KOLKATA - It is difficult to imagine that
a country that is still far, far away from
becoming what the world considers an
industrialized nation; a country that is still
full of vast slums, poverty-stricken villages and
a crumbling infrastructure; let alone problems of
corruption, pollution, religious violence and
child labor, could produce the richest man in
world after just 15 years of economic
liberalization.
Yet, as India's benchmark
stock index, the Sensex, shattered the
psychological 20,000-point
barrier on Monday, the head of one of India's most
high-profile industrial groups, Reliance Group,
emerged as the richest man in the world.
Mukesh Ambani, 50, chairman of the oil,
textiles and chemicals giant Reliance, is now
ahead of American software czar Bill Gates and US
investment guru Warren Buffett, as well as Mexican
business tycoon Carlos Slim Helu, after the
combined value of his stakes in his three group
companies, Reliance Industries Ltd, Reliance
Petroleum Ltd and Reliance Industrial
Infrastructure Ltd, rose to US$63.2 billion.
His wealth includes $53.3 billion from
Reliance Industries (a 50.98% stake), $9.4 billion
from Reliance Petroleum (37.5%) and $532 million
from Reliance Industrial Infrastructure 46.23%).
The net worth of Gates and Helu is
estimated to be slightly lower, at about $62.29
billion each, with Warren Buffett, previously the
third-richest in the world, dropping one position
with a net worth of about $56 billion.
The
only other Indian businessman - although he now
holds a British passport - who is in Ambani's
wealth league is London-based Lakshmi N Mittal,
head of Arcelor Mittal, whose 44.8% in the world's
largest steel producer is worth $52 billion.
Ambani's rise is perhaps one of the most
conspicuous examples of India's economic
prosperity and its unprecedented stock market
boom. Ambani, a chemical engineer who quit his
studies at Stanford University in the US in 1981
to join Reliance Industries, the flagship company
founded by his father, the legendary Dhirubhai
Ambani. According to Gita Piramal, corporate
chronicler and editor of Smart Manager magazine,
Ambani is "a manager with the rare ability of
being able to think both wide and deep, to see
both the big picture and keep track of the
minuscule details in which lie profits".
When he took over the Reliance Group in
July 2002 following the death of his father,
Reliance's strategy of backward and forward
vertical integration as chalked out by his father
had almost run its course. Ambani realized that
"to remain competitive in the global arena",
Reliance Industries would have to further
"leverage economies of scale to reduce costs".
Thus he initiated a fresh course of
backward integration that went deeper, from
textiles and polyester fibers to petrochemicals
and oil. During this process, Ambani led the
creation of 51 new, world-class manufacturing
facilities involving diverse technologies that
raised Reliance's manufacturing capacities many
times.
Simultaneously, he embarked on an
acquisition spree to consolidate Reliance's
position in the petrochemical industry. He started
by acquiring ailing local petrochemicals company
IPCL Ltd in 2002, followed by a similar company,
Nocil, in 2004. Within months of these two
takeovers, Ambani claimed that he was able to turn
around these companies "impressively" through
growth caused by "geographical expansion, market
consolidation, acquisitions and green-field
investments".
The world's largest
petroleum refinery now being built, Reliance
Petrochemicals Ltd, under construction in
Jamnagar, Gujarat state, is his brainchild, as is
Reliance Infocomm, one of the largest mobile phone
operators in the country. (After a split in the
Reliance empire, he had to give up control of this
company to his brother, Anil Ambani.)
Ambani is now entering the retail sector
in a big way with the establishment of giant
"Wal-Mart-like" retail stores all over the
country. Recently he forayed into special economic
zones (a project created by the government to
promote exports) involving investment of millions
of dollars. Currently, he is also steering
Reliance's initiatives on a world scale into
offshore, deep-water oil and gas exploration and
production. His petroleum retail network in India
involves 5,800 outlets and he started a
research-led life sciences program covering
medical, plant and industrial biotechnology.
But the one big factor in Ambani's
phenomenal rise to the richest man in the world is
the stupendous rise in Indian stock values, fueled
by over $17 billion of foreign institutional money
this year. In the past three years, India's main
stock index, the Sensex, has more than tripled,
aided by India's economy that is in the throes of
a three-year boom.
According to a case
study undertaken by Smart Manager on Ambani's
management style, although his father followed a
highly visible and high-profile existence, Mukesh
Ambani's leadership style is not that of an
attention-seeker. To many he is shy, almost a
recluse, a strict vegetarian who abstains from
drinking alcohol.
"India does not need a
tie-wearing, golf-playing leader," he said
recently in comments on his management style. "You
don't need leaders who say we will motivate you,
but leaders - and by leaders I am not talking of
chief executive officers but leaders at all levels
- who can drive your company as strong
knowledge-based achievers."
Ambani has
generated his share of controversies. Three years
ago he was embroiled in a high-profile feud with
his brother Anil that saw a vertical division of
the group's assets, and a long period of
uncertainty regarding the future of the Reliance
Group as a whole. Last year he drew a fair amount
of criticism from local social organizations for
building an extravagant 27-storey family home -
that reportedly includes six floors for parking
the family's 168 imported cars - over the site of
a former Mumbai orphanage. He has a wife, Nita,
and three children.
Still, he has managed
to come out unscathed because, he says, of his
single-minded focus on pursuing growth and
consolidation. "Over the years, Reliance has
developed the main competency of building
businesses from scratch, of building businesses
which it did not know anything about ... the way
we do it is really grow, consolidate, put a
separate team to again grow and the cycle
continues," he said in an interview.
Small
wonder then that some like Shobhaa De, a
bestselling novelist and cultural observer,
considers that "he's pretty much running India".
"Policy decisions [that Ambani makes and]
the direction India is taking [could fulfill] his
ambition to be the most powerful man in the
region," she said.
Indrajit Basu
is a Kolkata-based journalist.
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