What should investors ask Mukesh Ambani at his company’s AGM?

• RIL’s annual general meetings have been labelled ‘carnivals’ by market experts due to huge attendance.
• The company has been acquiring many companies across sectors, above and beyond the many interests it already holds.
• Here are some of the questions that investors can ask the chairman at the AGM about the future course of the conglomerate.
  

It’s been decades since Dhirubhai Ambani famously said that a phone call should be cheaper than a postcard. No one writes postcards anymore. But Ambani generations are still experimenting with newer and newer ways to bring people ‘closer’.

During the first pandemic year, Isha and Akash Ambani conversed in their 2D and 3D avatars via a holographic call at the company’s 41st annual general meeting; showcasing their futuristic product – Jio Glass.

The twins kept two important traditions alive – announcing the next-big thing of the group’s ever expanding interests; and of course the dazzle factor of AGMs.

The celeb factor

In 2019, Mukesh Ambani connected to Alphabet CEO Satya Nadella after he announced a deal with Google. Two years later, he ‘welcomed’ Saudi Aramco’s chairman Yasir Al-Rumayyan onto the board. The $15 billion deal with the oil major was cancelled a few months later over valuation mismatch.

Yet the optics around the ‘big announcements’ have worked so well that most of the time, RIL stock tends to appreciate ahead of an AGM. Especially since 2016, when telecom’s soft launch kicked off, it never did die down. Most of them also center around technologies of tomorrow – be it shopping via VR or retail going online.

The range and depth of Relianceverse

It’s not just metaverse or virtual reality that the group is banking on – the sheer number of acquisitions and interest that it has in startups has turned its interests into a mini Relianceverse. While they have acquired interests in over 20 companies since 2019. The ticket size of these acquisitions range from $2 million to $200 million from Sankhya Sutra Labs to Dunzo, respectively.

The companies belong to niche specializations – from fluid dynamics software simulation software VR imaging to ERP and SaaS companies, e-commerce companies, creative home solutions to AI powered learning platforms. The latest acquisitions however pertain to lithium and sodium battery solutions as the group ventures into green hydrogen.

According to a Bank of America research report, the historical M&As show a pattern – they all were done to add value or fill gaps in RIL’s consumer offerings where management believed it was difficult to build in-house.

“All investments fall under five categories– telecom, retail, education, healthcare, and agriculture. A new category of clean-energy was added in 2020-21 where further investments were made with an intention of getting access to clean-tech,” the report said.

This BoFA rule however exceptions – the luxury hotel of Mandarin Oriental in New York for $98 million, UK based hotel StokePark for $79 million, SkyTran a clean tech podcar transport system based in the US, and also a smaller acquisition of IMG Reliance, an event management company for $7 million.

This is the part that investors seek clarity from the management and the best way to do it is the annual general meeting that’s to be held on August 29, 2022.

Questions to be asked

Reliance AGMs are blessed with a large and wide attendance, making market watcher S P Tulsian once call it a ‘carnival’. While most people come to get a glimpse of India’s richest family members and some others entertain with shayaris, investors also need to do what AGMs are there for — to ask questions about the direction of the business and the value its creating.

Currently, RIL is an oil to telecom to retail to new energy business that’s being driven in different directions. Here are some of the questions that can be answered at the AGM.

1. Why are we acquiring so many companies across business and are we getting into hotels and lifestyle business, especially in international markets?
   
2. Jio Mart is nowhere close to Amazon, Flipkart or even startups like Swiggy Instamart. When can we expect a possible sync with Dunzo and become a serious e-commerce player??
   
3. Reliance JioTV and JioFibre were launched with the promise of first show movies, but Voot and JioTV are nowhere close to Hotstar, Prime or Netflix. Will the $3 billion IPL media rights be a game changer?
   
4. We paid nearly $11 billion for 5G spectrum, when can we expect the payoff? And, when will we reach the 500 million subscriber target?
   
5. Reliance has plans for green hydrogen, biogas and solar PV manufacturing, which are capital intensive. When can we expect a demerger or fund raising?
   
6. The IPO market has become feeble due to international market conditions. Will that delay the demerger and listing of retail and telecom businesses?
   
7. Akash Ambani has been elevated as the head of telecom business. Is there a complete succession plan in place?
   

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