookfield deal, delayed because of delay in getting the regulatory approvals. The global oil crisis and low crude prices, govt.intervenes to restrain the deal, COVID-19 and global lockdown are the reasons that delayed the company’s target achievement.
Finding the solution, a new way out
But obstacles don’t stop Reliance from finding the solution or a new way out to reach the goal of becoming debt-free.
The steps are taken
- In April 2020, RIL found the new investor in Facebook and sold 9.99% stake in the Jio Platform (parent company of JIO Infocomm) to Facebook for Rs. 43,500 Cr.
- Then it came with right issue offer to raise Rs. 53,120 Cr. Both the deals are done and dusted so there are no two ways about it.
- Reliance also got another investor, the US-based private equity and VC firm Vista Equity Partners. Vista Equity will invest Rs 11,367 crore in Jio Platforms for a 2.32% stake.
- And General Atlantic deal is in pipeline
And the set target may be achieved earlier also!
With all the above-mentioned steps Reliance is set to achieve its goal early and may become zero net-debt company by December 2020. Further, if the delayed Aramco and Brookfield deals, if executed will put RIL into strong net cash position!
Always look for the solution and find the way out. Lockdown or pandemic should not stop us from achieving our goals. Every problem has a solution!