Mukesh Ambani, chairman, Reliance Industries
“Jio Financial Services aims to provide simple, affordable and innovative digital-first solutions,” Mukesh Ambani said
Jio Financial Services also has plans set up two insurance companies to foray into life and non-life business
Mumbai:
Reliance Industries said it expects shares of its financial services business to be listed soon as the conglomerate seeks to propel its recently carved out unit into India’s largest non-banking lender, leveraging the prowess of the digital and retail businesses.
“The new entity is expected to unlock value for shareholders and give them an opportunity to be a part of a new growth platform,” Reliance’s billionaire chairman Mukesh Ambani in his message to shareholders in the annual report for the financial year that ended March 31.
Today’s India is young and entrepreneurial, adopting digital finance at an unprecedented pace. The digital revolution has penetrated every corner of the nation through Jandhan Accounts, digital payments, usage of smart phones and low cost data. The growth opportunities presented by financial services are remarkable and provide a strong directional support to the economy, he said.
“As various financial services are governed by different regulatory frameworks, we believe, an independent financial services entity will allow us to access the opportunities available in the Indian market. Jio Financial Services Limited along with its subsidiaries will leverage the technological capabilities of Reliance and digitally deliver financial services, democratising access to financial services offerings for Indian citizens,” Ambani outlined.
Jio Financial Services also has plans set up two insurance companies to foray into life and non-life business.
Jio Financial Services Limited is positioned uniquely to capture the growth opportunities in financial services sector and play a crucial role in transforming the landscape of digital finance in India and aims to provide simple, affordable and innovative digital first solutions, he said.
Reliance will hold its annual shareholders’ meeting on August 28.
Ambani, following the legacy of his late father Dhirajlal Hirachand Ambani, has used the annual investors’ gathering to announce big-bang projects and future growth plans. In the past, he has offered free shares and launched a new smartphone at effectively zero cost to users.
This year, analysts are keen to know more about the billionaire’s strategy for his new unit Jio Financial Services Ltd., clean energy and digital businesses.
Reliance Strategic Industries Ltd., which will be later renamed Jio Financial, has been valued at about $20 billion after its shares were spun off last month through a special session conducted by exchanges to discover its trading value.
The newly formed firm, which has little revenue as of now but owns a 6.1 percent stake in Reliance Industries, has already announced a partnership with BlackRock to set up an Indian asset management venture.
The tycoon has a track record of transforming businesses and has helped the conglomerate to become a consumer services behemoth in the last decade from its earlier focus on traditional crude oil refining and petrochemicals businesses.
Reliance is also seeking to make Jio Financial Services one of India’s top non-banking finance companies to bolster its presence and create an empire that’s similar to Alibaba Group Holding Ltd. and Tencent Holdings Ltd.
Meanwhile,Reliance Industries Ltd, India’s most valuable company, has sought shareholder’s approval to give Mukesh Ambani another five-year term as chairman and managing director of the company till 2029 — a period during which he has opted to draw nil salary.
Ambani, 66, will cross the company law-mandated 70 years age for the chief executive of the company and requires a special resolution by the shareholders for him to be appointed beyond that age bar.
In a special resolution, Reliance sought the nod of shareholders to appoint Ambani as the head of the company till April 2029.
Ambani has been on the board of Reliance since 1977 and was elevated as chairman of the company after the death of his father and group patriarch Dhiburhai Ambani in July 2002.
In the special resolution posted to shareholders, Reliance said its Board of Directors on July 21, 2023 approved “re-appointed Mukesh D. Ambani as Managing Director, for a period of 5 years from the expiry of his present term, i.e. with effect from April 19, 2024.”
Ambani, it said, had capped his annual remuneration at Rs 15 crore from financial year 2008-09 (April 2008 to March 2009) to FY20; and since FY21, he opted to forego his salary, due to COVID-19 pandemic, until the company and all its businesses were fully back to their earnings potential.
Accordingly, he has not been paid any salary and profit-based commission for three years in a row beginning FY21.
At the request of Ambani, “the Board has recommended that no salary or profit-based commission be paid to him for the proposed term from April 19, 2024 till April 18, 2029,” the resolution said.
“He shall, however, be entitled to reimbursement of expenses incurred for travelling, boarding and lodging including for spouse and attendant(s) during business trips and provision of car(s) for use on company’s business and communication expenses at residence shall be reimbursed at actuals and not considered as perquisites,” the special resolution said.
“The company shall arrange to provide security to Ambani and his family members and the expenses borne by the company for the same shall not be considered as perquisites.”
Reliance said Ambani will attain the age of 70 years on April 19, 2027.
“The company has grown multifold under his leadership and it would be in the interest of the company that he continues to lead the company even after he attains the age of 70 years. Accordingly, approval of the members (shareholders) is sought for passing the resolution proposed (to give him another 5-year term) as a Special Resolution.”
Ambani, it said, satisfies all the conditions set out in company law and has not disqualified from being appointed as director.
“In terms of Article 86(1) of the Articles of Association of the company, Shri Mukesh D. Ambani is not liable to retire by rotation. Regulation 17(1D) of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 provides that in such cases, the continuation of the director shall be subject to the approval by the shareholders in a general meeting once in every five years,” it said, adding he is being sought to be reappointed till April 18, 2029.
Ambani has for a third year in a row drawn no salary from his flagship firm in the last fiscal as he voluntarily gave up remuneration in light of the pandemic hitting the business and economy.
In its latest annual report, Reliance said Ambani’s remuneration for the financial year 2022-23 was “nil”.
In June 2020, he voluntarily decided to forego his salary for the year 2020-21, in light of the COVID-19 outbreak in India, which exacted a huge toll on the societal, economic and industrial health of the nation.
He continued to forgo his salary in 2021-22 as well and now in 2022-23.
In these three years, Ambani did not avail of any allowances, perquisites, retiral benefits, commission or stock options from Reliance for his role as the Chairman and Managing Director.
Prior to that, the Chairman and Managing Director had his salary capped at Rs 15 crore since 2008-09 in order to set a personal example of moderation in managerial compensation levels.
The Rs 15-crore salary in 2019-20 was the same as in the previous 11 years.
Ambani has kept salary, perquisites, allowances and commission together at Rs 15 crore since 2008-09, forgoing over Rs 24 crore per annum.
The remuneration of his cousins Nikhil and Hital Meswani rose to Rs 25 crore each, including Rs 17.28 crore commission (unchanged from previous fiscal year).
Executive Directors P M S Prasad and Pawan Kumar Kapil saw their remuneration rise.
While Prasad drew Rs 13.50 crore in 2022-23 including performance linked incentives for 2021-22 which was paid in 2022-23. In 2021-22, he drew Rs 11.89 crore.