Decoding the Reliance-Aramco Deal

Decoding the Reliance-Aramco Deal

Great Lakes Institute of Management, Gurgaon, student Surya Jain talks about his opinions on the Reliance-Aramco deal.

An investment in Reliance Group, rather the biggest one in its 53-year history, might just result in one of the largest ever foreign investment by any overseas company into India. This investor is none other but Saudi Aramco, which is not only the world’s largest and lowest cost-per-barrel producer of crude oil but also the most profitable company in the world [1]. This company is in talks to invest a handsome amount in the largest private-sector corporation in India.

Great Lakes Institute of Management, Gurgaon, PGDM 2019-21 student Surya Jain talks about his opinions on the Reliance-Aramco deal.

The relationship between Saudi Aramco and Reliance Industries has already been a long one, 25 years to be specific. Saudi Aramco has already supplied 2 billion barrels of crude oil for processing at RIL’s refinery at Jamnagar till date. A potential 20% stake in the Oil-to-Chemical division comprising of Refining, Petrochemicals and Fuel Marketing Business of Reliance Industries carries an Enterprise Value of US $75 billion [2]. This deal will also result in Saudi Aramco supplying 5,00,000 barrels of Crude oil per day to Jamnagar refinery on a long-term basis [3].

However, the deal didn’t really have a great start. It fell apart on multiple occasions with Reliance demanding a higher valuation which, indeed, they were able to command with a much higher multiple than industry standards. As a part of the deal, Reliance industries will carve its oil-to-chemicals division and will become an independent entity in 5 years. However, for the first 5 years, Saudi Aramco will not directly own shares in the business division, though it will get a chance to appoint a key business leader, tentatively the COO, to oversee it [4]. Apart from this, Saudi Aramco has been on an acquisition spree and making other major investments in Asia to bolster its presence, building refineries in Indonesia, South Korea, China, and Malaysia.

PGDM student from Class of 2019-21 at Great Lakes Institute of Management, Gurgaon, Surya Jain, talks about his opinions on the Reliance-Aramco deal.

To put things in perspective, Saudi Arabia’s oil export to the US was ~2,62,053 BPD in July 2019, nearly 62% down from 6,87,946 BPD as compared in August 2018, as a result of the US becoming self-reliant than ever [5]. This has resulted from the US Shale Oil Revolution and has been one of the major reason of OPEC production cut in 2017, resulting in reduced supply to the largest, transparent and timeliest market – The US. At the same time, according to a report by Wood Mackenzie, India will surpass China to become the second-largest oil demand growth center in 2019 remaining only behind the US and helping them offset a slowdown elsewhere through growth in Indian markets [6].

On the backdrop, this deal seems to be a perfect solution for Saudi Aramco to maintain stronghold and grip on the fastest-growing oil market in the world (bolstered by the swelling middle class) where it is facing stiff competition. By competition, we also mean the US, which is ramping up shale exports, and Russia who is looking for new customers and trying to making inroads

Suppliers of Crude Oil to India
Source : Ministry of Petroleum and Natural Gas

Stepping into Mr. Mukesh Ambani’s shoes and understanding the story from his perspective, the deal will provide Reliance with the much-required cash to de-leverage its balance sheet, bring net debt to zero by March 2021, and fund the Jio and Digital business [7]. This is part of the company’s larger effort to expand its consumer-facing business including its retail chain, and its effort to move into the technology sector and internet services by diversifying from its core oil refining and petrochemical business. This deal seems to be a perfect synergy between the interests of the world’s largest oil producer and the ambitions of one of India’s largest conglomerates.

Great Lakes Institute of Management, Gurgaon, PGDM class of 2019-21 student Surya Jain talks about his opinions on the Reliance-Aramco deal and how it would benefit Mukesh Ambani's conglomerate and the world's largest corporation.

Written by: Surya Jain – PGDM “Apache” Class of 2021

Great Lakes Institute of Management, Gurgaon

Great Lakes Institute of Management, Gurgaon, PGDM class of 2019-21 student Surya Jain talks about his opinions on the Reliance-Aramco deal and how it would benefit Mukesh Ambani's conglomerate and the world's largest corporation.

