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Reliance Industries SWOT & PESTLE Analysis

ID : 52525953| Mar 2019| 15 pages

COMPANY PROFILE -Reliance Industries

Business Sector :Refining & Marketing, Petrochemicals, Oil & Gas, Retail, Digital Services, Media & Entertainment

Operating Geography :India, South Asia, Global

About Reliance Industries :

Reliance Industries Ltd. is an Indian conglomerate holding company involved in textile, energy, refining, petrochemicals, telecommunications, retail etc. having it’s headquarter in Mumbai, Maharashtra, India. Founded as Reliance by Dhirubhai Ambani in the year 1966 in Mumbai as a textile company trading in yarn business, it had its first mill set up in Naroda, Gujurat. In 1977, Reliance textile industries came up with its first IPO and in 1996 went on to become the biggest textile brand “Only Vimal”. As of 2019, Reliance enjoys global presence, being the largest yarn and fibre producer in the world and is among the top ten petrochemical products producer in the world. Starting as a small textile company in a 500 sq. ft. office, Reliance group has translated into a Fortune 500 company in less than 3 decades.
Today, Reliance Industries is India’s most profitable private sector company. Through its achievements of the past four decades, the company has managed to reach the super league of global enterprises. Headed by Mukesh Ambani, Chairman and MD, RIL has over 1.8 lakh employees working directly and 50 lakh plus employed indirectly. The workforce of RIL is highly diverse having of over 40% millennial and employees from over 15 countries. Besides focusing on core industrialization, Reliance has been a proactive supporter of CSR activities through Reliance foundation focusing on education, healthcare & poverty alleviation. Reliance has also been an ardent promoter of sports and nurturing young talent in this space. It has undertaken several initiatives to transform the sporting landscape through ISL, IPL, Tennis leagues etc.
Reliance industries vision reads, “Through sustainable measures, create value for the nation, enhance quality of life across the entire socio-economic spectrum and help spearhead India as a global leader in the domains where we operate.” According to the company, its growth and success are based on the core values of Corporate Citizenship, Customer value, Respect, One team, Ownership mind-set, Integrity, safety and excellence.

Reliance Industries Revenue :


INR 430,731 crore – FY ended March 31st 2017-18 (year-on-year growth of 30.5%)
INR 330,180 crore – FY ended March 31st 2016-17

Competitive Analysis of Reliance Industries

SWOT
PESTLE
The SWOT analysis for Reliance Industries presented below:
Strengths
Weaknesses
1. Strong Market Position with diverse Brand Portfolio
2. Strong Free Cash flow and good returns on Capital expenditure
3. Operational and expansion advantage in different business verticals
4. Successful track record of integration
5. Reliance Jio & Digital Services
1. Relatively weak financial ratios
2. Limited success outside core business
3. Less investment in R&D
4. No regular supply of innovative products
Opportunities
Threats
1. Tapping the Online market segment
2. Expanding business in more emerging markets
3. Infrastructural development in domestic and off-shore operational units
1. Intense competition from all sectors
2. Litigations may impact business expansion
SWOT & PESTLE (combined)
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Detailed SWOT Analysis of Reliance Industries

 

Strength

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Weakness

1. Relatively weak financial ratios: RIL at present has a current asset ratio of 0.41 and liquid asset ratio of 0.25. This speaks about improper financial planning and the company’s inability to convert the assets into cash to cover the current liabilities. Inventory days for RIL are as high as 52 days where the industry average stands at 13.56 days. This makes the company invest more capital which might affect the long term growth of the industry. The Price to Earnings ratio stands as low as 18.89 when the industry average is at 55.03 which undermines its stock value and maybe be indicative of a lack in growth potential.

2. Limited success outside core business: The profitability of RIL outside core business is not that successful as compared to its competitors. On the outside, diversification might seem like a valid solution to increase revenues but in the case of RIL, they have been eating up resources. In the case of media services, The Voot app has not been as successful as other online media streaming services like Prime video, Netflix or its direct rival Hotstar. Even the JioCinema app is not that competent as the major competitors in this field are Netflix & Prime Video whose core business is online media streaming. The core sectors of RIL have been providing the major chunk of profits whereas the non-core sectors have not been that profitable for RIL.

3. Less investment in R&D: Given the scale of expansion and size of projects being undertaken, RIL investment in getting the latest technology and R&D is comparatively less. Though RIL’s investments in R&D of Rs.1824 crores in FY18, which translates to just 0.004% of its revenues is much higher than its competitors in absolute terms, it hasn’t led to any significant innovation giving a competitive advantage. The lack of product positioning and undefined unique selling propositions has made it open to attacks from its competitors. The company’s present investment in procuring and integrating new technology and R&D is not in tandem with the vision of the company.

4. No regular supply of innovative products: Despite development of numerous products over the years, they are in defense to products developed by competitors. None of the products have been a reliance innovation which makes the image of Reliance products as counterfeit items. This can be accounted less investment in R&D activities which makes the product line of Reliance seem like a mere dummy of the competitor’s product and perceived as a low quality product by the consumers. Adding fuel to the fire is the irregular supply of products leading to a bullwhip effect on the sales figure and the corresponding supply chain. This opens up an opportunity for new players to enter the market and grasp market share.

Opportunity

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Threat

This section is available only in the 'Complete Report' on purchase.

Key Business Segments / Diversification :

Reliance Industries
Refining & Marketing Petrochemicals Digital Services
Reliance Retail Oil & Gas
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TABLE OF CONTENTS
DELIVERY AND FORMAT
WHY CHOOSE US?
References used in Reliance Industries Analysis Report

1. Reliance Industries Annual Report 2017-2018- http://www.riil.in/pdf/Annual-Report-2017-18.pdf

2. Reliance Industries Annual Report 2016-2017http://www.riil.in/pdf/Annual-Report-2016-17.pdf

3. Reliance Industries Financial and Operational Performance- http://www.ril.com/getattachment/b35911ba-d32f-4520-bcd9-6c82baaa7601/Q3-(FY-2018-19)-Financial-and-Operational-Perf-(1).aspx

4. Total wealth of these 20 men equals 10% of India’s $2 trillion GDP - https://economictimes.indiatimes.com/markets/stocks/news/10-indias-2-trillion-gdp-is-now-in-the-hands-of-these-20-men/articleshow/59911669.cms

5. India's GDP grows at 8.2 per cent in 2018-19 Q1- https://economictimes.indiatimes.com/news/economy/indicators/indias-gdp-grows-at-8-2-per-cent-in-2018-19-q1/articleshow/65623967.cms

Copyrights and Disclaimer

Reliance Industries SWOT and PESTLE analysis has been conducted by Prayaag Kumar and reviewed by senior analysts from Barakaat Consulting.

Copyright of Reliance Industries SWOT and PESTLE Analysis is the property of Barakaat Consulting. Please refer to the Terms and Conditions and Disclaimer for usage guidelines.

Reliance Industries SWOT & PESTLE Analysis
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