Oil & Gas Industry

Reliance Industries ltd.

The Reliance Group, founded by Dhirubhai H. Ambani, is India's largest private sector
enterprise, with businesses in the energy and materials value chain. The flagship
company, Reliance Industries Limited, is a Fortune Global 500 company and is the
largest private sector company in India.

Dhirubhai Ambani founded Reliance as a textile company and led its evolution as a
global leader in the materials and energy value chain businesses. It was in 1957 when
he returned to India after a stint with A.Besse& Co., Aden he started yarn trading
business from a small 500 sq.ft. Office in Masjid Bunder, Mumbai. He set up his brand
new mill in Naroda, Gujarat. In 1996 Reliance went on to become the biggest textile
brand ‘Only Vimal’. In 1977 the Reliance Textile Industries came with an IPO which was
oversubscribed seven times.

Reliance enjoys global leadership in its businesses, being the largest polyester yarn and
fibre producer in the world and among the top five to ten producers in the world in major
petrochemical products.

Starting as a small textile company, Reliance has in its journey crossed several
milestones to become a Fortune 500 company in less than 3 decades.
Reliance Industries Limited operates world–class manufacturing facilities across the
country at Allahabad, Barabanki, Dahej, Dhenkanal, Hazira, Hoshiarpur, Jamnagar,
Kurkumbh, Nagothane, Nagpur, Naroda, Patalganga, Silvassa and Vadodara.

Reliance Industries’ Shareholding Pattern

Share Holding Pattern (% of Shares Held)

Management of the company

Reliance Industries limited is family owned business.
The company works under different business segments:
1. Exploration and Production
2. Petroleum Refining and Marketing
3. Petrochemicals
4. Textiles
5. Retail

Products and brands offered by the company:

1. Crude oil and natural gas
2. LPG
3. Propylene
4. Naphtha
5. Gasoline
6. Jet/Aviation Turbine Fuel
7. Superior Kerosene Oil
8. High Speed Diesel
9. Sulphur
10. Petroleum Coke
11. Polypropylene
12. High Density Polyethylene
13. Low Density Polyethylene
14. Linear Low Density Polyethylene
15. Polyvinyl Chloride
16. Poly –Olefin
17. Suitings ,Shirtings,Readymade Garments
18. Furnishing fabrics
19. Day curtains
20. Automotive upholstery
21. Suitings
22. Ready–to–stitch
23. Take away fabric
24. Fleet management services
25. Highway hospitality services
26. Vehicle care services
27. Linear Alkyl Benzene
28. Paraxylene
29. Purified Terephthalic Acid
30. Mono Ethylene Glycol
31. Staple Fibre
32. Filament Yarn
33. Texturised yarn
 34. Twisted yarn
35. Moisture management yarn
36. Quality certified sleep products
37. Polyethylene terephthalate

Strengths of Reliance Industries – Internal Strategic Factors

As one of the leading organizations in its industry, Reliance Industries has numerous
strengths that help it to thrive in the market place. These strengths not only help it to
protect the market share in existing markets but also help in penetrating new markets.
Some of the strengths of Reliance Industries are –

 Successful track record of integrating complimentary firms through mergers &

acquisition. It has successfully integrated number of technology companies in the past
few years to streamline its operations and to build a reliable supply chain.
 Strong dealer community – It has built a culture among distributor & dealers
where the dealers not only promote company’s products but also invest in training the
sales team to explain to the customer how he/she can extract the maximum benefits out
of the products.
 Strong Free Cash Flow – Reliance Industries has strong free cash flows that
provide resources in the hand of the company to expand into new projects.
 Strong Brand Portfolio – Over the years Reliance Industries has invested in
building a strong brand portfolio. The SWOT analysis of Reliance Industries just
underlines this fact. This brand portfolio can be extremely useful if the organization
wants to expand into new product categories.
 Strong distribution network – Over the years Reliance Industries has built a
reliable distribution network that can reach majority of its potential market.
 Automation of activities brought consistency of quality to Reliance Industries
products and has enabled the company to scale up and scale down based on the
demand conditions in the market.
 Good Returns on Capital Expenditure – Reliance Industries is relatively
successful at execution of new projects and generated good returns on capital
expenditure by building new revenue streams.
 Successful track record of developing new products – product innovation.

