🏙️ How Reliance Industries India’s Biggest Company Was Built
The fascinating story of Ambani’s rise to the top, and how he transformed Reliance from a small textile business into a global conglomerate.
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You’ve probably heard of Mukesh Ambani, the chairman and managing director of Reliance Industries, India’s largest private sector company.
He’s also the richest person in Asia, with a net worth of over $80 billion, according to Forbes.
But do you know how he built his empire from scratch?
In today’s episode of the week, we’ll take you through the fascinating story of Ambani’s rise to the top, and how he transformed Reliance from a small textile business into a global conglomerate with interests in oil, telecom, retail, media, and more.
Let’s dive in.
The humble beginnings
Mukesh Ambani was born in 1957 in Aden, Yemen, where his father, Dhirubhai Ambani, worked as a gas station attendant.
Dhirubhai was a visionary entrepreneur who had a knack for spotting opportunities and taking risks.
He moved his family back to India in 1958 and started a small trading firm called Reliance Commercial Corporation.
He soon ventured into the textile industry, setting up a small mill in Naroda, Gujarat, in 1966.
He named his brand “Vimal”, after his elder brother, who had died in childhood.
He also pioneered the concept of “franchise retail outlets” in India, where he sold his fabrics directly to customers through a network of exclusive shops.
The big break
In 1977, Dhirubhai decided to take Reliance public, raising $3.3 million from 58,000 investors.
This was a bold move, as most Indian businesses at the time were family-owned and secretive.
Dhirubhai wanted to create a “people’s company”, where ordinary investors could share in his success.
He also cultivated a loyal fan base among his shareholders, who admired his vision and ambition.
He rewarded them with generous dividends and bonus issues, making them rich along the way.
One of his famous quotes was: “If you work with determination and with perfection, success will follow.”
The expansion
With the funds from the IPO, Dhirubhai embarked on a massive expansion plan, diversifying into petrochemicals, plastics, synthetic fibers, and more.
He also built India’s first private sector refinery in Jamnagar, Gujarat, in 1999, with a capacity of 660,000 barrels per day.
He also acquired several companies, such as Indian Petrochemicals Corporation Limited (IPCL) and Larsen & Toubro’s (L&T) cement division.
He also entered into joint ventures with foreign giants, such as Chevron, DuPont, and GE.
By the early 2000s, Reliance had become India’s largest private sector company, with revenues of over $15 billion and a market capitalization of over $25 billion.
The succession
Dhirubhai suffered a stroke in 1986, which impaired his speech and mobility.
He handed over the reins of Reliance to his two sons, Mukesh and Anil, who had joined the company in the early 1980s after completing their education in the US.
Mukesh took charge of the core businesses of oil, petrochemicals, and textiles, while Anil handled the newer ventures of telecom, power, and finance.
The brothers worked well together for a while, but soon differences emerged over the future direction and strategy of Reliance.
The feud escalated after Dhirubhai’s death in 2002 when he left behind no clear succession plan or will.
The brothers fought bitterly for control of Reliance, leading to a public and ugly spat that shook the Indian business world.
The split
In 2005, the brothers agreed to split Reliance into two separate entities, under the mediation of their mother, Kokilaben.
Mukesh got Reliance Industries Limited (RIL), which retained the oil, petrochemicals, and textiles businesses, along with a 45% stake in Reliance Infocomm, the telecom venture.
Anil got Reliance Anil Dhirubhai Ambani Group (ADAG), which comprised the telecom, power, finance, and entertainment businesses, along with a 45% stake in Reliance Infocomm.
The brothers also signed a non-compete agreement, which barred them from entering into each other’s domains for 10 years.
The rivalry
The split did not end the rivalry between the brothers, who continued to compete fiercely in the market.
Mukesh focused on expanding RIL’s core businesses, investing heavily in exploration, production, refining, and petrochemicals.
He also entered into new sectors, such as retail, media, and broadband.
He launched Reliance Retail in 2006, which became India’s largest retailer, with over 12,000 stores across the country.
He also acquired Network18, a leading media and entertainment company, in 2014.
He also re-entered the telecom sector in 2016, with the launch of Reliance Jio, a 4G mobile network that offered free voice calls and cheap data plans.
Jio disrupted the telecom industry, attracting over 400 million subscribers in four years, and becoming India’s largest telecom operator.
Anil, on the other hand, struggled to grow his businesses, facing regulatory hurdles, legal battles, and financial troubles.
He sold off some of his assets, such as Reliance Communications (RCom), Reliance Infrastructure, and Reliance Power, to reduce his debt.
He also faced allegations of corruption, fraud, and money laundering, which tarnished his reputation and credibility.
He also lost a legal case against Mukesh in 2010, when the Supreme Court ruled that Mukesh was not obliged to supply gas to Anil’s power plants at a discounted rate, as per the family agreement.
The outcome
The divergent fortunes of the brothers are reflected in their net worth.
Mukesh became the richest person in India, and one of the richest in the world, with a net worth of over $80 billion, according to Forbes.
He also built a 27-story mansion in Mumbai, called Antilia, which is valued at over $1 billion and is one of the most expensive homes in the world.
He also owns a stake in the Indian Premier League (IPL) cricket team, Mumbai Indians, which has won five titles.
Anil, on the other hand, saw his net worth plummet from over $30 billion in 2008 to less than $1 billion in 2020, according to Forbes.
He also faced the risk of being jailed for failing to pay dues to his creditors, including the Swedish telecom equipment maker Ericsson.
He was saved from imprisonment by Mukesh, who paid $76 million to Ericsson on Anil’s behalf, in 2019.
Anil thanked his brother for his gesture, saying that he was “touched” by his “timely support”.
The lesson
The story of Mukesh Ambani and his rise to the top is a remarkable one, that shows how a poor kid from Yemen became India’s richest man, by following his father’s footsteps and vision.
He also shows how he overcame the challenges of a family feud, a business split, and fierce competition, to create a global conglomerate that spans across multiple sectors and industries.
He also shows how he leveraged his strengths, such as innovation, scale, and execution, to create value for his customers, shareholders, and employees.
He also shows how he adapted to the changing market conditions, and embraced new technologies and opportunities, to stay ahead of the curve.
He also shows how he balanced his business ambitions with his social responsibilities, by investing in education, health, and environment initiatives, and by supporting his brother in his time of need.
The story of Mukesh Ambani and his rise to the top is a story of inspiration, aspiration, and perspiration, that can teach us all a thing or two about business and life.
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