India's Polyester King, His Son, and the empire they built.
Yemen has been hit by a severe civil war, and Mr. Dhirubhai Ambani is left with no choice but to leave Yemen for India with his wife, Mrs. Kokila Ben Ambani, and his 1-year-old son, Mukesh. They settle in a one-room kitchen in Bhuleshwar. The family was sleeping on the floor and had no money. Cars, telephones, and electricity were luxuries. Nobody had predicted that a struggling middle-class family in 1958 would go on to live in this breathtaking building named Antilia, which is the costliest residential house in the world. Along with the house, the family rose to become one of the most powerful families in India in just one generation.
How did Mr. Dhirubhai build an unsinkable organization? If this company fails, it will take the country with it. What were their principles? What was their competitive advantage? Let's dive into one of the most mesmerizing business stories India has ever experienced.
INITIAL DAYS
Mr. Dhirubhai began a business trading in spices in the late 1950s, calling his nascent venture Reliance Commercial Corporation. He soon expanded into other commodities, following a strategy of offering higher-quality products and accepting smaller profits than his competitors. His business grew quickly. After deciding that the corporation had gone as far as it could with commodities, Ambani turned his attention to synthetic textiles. Synthetic textiles are man-made fibers; most of them are prepared from petroleum raw materials called petrochemicals. He made his first foray into backward integration with the opening of the first Reliance textile mill in 1966. He noticed that even though he had control over his fabrics and fibers, the protagonist was petroleum and petrochemicals. In order to call Reliance a completely backward-integrated company, he thought about foraying into the petrochemical business.
EARLIY LIFE OF MUKESH AND ANIL
Anil Ambani joined Reliance in 1983 as Co-Chief Executive Officer and is credited with having pioneered many financial innovations in the Indian capital markets. For example, he led India's first foray into overseas capital markets with an international public offering of Global Depository Receipts (GDRs are a tool through which Indian companies can raise money from the overseas market), convertibles, and bonds. He had steered the Reliance group to its current status as India's leading textile, petroleum, petrochemicals, power, and telecom company.
Mukesh joined the business in 1981 and initiated Reliance's backward integration from textiles into polyester fibers and further into petrochemicals. In this process, he directed the creation of 60 new, world-class manufacturing facilities involving diverse technologies that have raised Reliance's manufacturing capacities from less than a million metric tons to twelve million metric tons per year. He directed and led the creation of the world's largest petroleum refinery, which is located in Jamnagar, Gujarat.
THE FEUD BETWEEN THE BROTHERS
A feud broke out between the two brothers, who were heirs to their multi-billion-dollar Reliance group, after their father's death in 2002. It was their mother who was finally able to broker a truce. Mukesh kept the group's petrochemical flagship, Reliance Industries, Indian Petrochemical Corp. Ltd., Reliance Petroleum, and Reliance Industrial Infrastructure Limited, and kept the Reliance name. Anil formed the Anil Dhirubhai Ambani Group, with Reliance Communication, Reliance Capital, Reliance Energy, and Reliance Natural Resources Ltd. forming the group. Anil Ambani had literally everything that Mukesh is trying to build right now. Back in the 2000s, all of these sectors were booming, and yet Anil Ambani failed to turn those events into profit-making cows. Mukesh Ambani always had an eye on the telecom business, as he saw the rising importance of data in our day-to-day lives. I believe vision is what differentiates between a good and bad leader.
FALL OF KAURAV AND RISE OF PANDAV
Anil Ambani saw his downfall only because of his bad investment decision. His investment in the entertainment industry, his choice of CDMA (Code division multiple access) over GSM (the global system for mobile communication), and the criminal cases against him are all results of his bad investments. Patience and good relations are two skills that every entrepreneur should have on his CV. Anil Ambani was prone to taking on capital-guzzling projects immediately after the family split. But his decision did not come out as per his strategy. His battle with his own brother over gas prices landed him more in trouble.
Anil Ambani also loved his flashy lifestyle, and rarely did he manage his business at the microlevel. In order to expand his telecom business, he approached the capital markets regulator for an IPO. Anil Ambani had no prior experience in the telecom business. Still, he was given land where he was supposedly going to build telecom towers. He raised a few billion dollars from the public. In a way, Mukesh Ambani also played an indirect and direct role in Anil Ambani's bankruptcy. As per an older agreement, Mukesh was to supply gas (till 2022) to Anil's Reliance Power at a price that was 44% lower than the then government's prevailing rates. In 2010, Mukesh stopped doing this. Because the government raised the prices, it was no longer feasible for him to give cheap gas to his brother. One thing led to another, which pushed Anil Ambani and his companies into major debt. RCom alone had a debt of Rs 26,000 crore. The gap between the brothers widened when Mukesh came up with the "joint implementation opportunity," or Reliance JIO.
