Go Back   ManagementParadise.com | Management & Business Education Learning Platform Mirror View - Ebooks Links & Miscellenous Reading Material > Company Profiles & News !!

Mukesh Ambani on coverpage of NewsWeek

Discuss Mukesh Ambani on coverpage of NewsWeek within the Company Profiles & News !! forums, part of the Mirror View - Ebooks Links & Miscellenous Reading Material category; The latest issue of international edition of "Newsweek" magazine has RIL chairman, Mukesh Ambani on its cover page. Mr. Ambani ...

Reply

 

Thread Tools Display Modes
Mukesh Ambani on coverpage of NewsWeek
Old
 (1 (permalink))
j_ritu
j_ritu is on a distinguished road
 
j_ritu
Status: Offline
Posts: 88
Join Date: May 2006
Mukesh Ambani on coverpage of NewsWeek - July 18th, 2006

The latest issue of international edition of "Newsweek" magazine has RIL
chairman, Mukesh Ambani on its cover page. Mr. Ambani is the second Indian
corporate leader to appear on Newsweek cover after Ratan Tata. "

The cover story "Bigger Faster, Better" is worth reading.:India's top tycoon
hopes to kick the country's nascent boom into hyperdrive by remaking its
stores, farms and even its biggest cities. It's India's time: "We are
rebalancing the world", says Ambani.

By Ron Moreau and Sudip Mazumdar
Newsweek International

July 17, 2006 issue - Mukesh Ambani has been India's Mr. Big for a long time. By
all accounts, he is the country's most influential private citizen, and the
businessman who thinks bigger than the rest in this rising economic superpower.
He was all that even before a bitter internal feud led to a split in his family
conglomerate. The breakup, finalized in January, left Mukesh in control of the
larger (and largely petrochemical) share, Reliance Industries, and that behemoth
has seen its fortunes soar ever since. It is now India's largest private-sector
enterprise by any measure: revenue ($20 billion in 2005), profit ($2 billion),
or share of Indian GDP (3.5 percent). Last week its stock closed up 15 percent
since January, making Reliance India's biggest company by market cap (about $35
billion). Mukesh, who was already the world's 38th richest person before the
split, according to Forbes, is now considerably richer. He says that while most
family empires destroy wealth when they divide, the parting of the Ambanis was a
"win-win" proposition.

Now, Mr. Big's ambitions are bigger than ever. Since the breakup, Ambani, 49,
has finalized plans to invest more than $11 billion over the next decade to
build two new satellite cities outside creaking, overcrowded Mumbai and Delhi.
He foresees these metropolises emerging within just four years, each with a
population of 5 million people making $5,000 a year, on average (or seven times
India's norm), and hosting top multinational companies. And that is all pretty
simple-a development on steroids-compared with the idea that really gets Ambani
going.

Ambani's favorite scheme aims to revolutionize in one swoop two of India's
largest but most backward sectors: farming and retail. Despite boom times, India
is still a nation where 100 million mostly small farmers work with ox and plow,
where 96 percent of retail stores are mom-and-pop shops and most of the roads
between farm and store are mud tracks. Ambani plans to invest $5 billion by 2011
to put both the farms and the stores on the road to modernity, connect them
through a distribution system guided by the latest logistics technology, and
create enough of a surplus to generate $20 billion in agricultural exports
annually.

In China, these plans would be hatched by the Communist Party. In India, the
government is neither visionary nor efficient enough. But Mukesh Ambani is both.
"This new business model excites me the most," said Ambani, wearing a white
polyester-blend, safari-style shirt and dark blue slacks, in an exclusive
interview in his Mumbai office recently.

Ambani is in many ways the enthusiastic extreme in a booming India, which has
seen an explosion of entrepreneurial energy every time it opens a new industry
to competition. The Reliance conglomerate got its start as a family textile
business in 1966, and has grown in spurts, often triggered when the government
released its grip on one sector or another. Mukesh Ambani's new cities were
born, for example, from a recent reversal in the attitude of both state and
federal governments, which are now willing to give private businessmen control
over huge projects. "Can you imagine the change in mind-set?" he says. "The
government is ceding its powers."

Reliance has always had a complex relationship with the government. In a sea of
family monopolies, it was a genuine start-up. Yet it quickly acquired deep and
sometimes murky connections with politicians, who have often helped Reliance
along the way. Mukesh retains the extraordinary clout of his late father,
Dhirubhai, the company's founder. But many who have dealt with him say he has
also created a company that succeeds based on merit, not political good will. In
that sense India's complex and controlled reform process has been perfect for
market-savvy insiders like Ambani.