References

[1]: https://www.linkedin.com/feed/news/the-worlds-most-profitable-company-4984378/

[2]:  https://www.bloomberg.com/news/articles/2019-08-14/saudis-defending-coveted-indian-oil-market-with-reliance-tie-up

[3]: https://www.vccircle.com/reliance-to-sell-20-stake-in-oil-to-chemicals-business-to-saudi-aramco

[4]: https://economictimes.indiatimes.com/industry/energy/oil-gas/ril-to-hive-off-oil-to-chemicals-business-into-separate-company-in-five-years-rils-pms prasad/articleshow/70651943.cms?from=mdr

[5]: https://www.cnbc.com/2019/08/15/saudi-arabia-dramatically-changing-its-oil-exports-to-china-and-the-us.html

[6]: https://economictimes.indiatimes.com/industry/energy/oil-gas/india-to-surpass-china-to-become-2nd-largest-oil-demand-centre-in-2019/articleshow/67641257.cms?from=mdr

[7]: https://www.financialexpress.com/industry/reliance-industries-agm-live-updates-mukesh-ambani-jio-giga-fiber-jio-phone-3-ril-stock-price-reliance-plan-12-aug-2019/1672964/

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#instascam – Of Fake Accounts and False Prophets

#instascam – Of Fake Accounts and False Prophets

Mechanics of the Scam:

Influencer marketing is big business today. A study by Swedish e-commerce start-up A Good Company, and HypeAuditor, shows that Indian Instagram influencers have over 16 million fake followers, the third-highest after the US and Brazil [1]. Several influencers use these bogus accounts to boost their vanity metrics such as “likes” and overall engagement.

And brands bite – the study estimates that the fraud has cost marketers $750 million globally. Marketing firm Mediakix predicts that influencer marketing on Instagram could reach $2 billion by the end of 2019. “Influencers” on Instagram and other social media enjoy a wide outreach and leverage this to strike deals with brands and earn sponsorships, pushing products and services to their fake fan base. Many of these influencers try to game the system and make easy money by coaxing brands into thinking they have a larger following than they actually do; they buy followers, likes and even engineer comments on their posts. Companies end up paying a fortune to these influencers for collaboration and in the form of free give-aways to non-existent persons. It is quite easy to buy fake engagement and fake followers online for anyone who knows where to look.

Influencers get more and more creative with their tricks in making their fake followers look genuine

A Cat and Mouse game:

Unfortunately, there is no single fool-proof workaround for this. As much as social media platforms such as Instagram, Twitter, Facebook, Reddit, etc. work to identify fake users, the shady services that sell fake social media engagement always find ways to stay one step ahead. In his great “Manipulating” series on YouTube, Destin Sandlin explains how these social media websites are at war with fake news and fake engagement [2]. You could once spot fake following by checking social media analytics websites such as Social Blade and look for unusual spikes in follower count, given that there has been no major external event that may to the spike [3]. However, services that provide fake engagement have gotten smarter. They allow you to gain followers in a slow, consistent, steady fashion that seems organic to the algorithms of social media websites.

Influencers have a number of fake followers in the form of people, often themselves, and as bots.

So what can be done about it?

Technology companies have dedicated a vast amount of resources to solve this problem using AI-driven algorithms to terminate fake accounts. However, there are certain elementary methods to identify if an account is fake, apart from the ones mentioned earlier.

One of the ways is to analyse the comments. Comments posted by bots or the influencers themselves usually follow a common theme in terms of vocabulary and sentence structure. So if you look for patterns in them, you will usually find overwhelming polarized content and limited writing variety.

Another method is to check the profiles of some of the commenters. If they are overwhelmingly empty accounts with poor post frequency, skewed following-to-followers ratio (fake accounts usually follow a large no. of accounts to engage but have low follower count), or just don’t seem to have any personalized content, there is a very good chance the influencers are buying engagement and scamming companies out of their money.

A typical fake Instagram profile with high Following count as compared to Followers count and a single post, with the image of a celebrity.

In Conclusion:

Methods to spot fake profiles are certainly not fool-proof and can be quite cumbersome, but they can still provide a fair idea about an influencer’s account. Skepticism could be helpful to marketers so that they can take a calculated risk if they’ve got Influencer Marketing on their minds. They should be cognizant of the fact that any random “influencer” may not have their best interests at heart. Nevertheless, influencer culture is here to stay, whether we like it or not. While large corporates may not [need to] invest in this, struggling start-ups and local brands may still try to walk this road as a cost-effective means to create awareness among masses, instead of expensive mainstream advertising.

Written by: Anant Gupta – PGDM “Apache” Class of 2021

Great Lakes Institute of Management, Gurgaon

PGDM Class of 2021 (Apaches) student Anant Gupta

[1]: https://indianexpress.com/article/technology/social/indian-instagram-influencers-have-over-16-million-fake-followers-says-new-study-5830303/

[2]: https://www.youtube.com/watch?v=MUiYglgGbos&list=PLOY__sF3NWC1rqjRh_KVftNj0j4slUd3Z

