Reliance Industries is underperforming. Yet the hydrocarbon-rich conglomerate, which is controlled by Mukesh Ambani, India’s richest man, also has a cash mountain of $13.8-billion (U.S.) that it does not seem to know how to spend.
As returns have dwindled from core businesses, the proportion of profits from its treasury operations has surged. They accounted for as much as 42 per cent of the total in the March quarter, roughly triple last year’s share. Reliance is now generating more profit from cash management than from exploration, and the contribution is almost equal to gains from refining. It’s nice to have such an efficient treasury, but it raises big questions about the sustainability of the overall Reliance business model.