Ambani is not the only major Indian entrepreneur who sees India's farmers as an
army of opportunity, either. Others are investing heavily in fruit and vegetable
exports to Europe, information services for farmers, and consumer credit in the
countryside. What unites them is both pursuit of profit, and a perhaps uniquely
Indian mission to spread the wealth, which is arguably becoming a business
necessity in a democracy whose growing income gap could prove explosive,
particularly for the superrich. What distinguishes Ambani is the sweep of his
plans, and a track record for making big projects happen. "His genius, his
strength, is that he's enormously good at executing large projects," says Nandan
Nilekani, the CEO of Infosys, India's huge IT company. "He is able to assemble
large numbers of people, the project-management skills, the capital and then
execute."

Ambani wants to build a chain of both small and supersize stores across India,
creating 1 million jobs and reaching $25 billion in annual sales, all by 2011.
If his plan succeeds, he says, consumers will get fresher food at lower prices,
rural incomes will soar, farmers will become active consumers, and Reliance will
become "a WalMart in India." The agricultural export boom will bring India's
farmers into the global economy, as IT has done for its college grads. "We are
rebalancing the world," says Ambani. "We are in fact lucky to be at the right
place at the right time, contributing to our self-confidence as Indians. That's
what energizes me." It's a vision in which everyone wins, which helps explain
the silence of any doubters.

They were not so silent earlier. Mukesh Ambani got his start implementing his
father's dreams. In 1980 Dhirubhai summoned Mukesh back from his M.B.A. studies
at Stanford to begin a risky attempt at "backward integration" of its textile
mills. The plan was to move from sewing clothes to creating the fabric, and
eventually refining and pumping the oil from which synthetic fabrics are made.
At almost every step, naysayers would dismiss Ambani's plans as too grand for
the Indian market. Mukesh first took charge of building a polyester plant at
Patalganga, with an annual capacity of 10,000 tons at a time when India's demand
was only 6,000 tons, and got it done in just 18 months. After Dhirubhai was
hobbled by a stroke in 1986, Mukesh became a more nearly equal partner and was
once again manager-in-chief when Reliance built a petrochemical plant to feed
the Patalganga complex. "The son learned at his father's feet how to think big,"
says Vallabh Bhanshali, a Mumbai investment banker.

By 1996, the Ambanis were launching the next step in their grand plan: an oil
refinery. Mukesh lived in a shipping container at the arid site in Jamnagar, 850
kilometers northwest of Mumbai on the Gulf of Kutch, while managing a work force
of 80,000 and shuttling back to Mumbai in a small plane to consult with his
invalid father and answer the critics, who kept asking: "What does Reliance know
about refining?"

The Jamnagar project would set the pattern of sharp attention to detail,
executed at breakneck speed, for which Ambani is now famous. He and his experts
looked at 2,400 configurations for the refinery, sweated over every detail, yet
finished in just three years. Jamnagar is now the world's third-largest
refinery, and can turn crude into gas for cars or aviation fuel for $2 or $3
less per barrel than its closest Asian rival, a plant in Singapore. "We wanted
and got an elephant that could dance to the tune of any market," says Hital
Meswani, a long-time family friend who heads the refining operation.
Soon after the plant came online in 2000, India not only stopped importing
refined oil products, it started exporting enough to more than pay for its
crude-oil imports, becoming a net energy exporter for the first time. While
other nations like Angola and Turkmenistan have achieved a similar turnaround,
they did it by simply exploiting existing oil reserves-not by creating an
industry from nothing, as Ambani did for India.

Soon, Ambani plans to break ground on a $6 billion expansion that will make
Jamnagar the world's largest refinery, capable of processing more than 60
million tons of crude oil annually. Meanwhile, he has completed the "backward
integration" of Reliance through an oil and gas exploration company that has hit
a potentially huge natural gas reserve off the east coast of India, and is now
spending $1 billion annually to pursue sites too remote for major oil companies,
including three in Iraqi Kurdistan. "Mukesh wants to take risks," says P.M.S.
Prasad, president of the search company, Reliance Petroleum.

Dhirubhai did not live to see this moment. He died in 2002, setting off a power
struggle between Mukesh and his younger, more flamboyant brother, Anil, 47, that
became a tabloid sensation and prompted speculation that Reliance itself might
not survive. Mukesh pushed ahead during this period, taking advantage of the
deregulation of the telecom sector to launch Reliance Infocomm in 2003, which
quickly became the third-largest telecom in India. Mukesh felt a special
attachment to Infocomm because it realized another dream of his father's-cutting
the price of a phone call down to a penny a minute in India.

A year ago, with Reliance stock faltering, the matriarch of the Ambani clan
stepped in to resolve the feud by dividing the conglomerate in two: the majority
share ended up in Mukesh's hands, but Anil got Reliance Infocomm as well as
Reliance Energy (electric power) and Reliance Capital (finance). "We are not
crying about the three sectors we lost," says Anand Jain, Ambani's friend from
their grammar-school days and head of Reliance's new cities project. Jain points
out that within one month of the settlement Mukesh was rolling out three new
projects, including the new cities, the farm-to-retail plan, and a related plan
to foment "a second green revolution" in biofuels.