[3]: https://socialblade.com/

Atal Bihari Vajpayee: Tribute to the True People’s Prime Minister

Atal Bihari Vajpayee: Tribute to the True People’s Prime Minister

India is the largest democracy in the world. Throughout its democratic history, it has witnessed several politicians rising to power before going downhill. Our countrymen have been fortunate enough to see great leaders like Jawaharlal Nehru, P.V Narsimha Rao, and Indira Gandhi taking up the podium and setting up vivid examples of leadership and diplomacy for the generations to come. Our country represents a classic example of unity in diversity, it exemplifies different flavours in almost every aspect of our lives, Politics being one of them. We have produced leaders exhibiting varied styles and building a connect with varied people of our country. And at the same time, the race to reach the pinnacle of power had also corrupted some of those leaders beyond redemption. Today, we are a part of a political system which lacks mutual respect for each other. We see Parliamentary sessions succumbing to unproductivity owing to clashes between ideologies and people driven by the utmost motive of demeaning each other. Where does a leader like ‘Shri Atal Bihari Vajpayee’ fit in in this landscape? What made him stand out from the rest?

Born to Krishna Devi and Krishna Bihari Vajpayee on 25th December 1924 in Gwalior, Atal Bihari Vajpayee did his schooling from Saraswati Shishu Mandir, Gwalior and later went on to complete his graduation from Laxmi Bai College, Gwalior. He then pursued his Masters of Arts in Political Science from DAV College, Kanpur, where he was awarded a first-class degree. A revolutionary nationalist at heart, at a tender age of 16, he was already working as an active member of RSS (Rashtriya Swayamsevak Sangh) and had earned the honour of being a freedom fighter when he was jailed for participating in ‘Quit India movement’. The urge for public service and uplifting our nation drove him throughout his life. From being one of the founding members of ‘Bhartiya Jan Sangh’ to organizing it into the first truly national party, ‘Bhartiya Janta Party’, formed in independent India, he exhibited strength, proactivity and responsiveness to various national and state-level issues, especially in the case of J&K protests against separate permits for other citizens. His extraordinary organizational and oratorical skills won the hearts of masses. His aptly articulated and poetic way of addressing public sessions soon started bearing fruits. In 1957, he was elected as a member of Lok Sabha from Balrampur. There, his oratorical skills so impressed Prime Minister Jawaharlal Nehru that he predicted that Vajpayee would someday become India’s Prime Minister. He served as an MP (Member of Parliament) for 47 years thereafter, as he was elected 10 times for Lok Sabha and 2 times for Rajya Sabha. As his political career progressed, Atalji became a name synonymous with Integrity, Cohesiveness, Patience and Cooperation. He was an inspiration for many and he strongly upheld our nationalistic identity on international platforms. India had just started gaining momentum, when as a ‘Minister of External Affairs’, he addressed the UN General assembly in Hindi. It showed the love he had for his motherland and his capability to think differently to create a distinct national identity.

Shri Atal Bihari Vajpayee @Pokhran

Atal Bihari Vajpayee served as the Prime Minister of India between 1996 and 2004 in three non-consecutive terms. Though the initial terms were comparatively unstable, his firm decision-making and his ability to build consensus amongst everyone brought about a lot of key changes at that time. His approach to decision-making included seeking considerations from every political front to arrive at a consensus. He strongly believed that such inclusion was paramount in achieving desired effectiveness for the government policies to work. His able governance proved several economic and political pundits wrong, who suggested that a democracy could never achieve a very high GDP growth rate since India grew at around 6-7% at that time owing to the liberal reforms in various sectors. While we as a nation had started dreaming of becoming a superpower, Atalji consolidated our position in terms of national security as well when he overcame the hesitation of our nation, the resistance of the world and threat of isolation to make India a nuclear weapons power post the second Pokharan range tests. Amid all these developments, he showed contrasting gumptions when he went an extra mile to make Indo-Pak relations better post Kargil war. Foreign relations, especially with USA and China, were never better. He widely advocated World Peace and Cooperation. As he himself once said, “Gun can solve no problem; brotherhood can. Issues can be resolved if we move forward guided by the three principles of Insaniyat, Jamhooriyat and Kashmiriyat.” During his Prime Ministership, India witnessed a golden era of transformation and positivity while everything worked in tandem in an otherwise difficult-to-manage coalition government. It was the magic of Atalji working wonders for the nation.

We have not only lost an excellent politician, but a diplomat, journalist, poet, and in a true sense, a Bharat Ratna. A gem whose shine would enlighten us forever in our path for development. He taught everyone the politics of consensus and not confrontation. He taught us how to accommodate everyone’s opinion while putting forth your own ideologies and beliefs. He was often termed as ‘Bhishm Pitamah’ of Indian politics as he was equally respected and liked by either political fronts. I still remember humming to the tune of the song “School chale hum…” during my childhood. Today it feels different. I am sure his spirit will continue to guide us as we progress to become the greatest nation in this world.

Author: Prateek Gupta

PGPM, Class of 2019, Great Lakes, Gurgaon

Disclaimer: The views expressed are those of the author

Image Sources:

indiatimes.com

abplive.in

ndtv.com