Reliance: Power Play

Business policies & StrategiesDone by:

Nandini ApayaNimisha Dhanak

Parminder JabbalShweta Dabholkar

Sifat Shah

• The Reliance Group, founded by Dhirubhai Ambani (1932-2002), is India's largest Private Sector Enterprise.

• Reliance is the Sole distributor of electricity to consumers in the suburbs of  Mumbai.

• It runs the power generation and distribution businesses in Maharashtra, Goa & Andhra Pradesh

• Reliance Energy distributes over 5,000 MW of power - the largest amongst all players in the country.

• Reliance Energy has a consumer base of 5 million and to become a nationwide power company, providing world class quality, reliable and competitively priced power to millions of customers.

Through sustainable measures, create value for the nation, to enhance quality of life across the entire socio-economic spectrum and help spearhead India as a global leader in the domains where we operate

Create value for all stakeholders Grow through innovation Lead in good governance practices Use sustainability to drive product development and Enhance operational efficiencies Ensure energy security of the nation

Q1. Explain the growth strategies being adopted by Anil Ambani and critically examine each of them?

• Bombay suburban electricity supply Ltd. (BSES): $2,826 million power company renamed Reliance Energy Ltd in 2003.

• Reliance consolidated its control over the BSES

• The aim was to setup the world’s largest gas-based thermal plant for the generation of competitive, quality power in India.

‘From well-headed to wall-socket’• Reliance Energy Strategy:• Straddle the entire value chain in the power

business.• Generate power leveraging the group’s production

of gas.• Transmission & distribution to the retail and

industrial consumer.• Reaping the returns of not just the generating

power using its own gas but selling what it generates not as a bulk supplier but to the end user.

GENERATION - Examining opportunities in conventional and non-conventional energy.

TRANSMISSION - Reliance Energy Transmission, a separate company will contribute to enhanced reliability in the supply of power to networks across India. 

DISTRIBUTION -  Expansion of customer base through entry into new geographical areas by means of the new Electricity Act. It gives the benefit of open access on existing assets i.e. utilizing existing power lines to reach customers, without replicating infrastructure. 

Trading- Reliance Energy Trading, a separate company will assist in optimization of cost of power for networks and create enhanced value for customers. 

Maximize customer satisfaction -  Supplying electricity to consumers all over India and catering to their needs.

Recruitment - Reliance energy house is on a hiring spree ie. The are Signing on dozens of new recruits at every level on a daily basis.

Reliance Energy's new all-color electricity bill: Easy to read, uncluttered and convenient with information including six-month billing history, payment options, energy calculator and tips. Also mutilingual billing choice in as many as 19 indian languages.

• Q2. Undertake a detailed SWOT analysis of Reliance and identify its core competencies. Is reliance's growth strategy in line with its core competencies? Comment.

Huge capacity generation in pipeline. Growth in EPC countries. Strong brand name & equity. Diversified market portfolio High capital investment Technology

Government restrictions on price mechanism Cross-subsidized tariffs : industrial consumers subsidize household consumers.

Huge scope in power sector Setting up worlds largest gas-based thermal plant in UP Distribution circles in several states AP, Karnataka, MP, Rajasthan, UP, Punjab & Tamil Nadu

Policy-related sticky points Challenges for power reforms especially in distribution in various states are vastCompetition in market. e.g., TATA Delays in project implementationIncrease in interest rates

S W

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Core competencies

• Large scale project management, financing and execution: careful planning to quantify tasks and then saturating the tasks with resources.

• ability to mobilise large amounts of funds at extremely low cost: The use of convertible debentures to fund projects

• Reliance avoids the bureaucratic Government financial institutions

Core Competencies

• Project Management skills are unsurpassed in India.

• Ability to mobilise large amounts of low-cost finance.

• Managing the regulatory environment, partly through and extensive system for gathering & interpreting information.

• Moving fast.