Reliance scrapped a plan announced 2 years ago to sell a 20% stake in its oil business to Saudi Aramco. However, this $15b deal was called off on Friday.
“Due to evolving nature of Reliance’s business portfolio, Reliance and Saudi Aramco have mutually determined that it would be beneficial for both parties to re-evaluate the proposed investment in O2C business in light of the changed context,” Reliance Industries Limited said in a late Friday statement. It has also shelve plans to spin off this business into a separate entity.
What does this mean for investors and the market at large? Is this a new worry for Reliance?
Modi withdrew proposed farm laws:
Since the beginning, the farmers have accused the Modi government of favouring businessmen like Mukesh Ambani and Gautam Adani. In December 2020, they took out their anger on telecom infrastructure owned by Ambani’s firm Reliance Jio. Around 1,500 mobile towers were damaged in Punjab alone.
After weeks of farmer protests, Mukesh Ambani’s Reliance Industries (RIL) announced this month that the company wasn’t going to embark on “corporate or contract farming.” It also promised to ensure its suppliers would always provide farmers a fair deal. The statement aimed to address farmer fears that farm reforms passed last year will exploit them and will benefit large corporations such as Reliance that are expanding in the grocery business.
Elon Musk’s Starlink:
Unlike others, Starlink will be a satellite-based service. Its kit includes a dish antenna, a stand, its power supply and a wifi router.
This difference is one reason for the excitement around SpaceX’s India entry. It is also why, despite the heavy competition, Starlink may not find making space for itself an uphill task.
Besides, customers are not rigid anymore. Indian users are nowadays adapting to new changes. So Starlink might have a great response. Reliance Jio had a subdued quarter this September as it saw its subscriber base erode for the first time in 10 quarters, putting the brakes on the Mukesh Ambani-led telco’s juggernaut. Reliance Jio has traditionally suffered a much inferior rate of active subscribers when compared to its rivals Airtel and Vodafone Idea.
Earlier this month, Starlink registered a subsidiary in India – Starlink Satellite Communications – to seek licenses. It has already received more than 5,000 pre-orders in the country, according to its India director Sanjay Bhargava.
It is set to begin talks with either Jio or Vodafone-Idea. A deal with the former will make the duo simply unbeatable, experts said.
Amazon.com Inc. won a crucial court case:
Amazon.com Inc. won a crucial court case to halt billionaire Mukesh Ambani’s planned $3.4 billion purchase of an indebted Indian retailer, a big boost to the global e-commerce giant’s ambitions of dominating the country’s $1 trillion retail market.
“The court verdict puts a speed breaker on Reliance’s retail dominance in India,” said Devangshu Dutta, founder and chief executive officer of the Delhi-based retail consultancy, Third Eyesight. “It balances the competition with the larger American players, and gives Amazon a much-needed presence in physical retail.”
And finally the Aramco deal:
Reliance Industries has dropped plans to hive off its oil-to-chemicals (O2C) business, intended as part of a potential stake sale to Saudi Aramco, making way for fresh negotiations between the two companies.
Some analyst noted that Aramco may have also had concerns that a large part of it’s investment could be used to repay loans to RIL, which the Mukesh Ambani led firm may then use to fund its green energy related projects.
