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Top 3 Reasons Why Reliance Industries Demerger with Jio


It might be true by 2030 Mukesh Ambani will be there in each sector of the business. Yes, it true, Mukesh Ambani always watch for the opportunity to enter and build his empire.

This is what happened over the decades. In 2016, Mukesh Ambani noticed a gap in the Telecom industry and so Launched JIO. Now there are hardly 2 telecom players competing with JIO.

In 2022, Mukesh Ambani entered the OTT space by taking the rights of IPL for whopping 23,000 crores. Then made IPL for free for the fans. In this way, Mukesh Ambani won the battle by implying a freemium business strategy.

Now again Mukesh Ambani is now news about the Reliance Industries demerger with JIO.

Ambani Loan App

Mukesh Ambani never takes a decision without any benefits. Now there is a Reliance industry demerger with JIO. Yes, from now on there is an independent entity of JIO Financial Services.

From this entity, Ambani will enter into the NBFC business. Yes, providing loans for individuals and MSME

Now there is a lot of demand for short-term loans. As this generation, people are spending more money than ever before. So, people are looking for lending services other than traditional banks which makes the process tedious.

JIO Financial Services also gives tough competition for Bajaj and Primal Finance in the coming years.

However, now JIO Financial services are in the bottom line of their competitors. As in 2022

Bajaj Finance – 2.47 lakh crores

Piramal Finance- 63,989 crores

Jio Financial Sercices – 9.149 crores

These are the amounts that have been lent from the respective companies.

Reliance Industries Demerger helps toPut Break on Chinese Loan Apps

JIO entering into the loan-providing space will definitely impact the Chinese loan apps. However, many people are suffering from the wrong practices from these Chinese apps. Even many apps are threatening users by accessing private media.

Till now, Google Playstore removed over 3500 loan apps which were having some illegal activities and non-compliance issues.

But still, the problem prevails. Now the entry of JIO Financial service will impact many Chinese loan apps. Because Ambani will lend the money with much less interest and also not threaten its users harshly.

Reliance Industry Demerger helps JIO to scale

The main reason for the Reliance Industries demerger with JIO is to make JIO a financial scale.

To enter into the NBFC space, it is a very capital-intensive business. Initially, the company has the spend lots of capital on the market.

So, if the RIL- jio demerger wouldn’t happen then there will be severe drops in the share price of Reliance Industries.

Now after the Reliance Industries Demerger, JIO Financial Service has 6.1% shares of RIL ( Reliance Industries) which is worth 1,00,000 crores.

According to RBI rules, any company which enters into the NBFC space, that respective entity should have great financial support from anybody. So, from the RIL-jio demerger, the JIO finance services have great support from its parent company RIL.

Also Read: TOP Indian Entrepreneurs of India

Top 5 areas that JIO Financial Services build their business

Reliance Payment Solution

Mukesh Ambani’s main master plan is to build a payment solution business. However, Ambani holds over 18,000 reliance stores and 1300 petrol pumps.

So, imagine if Reliance uses its own entity JIO as a payment gateway then it can save millions in commission that is going out for 3rd party companies.

Some payment solution companies like Razorpay and Pinelabs are having $7 billion and 3.5 Billion respective valuations. From this data, it is clearly shown that this market has a great demand.

JIO Payment Bank

Mukesh Ambani plans to open up the private banks in JIO’s entity. If the JIO Bank will be launched then there will be a wide range of disruptions in the banking space as well.

From JIO bank, Ambani can also grow its user base in the JIO financial services as well. It is all interlinked.

Retail Finance Business

Ambani is king in the Retail business. So, he understands the pain of retailers. So, cash flow is a vital factor in retail to run the business.

However, Mukesh has over 18,000 Reliance stores across India. So, he can extend its business in Retail financing. Where he will finance the retailer with low interest.

Another business that Reliance can enter into is the ” B2B marketplace”. As Reliance will buy products in massive quantities. So, it will get lots of margins. If Reliance leverages these margins to sell to local retailers still has fewer margins than they buy from whole sellers. Then it will be game-changers for reliance as well.

Reliance Insurance Policy

Yes, from Reliance Industries Demerger, Jio can step into the Insurance space as well. However, Reliance has massive business at its core. So, if they start an insurance broking company it can make massive returns.

In this way, the RIL-jio demerger will expand the JIO business in various fields.

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