JIOs entry is no less of a movie. It was like the sequel of Karan Arjun and Anil Ambani, VI, BSNL, and MTLP were played by Amrish Puri and Johnny Lever. The size of investment Mota Bhai raised was no less of a signal that other telecom players should start digging their graves. Mukesh's approach was very similar to what Netaji Subhas Chandra Bose did. Instead of trying to lick the toes of Indian politicians and other business magnets (what Anil Ambani did), Mukesh got global alliance and had giants like Google, Meta, Apple, Saudi Arabia Sovereign Fund, Abu Dhabi Investment Authority backing him which helped him collectively raise more than $15 billion in 1 single year. He did all this during 2020 while we were busy banging utensils. The extra mile is what I believe gets us to the desired destination and seduces success to fall into our arms.
RISE & ONLY RISE OF JIO AND MUKESH AMBANI
Jio's journey started in 2016, when Reliance Industries acquired Infotel Broadband, which won a pan-India 4G spectrum license. This acquisition gave Reliance Industries the infrastructure to launch Jio. However, Jio faced many challenges before its launch, including delays in the rollout of 4G services and opposition from other telecom companies.
Jio's pricing was a game changer, as it forced other telecom companies to reduce their tariffs. This led to a price increase in the telecom industry, which benefited customers. However, the price war also led to consolidation in the industry, with Vodafone and Idea merging to form Vodafone Idea. On July 3, 2023, Mukesh Ambani came up with the "Jio Bharat" phone, a 4G-enabled phone that is a step towards "2G Mukt" India. Mukesh Ambani has promised to offer 14 GB of data per month for Rs. 123. That means he will offer per GB data at Rs 8. Now that's a Gujju Businessman. Rs. 8 per GB of data is one of the cheapest per-GB data rates in the world. Just so you know, the per-GB cost in the US is Rs 477; in the UK it is Rs 64; in Germany it is Rs 218. The only country offering a cheaper price per GB of data than India is Israel, which is Rs 3.
We usually tend to favor the Tatas over the Ambani's, and it is for genuine reasons. But we forget that the contribution made by the Ambani family and Reliance Industries combined is one of the reasons why India is the 5th largest economy in the world. As of 2023, data is the new oxygen. The reason why Mukesh Ambani is among the world's 10 richest men alive, and Anil Ambani isn't because of one reason. Mukesh Ambani never disobeyed his guru, the late Mr. Dhirubhai Ambani's, lesson about serving the people before serving your own pockets. Ambani worked relentlessly so as to decrease the per-GB data cost in India, whereas Anil Ambani worked relentlessly to finance his luxurious lifestyle and just kept entering the debt web. We are no one to decide who deserves what, but as far as opinion holds, Mr. Mukesh Ambani deserves everything that he has achieved today. May it be his luxurious lifestyle, his three private jets, the Antilia, Z+ security, everything. It won't be wrong to say that if it weren't for Reliance Jio, Indian customers would have paid rates similar to what Americans, Brits, and Germans pay, and we still would have been the 10 largest economies. Because of data, UPI became a hit and revolutionized the payment system in India. Because of data, we survived the COVID pandemic.
There are many more things for which we should be grateful to have Mr. Mukesh Ambani in India. I would say that the level at which he is running Reliance requires a lot of political support. Besides, it's India. We can't even change college subjects without political interference. Business isn't an exception. I believe that just because of some political connection, the integrity of a man shouldn't be judged. What he has today is the result of his work, and if we envy that, it's our mistake. Ambani is a hard-core visionary who has transferred his job from managing to being a thinker. As chairman and MD, he sits and thinks and guides Reliance through it. I remember talking to a Reliance employee about 5G. He said that when Jio launched 4G services in India, the man was called to inspect a few telecom parts in Jamnagar. On arrival, he found out that the parts were for 5G infrastructure, and the day Mota Bhai launched 4G services was the exact same day when he started preparation for 5G. I can't even imagine the kind of brain power this man has. I believe the biggest achievement of Mr. Mukesh Ambani is his journey from humble beginnings to putting India on the global map with Reliance.
"It is important to remember that there are no overnight successes. You will need to be dedicated, single-minded, and there is no substitute to hard work." - Mukesh Ambani
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