(The author is a Reuters Breakingviews columnist. The opinions expressed are her own.)

 

MUMBAI - Mukesh Ambani has emerged from a brutal pandemic with even greater ambition. After building the world’s second biggest mobile-data carrier and India’s top retailer in quick time, the Reliance Industries boss wants to turn his $200 billion conglomerate into a global renewable-energy giant. He has a decent chance of success.

The big reveal came on Thursday at the company’s annual shareholder gathering, a marquee event in the Indian corporate calendar that’s as eagerly anticipated as an Apple product launch. Indeed, Asia’s richest man and Alphabet’s Sundar Pichai jointly revealed the co-developed JioPhone Next, which Reliance promises will be among the world’s most affordable full-feature smartphones.

The juicier announcement, however, was Ambani’s green push. He wants to “establish and enable” 100 gigawatts of India’s targeted 450 GW of renewable energy capacity by 2030, which is roughly quadruple the nation’s current level. Reliance will spend $10 billion over the next three years on a Green Energy Giga Complex, which means building solar manufacturing units, a battery factory for energy storage, a fuel cell factory, and a unit to produce green hydrogen.

The initiative follows Ambani’s tried and tested recipe for success: go quickly for scale and support Prime Minister Narendra Modi’s development goals. It’s also an opportune financial moment. His telecom operator is finally generating free cash flow, and the wider Reliance group succeeded in hitting its “zero-net debt” goal ahead of schedule.

Meanwhile the appointment of Saudi Aramco’s Chairman Yasir Al-Rumayyan to the board, also announced on Thursday, suggests Ambani’s three-year-old plan to sell 20% of its oil-to-chemicals business to the Gulf giant is within reach. That could bring in $15 billion. Either way, the tycoon’s willingness to sell stakes in core businesses like Jio to Facebook offers a template for funding his new ambitions. Renewables rival Gautam Adani has already sold 20% of his Adani Green Energy to France’s TotalEnergies.

Reliance is getting ahead of shareholder pressure that is pulling Western giants like Exxon Mobil kicking and screaming into a greener world. True, India doesn’t have a culture of activism, but investors are richly rewarding renewables stocks: Adani Green, for example, is up 160% in one year, against Reliance’s 25%. Ambani’s track record as a master of companies in motion should allow him to borrow some of that share-price magic.

 

CONTEXT NEWS

- Reliance Industries on June 24 said it would invest 750 billion rupees ($10.1 billion) in its newly launched “new energy business” over the next three years.

- The Dhirubhai Ambani Green Energy Giga Complex in Jamnagar will be the largest integrated renewable energy manufacturing facilities in the world, Chairman and Managing Director Mukesh Ambani told shareholders at the company’s annual general meeting, adding that Reliance aims to “establish and enable” 100 gigawatts of the government’s targeted 450 gigawatts of renewable energy capacity by 2030. Reliance will build solar manufacturing units, a battery factory for energy storage, a fuel cell-making factory and an electrolyser unit to produce green hydrogen as a part of the business, Ambani said.

- The company said it expects to close a deal with Saudi Aramco this year, and that the oil giant’s Chairman Yasir Al-Rumayyan will join the Indian conglomerate’s board as an independent director. The appointment marks the beginning of the internationalisation of Reliance, Ambani said, without elaborating. Reliance had announced a sale of a 20% stake in its oil-to-chemicals business to Aramco for $15 billion in 2019.

- Separately, Reliance announced the launch of the JioPhone, a full-feature smartphone co-developed by the company’s own digital business, Jio, and Alphabet’s Google. It will be among the world’s most affordable smartphone and will be available from Sept. 10, Reliance added.

(The author is a Reuters Breakingviews columnist. The opinions expressed are her own.)

(Editing by Liam Proud and Karen Kwok) ((SIGN UP FOR BREAKINGVIEWS EMAIL ALERTS http://bit.ly/BVsubscribe | una.galani@thomsonreuters.com; Reuters Messaging: una.galani.thomsonreuters.com@reuters.net))