“Our goal is to make RIL one of the most innovative companies in the world”
— Mukesh Ambani, 2010
In India, the Ambani name is used as a synonym for abundance of wealth and power. After all, Mukesh Ambani, Chairman of Reliance Industries Ltd (RIL) was named the richest Indian for the second consecutive year on the 2010 Forbes’ list of wealthiest people in the world. Ranking fourth globally, Ambani’s net worth is estimated at $29 billion.
Reliance is India’s largest private conglomerate, with a market value of $75 billion and vested interests in a range of sectors from petrochemicals and textiles to retail. Since his father Dhirubhai Ambani set up RIL four decades ago, beginning as a small textile importer, Reliance has acted as a solid springboard for India’s growth leap. Paralleling India’s economic rise, Mukesh Ambani ascended from life in a one-room tenement in Mumbai in the 1960s to the perch of India’s preeminent business family today.
The Stanford-educated Ambani formally joined the family business in 1981, when his father entrusted him with setting up a yarn manufacturing factory. Given free rein, the young Ambani lost no time in displaying his knack for entrepreneurship and incisive decision-making. In the following years, Ambani made rapid progress, mapping out the company’s expansion from textiles into petrochemicals, oil and gas exploration, and telecommunications. He also engineered the creation of 51 manufacturing facilities, tapping the latest technology.
Ambani soon realized the immense potential in acquisitions. One after one, he snapped up ailing companies, eventually adding the down and out state-run Indian Petrochemicals Corporation (IPCL) to his burgeoning portfolio in 2002. Two years later, with the acquisition of National Organic Chemicals Industries Ltd (NOCIL), Reliance’s chunk of India’s petrochemicals sector grew to 70%.
By the time Dhirubhai Ambani passed away in 2002, he had seen his son transform Reliance into India’s foremost publicly traded private sector companies. But it was now, more than ever, that Ambani’s business acumen would be tested. With his father gone, the responsibilities of the business rested solely on him, as well as on his younger brother, Anil Ambani.
But as often is the case, sibling rivalry erupted. In a highly publicized drama, the two brothers had a falling out, a soap opera which resulted in the splitting of the family business. In the end, Mukesh took over the petrochemicals, petroleum and industrial infrastructure divisions while his brother Anil controlled Reliance Capital as well as the telecommunications, energy and natural resources arms of the business.
The chaos of the separation, it seemed, had only served to fuel Mukesh Ambani’s ambitious vision. In 2007-2008, he commissioned the construction of one of the world’s biggest oil refining complex at Jamnagar, Gujarat in Western India. Today, his refinery processes 580,000 barrels of crude oil per day, feeding not just a briskly growing, power-hungry India, but also the oil energy needs of 26 export countries.
Reliance Industries’ revenue is equivalent to 3.5% of India’s GDP
Ambani’s prime business target was the flourishing middle class in India, to which he once belonged. Commenting to the New York Times, he explained, “How do you really bring about, in a country of a billion people, the individuality of every single individual? How do you make sure that you create systems that empower everybody and bring them to their true potential?”
When he opened Reliance Retail in 2006, Ambani brought the power of Wal-Mart style one-stop shopping to India, for a middle class used to neighborhood mom and pop stores and disordered convenience. Ambani sold everything from fresh produce to DVDs in air conditioned and well-stocked supermarkets with organized aisles. More importantly, outlets were opened in far flung areas, acting as a bridge that connected India’s vast rural population to its urban peers.
But it was this sort of diversification that helped Ambani stay afloat during the recent recession, when demand plunged drastically for textiles and petrochemicals, the main revenue source for Reliance. Though Ambani had to do some drastic cost-cutting, like shutting down his polyester manufacturing plant in Germany, the company got back on its feet soon enough to announce a profit in the third quarter of 2009 for the first time in the past one year. Reliance has continued its upsurge, recording a spectacular 92% year-on-year growth in January 2010 and posting a 30% rise in fourth quarter profits.
India’s richest man has made his fortunes by amassing businesses over the years, aided by a skyrocketing Indian stock market that benefited from a steady flow of foreign investments. Yet, at the end of the day, Ambani remains the shy, soft-spoken man known to be a strict vegetarian and teetotaler. His rare display of ostentatious flamboyance was the building of his $2 billion 27-floor ‘house.’ For that, he drew much criticism.
Yet perhaps, all this is what has cast Ambani as the icon of India’s aspirations, the everyman’s poster boy who stands for India’s dreams come true. Ambani realized his ambitions relying on India’s resources and potential. Today, it is the country that looks to Reliance and Ambani to continue India’s journey to the next frontier.
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© Thomas White International, Ltd. 2019