Weakness of Reliance Industries – Internal Strategic Factors

Weakness are the areas where Reliance Industries can improve upon. Strategy is about
making choices and weakness are the areas where an organization can improve using
SWOT analysis and build on its competitive advantage and strategic positioning.
 Days inventory is high compare to the competitors – making the company raise
more capital to invest in the channel. This can impact the long term growth of Reliance
Industries
 Financial planning is not done properly and efficiently. The current asset ratio
and liquid asset ratios suggest that the company can use the cash more efficiently than
what it is doing at present.
 Limited success outside core business – Even though Reliance Industries is one
of the leading organizations in its industry it has faced challenges in moving to other
product segments with its present culture.
 Need more investment in new technologies. Given the scale of expansion and
different geographies the company is planning to expand into, Reliance Industries
needs to put more money in technology to integrate the processes across the board.
Right now the investment in technologies is not at par with the vision of the company.
 Investment in Research and Development is below the fastest growing players in
the industry. Even though Reliance Industries is spending above the industry average
on Research and Development, it has not been able to compete with the leading
players in the industry in terms of innovation. It has come across as a mature firm
looking forward to bring out products based on tested features in the market.
 Organization structure is only compatible with present business model thus
limiting expansion in adjacent product segments.
 The marketing of the products left a lot to be desired. Even though the product is
a success in terms of sale but its positioning and unique selling proposition is not clearly
defined which can lead to the attacks in this segment from the competitors.

Opportunities for Reliance Industries – External Strategic Factors

 The new technology provides an opportunity to Reliance Industries to practices
differentiated pricing strategy in the new market. It will enable the firm to maintain its
loyal customers with great service and lure new customers through other value oriented
propositions.
 New customers from online channel – Over the past few years the company has
invested vast sum of money into the online platform. This investment has opened new
sales channel for Reliance Industries. In the next few years the company can leverage
this opportunity by knowing its customer better and serving their needs using big data
analytics.
 Organization’s core competencies can be a success in similar other products
field. A comparative example could be - GE healthcare research helped it in developing
better Oil drilling machines.
 Opening up of new markets because of government agreement – the adoption of
new technology standard and government free trade agreement has provided Reliance
Industries an opportunity to enter a new emerging market.
 The new taxation policy can significantly impact the way of doing business and
can open new opportunity for established players such as Reliance Industries to
increase its profitability.
 New environmental policies – The new opportunities will create a level playing
field for all the players in the industry. It represent a great opportunity for Reliance
Industries to drive home its advantage in new technology and gain market share in the
new product category.
 Economic uptick and increase in customer spending, after years of recession and
slow growth rate in the industry, is an opportunity for Reliance Industries to capture new
customers and increase its market share.
 Decreasing cost of transportation because of lower shipping prices can also bring
down the cost of Reliance Industries’s products thus providing an opportunity to the
company - either to boost its profitability or pass on the benefits to the customers to gain
market share.

Threats Reliance Industries Facing - External Strategic Factors

 Increasing trend toward isolationism in the American economy can lead to similar
reaction from other government thus negatively impacting the international sales.
 New technologies developed by the competitor or market disruptor could be a
serious threat to the industry in medium to long term future.
 Rising pay level especially movements such as $15 an hour and increasing
prices in the China can lead to serious pressure on profitability of Reliance Industries
 The demand of the highly profitable products is seasonal in nature and any
unlikely event during the peak season may impact the profitability of the company in
short to medium term.
 Growing strengths of local distributors also presents a threat in some markets as
the competition is paying higher margins to the local distributors.
 No regular supply of innovative products – Over the years the company has
developed numerous products but those are often response to the development by
other players. Secondly the supply of new products is not regular thus leading to high
and low swings in the sales number over period of time.
 Intense competition – Stable profitability has increased the number of players in
the industry over last two years which has put downward pressure on not only
profitability but also on overall sales.
 Imitation of the counterfeit and low quality product is also a threat to Reliance
Industries’s product especially in the emerging markets and low income markets.
 Competitors in market
The below table shows how Reliance industries Limited is different from other
competitors in market in terms of financial parameters. (All the values stated in the table
is in Indian rupees crore, 2019)

Reliance:

Market capital 14000.0

Sales turnover 6,228.09
Net profit 11,640
Total asset 1,002,406

Inter Oil Corporation:

Market capital 103,940.65

Sales turnover 269,136.03
Net profit 10,220.55
Total asset 95,119.08

Bharat Petroleum Corporation Limited:

Market capital 26,012.96

Sales turnover 135,331.48
Net profit 735.90
Total asset 35,281.91

Essar Oil:

Market capital 20,444.04

Sales turnover 37,652.00
Net profit 514.00
Total asset 15,027.38
 Conclusion
From the above competitors table we can see that reliance industries have been
compared with other major six companies in India. From the table is clear that in all the
areas like market capital, sales turnover, net profit and also total asset, reliance have a
very high position with a remarkable difference in their respective values. While we
analyse the competition we can determine that the company possess a dominancy over
the market. It is very difficult for the competitors to come over the reliance position.
Considering the fact that the company profit is from the market it is important for
reliance to maintain this status with more marketing strategies.

I have understood how reliance industries have come up in such a highly competitive
market like in India and also they were able to establish their name in international
market also. Form this report we can see that the company is not just focusing on one
industry whereas it have many subsidiaries and associates which helping them to be
stable when the economy is down.