Reliance Saga – Rs. 1,000 to Rs. 10 Trillions

The rags-to-riches storey of late Dhirubhai Ambani, has been inspiration for many generations. A company which started by late Dhirubhai with an investment of Rs 1000 in 1966 has turned in to a company with market capitalisation of  Rs. 10 trillion. Historically the company went to public in 1977 and raised equity capital from 58,000 investors.  Reliance attracted many small town investors to the capital market which was monopoly of metros and especially financial capital, Mumbai.

Late Dhirubhai had to fight lots of battles before emerging as numero uno entrepreneur in India, a Fortune 500 company, and making global inroads as private segment conglomerate. He dealt with all sorts of sniping criticism with silence. He battled with the likes of Ramnath Goenka – the crusader of real Free Press and proprietor of the Indian Express and industrialist Nusli Wadia of Bombay Dyeing. He was also part of the controversies labelled with him ranging from export manipulation, share switching and over utilisation of licenced capacity.

His eldest son Mukesh graduate in Chemical Engineering joined his father’s business in early nineties leaving his Harvard business school degree incomplete .Late Dhirubhai called his eldest to set up India’s biggest refinery at Jamnagar in Gujarat. His intestate death in July 2002 caused hazy situation in the private domain of Reliance with the two ambitious brothers. After death of father, eldest brother Mukesh became chairman and managing director of Reliance Industries, and Anil vice-chairman and managing director.

A Feud between the two brothers was brewing and came to light in November 2004.‘Well, there are issues which are ownership issues. These are in the private domain, but as far as Reliance is concerned it is a very-very strong professional company’. This statement made by Mr Mukesh Ambani November 2004 had lot of connotation as well denotations.

In June 2005, the family reached a settlement to split the Reliance business with mother Kokilaben intervening in the battle. The formal split happened in the year 2006. Mukesh got the flagship Reliance Industries, along with interests in petrochemicals, oil and gas exploration while Anil got telecoms, financial services businesses, power, and entertainment.

Ambani brothers feud  can be termed as biggest sibling rivalry in India. Younger brother Anil who had a net worth over USD 40 billion is struggling to settle. His ventures gradually failed him. He went through a rough patch where his elder brother bailed him out by funding the debt which prevented possible jail for the younger brother. Almost one and half decade of strained relationship ended in once again proving that blood is thicker than water. Mukesh, who stays in a 27 story building approximately valued at USD1 billion and employs a staff of around 600 people, called Antilla, has emerged as a clear winner.

Valuation of rupees 10 trillion market capitalisation from one trillion in 2005 is a story of Mukesh Ambani which would have made his late father Dhirubhai proud. The script covers all the issues a la Bollywood style, ranging from brotherly board room clash and defamation suit filed by estranged brother, request by the then finance minister to the brothers to resolve their dispute. Finally the issue in private domain ended privately with prayers and dandiya on the occasion of 80th birth anniversary of late father. In between it also had a scene of sabotage. Tampering of fuel tank of a helicopter supposed to carry younger brother with mud and subsequently a mysterious death of the man who discovered it.

But the legacy of huge bonanza to retail shareholders continues and that what’s the name Reliance makes room in every portfolio. Mukesh Ambani shrewdly used the advantage of liquidity to expand his investment in Oil and Petrochemicals business and operated with ease. Taking advantage of the economies of scale Reliance’s dominance left huge foot prints like an elephant. Mukesh Abmbani is getting global attention like his late father. Recently TIME magazine included his name in the list of 100 most influential people. His dexterity in negotiations skill and huge investments gave huge edge to the group. The march of the elephant continued with JIO and as it bulldozed even the several decades old players in telecom sector bleeding. They were wailing to JIO – Muze Jinee Do as the price war put them in the corner. JIO the Elephant with bigger margins has set to embark on the path to make it debt free. Reliance which had a debt of over 1, 50,000 crores has set a target of 18 months to make the company  debt free. In this context Reliance Industries announced its intention to sell oil and chemical business to Saudi oil giant Aramco and its fuel retail network to BP plc of United Kingdom for Rs 1.15 lakh crores. So the elephant is taking giant steps and growth engine is getting  stronger and stronger.

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