Reliance: The Rise of a Monopoly by Rayaan Sonawala

Before beginning, I would like to clarify the definition of a monopoly. According to Investopedia, ‘A monopoly refers to when a company and its product offerings dominate a sector or industry. The term monopoly is often used to describe an entity that has total or near-total control of a market.’ Historically Andrew Carnegie’s Steel Company (now U.S. Steel) was one of America’s most famous monopolies. They could control the price of steel without free-market competition. A more recent and appropriate example of a monopoly was American Telephone and Telegraph Company (AT&T). This telecom monopoly was eventually forced to split up into seven smaller divisions after violating U.S antitrust law.

Growing up in India, I only learnt about the concept of a monopoly in history class. However, over the last few years, I believe to see one building, slowly and gradually: Reliance Industries. Reliance Industries is expanding quickly and conquering several different industries including petroleum, textiles, retail, and telecommunications, to name a few. The conglomerate is India’s largest private sector company on all major financial parameters and even became the first Indian private sector organization ever listed in the Fortune Global 500 in 2004.

Jio, a private company under Reliance Industries, has disrupted the telecom industry in India since 2016. This company made an impact upon entering the competitive mobile market and offering free 4G voice and data. India’s poverty rate in pre-covid times was around 35%, and one of the reasons of Jio’s success is because they targeted the lower and middle class.

The graph below, taken from https://www.statista.com/chart/15895/market-share-of-wireless-carriers-india/, shows how Jio managed to disrupt the industry and get 19.6% market share in just two years.

In December 2020, Reliance Jio had a market share of around 35%. This private company is just one of the several branches of the conglomerate and the magnitude of damage caused by Jio upon entry is enormous and remarkable.

In this year’s Annual General Meeting, Reliance Industries’ chairman-Mukesh Ambani, announced that they are planning to invest roughly $10 billion for a new energy business. This New Energy business will become Reliance’s fourth vertical. Having plans for a new energy business, shows forward and futuristic thinking and further strengthens my belief of a monopoly being created.

Moreover, with Reliance still new to the retail business in India, there is opportunity of growth in this industry. As mentioned in an article in ‘Mint’, Goldman Sachs stated that ‘retail business is set to be the next growth engine for Reliance Industries, with potential for retail EBITDA to grow 10x over the next 10 years.’ This claim conveys another industry for Reliance to conquer, as the retail industry has a $400 billion GMV in India.

As per agreements on 16th July 2021, Reliance acquired 41% stake in Just Dial, India’s leading online B2B search engine for a whopping $766 billion. As stated by Just Dial themselves- “Just Dial Limited provides local search-related services to users in India through multiple platforms such as desktop, mobile site, mobile apps, over the telephone and text”. Hence, this strategic move by Reliance will help them because, as stated by Kotak Institutional Equities, this acquisition will mean that Reliance Retail’s platform could use Just Dial’s 30 million business listings to provide products and services to end consumers. Just Dial could have been the missing piece that Reliance just found to dominate yet another industry.

An article in the Times of India newspaper shows the acquisitions by Reliance retail over the last two years.

(Times of India- 17th July, 2021)

As seen by the table above, Reliance Retail is on the run by purchasing stake in several retail companies. The strategy Reliance has been using is phenomenal, as they look to disrupt and take control of a highly competitive industry in India.

Reliance Industries Limited’s motto, “Growth is Life”, has been practiced and implemented as the conglomerate is expanding all over India as tremendous pace. To conclude, I hope this blog has helped you to understand the extent to which Reliance is growing and flourishing in India, and therefore, I claim that there is a rise of a monopoly in India which we are witnessing.