The Indian market is smiling on all of Mukesh's schemes. The three companies
under his control have more than $22 billion in annual revenue, but 90 percent
of that comes from Reliance Industries, which is entirely in petrochemicals. No
doubt high oil prices have helped push up Reliance's stock price in recent
months, says Ambarish Baliga, a vice president at Karvy Stock Broking in Mumbai.
"But Reliance's strength is Mukesh" and the consensus view is that Reliance
Industries will thrive even if oil prices fall because retail is "the main story
going forward."

The question that some Indian businessmen ask, in private, is whether Ambani can
really translate the model he used to build refineries so successfully to all
his new projects. While Reliance touts its new business teams as top-flight,
many old family friends remain in the upper ranks.

They are, however, as meticulous as ever. The farm-to-retail team is researching
every step of the plan, from vegetable growing to hypermarket versus mom-and-pop
retailing. The good news is that the backwardness of Indian farming conceals
competitive advantages-for example, India has more arable land than any other
country, and spans climate zones ranging from alpine to tropical that can grow
any cash crop. The bad news, says Ambani, is that "the whole supply chain is
totally disorganized." Because of a lack of storage, refrigeration and
transportation, some 40 percent of India's fruit and vegetables spoils before
reaching market.

To transform Indian farmers into quality suppliers for his new retail chain,
Ambani plans to create 1,600 farm-supply hubs across India, providing technical
know-how and credit, selling seeds, fertilizer and fuel, and buying produce. He
also plans to build some 85 logistics centers to move food to retail outlets and
to ports and airports for export. Reliance is gearing up to train tens of
thousands of new employees in the next six to eight months to do everything from
erecting prefab warehouses to transporting fresh produce. Even Reliance's
admirers note that with little experience in farming or retail, Ambani is taking
his biggest risks yet. "There will be mistakes," Ambani admits. "But we are not
scared. We will correct our mistakes fast and move on."

In a sense, Ambani's basic bet is on the future of the Indian market and its 1
billion consumers. This is virgin territory, in which the 96 percent share held
by 12 million family-run shops is high even compared with China (80 percent) or
Thailand (60 percent). That makes it a relatively easy market to conquer. In the
past two years Reliance has built 1,250 modern service stations, and already has
15 percent of the retail gas market, with plans to double the number of Reliance
stations by December. Mukesh predicts consumer sales will surpass refining as
Reliance Industries' main source of revenue within seven years.

Ambani thinks he can beat the likes of Wal-Mart on his home turf based in part
on local knowledge: for example, Reliance executives understand that small
retailers are a powerful lobby, particularly on the local level, and could
easily trip up a giant. So Ambani is moving first to incorporate small stores
into his chain, starting with a trial partnership with the Sahakari Bhandar
chain of 19 supermarkets in Mumbai. In just two months, Reliance has renovated,
computerized and stocked these stores, with dramatic results: average store
revenue and customer traffic have tripled. In a second stage, Ambani plans to
build new superstores, starting on the outskirts of the 784 Indian towns with
populations greater than 50,000 before expanding into the ten largest cities,
where property prices and congestion make superstores problematic.

Ambani's farm, retail and energy visions merge at his Life Sciences Center in
Mumbai, which is pursuing his "second green revolution." Founded in 2002, its
research includes experiments in growing biofuels from the jatropha plant and
cellulose on a commercial scale. "If you can crack the cellulose code just like
the Da Vinci code, cellulose and jatropha could give us two agro-routes to a
world without gasoline," he says. About half of Indian homes have no
electricity, and Ambani says big companies have no workable plan to bring it to
them (an indirect slap at Anil's Reliance Energy). His answer is to go
"wireless." He now has teams setting up experimental biomass generators in
remote villages, and envisions a day when thousands of villages have these
generators-sold and serviced by Reliance's rural retail network.

It could happen, as many obstacles seem to be melting in Ambani's path. Last
year Parliament passed a law creating Special Economic Zones, which grant
developers authority to plan new projects with more freedom than even China
allows in its own bustling SEZs, on which Ambani's new cities are modeled.
Reliance has all but secured 150 square kilometers of largely farm land east of
Mumbai, at prices Jain estimates at 1/1000th those in downtown Mumbai. The
government holds some equity in the projects, but as a largely "silent" partner,
and has already approved Reliance's detailed plans for both new cities, says
Ambani. "If you would have asked me five years ago if a project like this was
possible I would have said no."

Reliance's first move will be to set up roads, rapid transit, power and water
supply, telecom and rail links. In cooperation with the government it plans to
build a 20-kilometer bridge across the bay linking old and new Mumbai, and a new
seaport. Another private firm is building a new airport nearby. There will be a
one-stop licensing agency, jointly run by Reliance and the government, to cut
through India's infamous red tape. "Every serious investor in the world is
approaching us to get in," boasts Jain, and Reliance has already secured $2
billion. Ambani expects that the cities will each pump $25 billion into the
national economy every year. With groundbreaking due to begin later this year,
Reliance aims to finish New Mumbai and Delhi by 2010 or sooner. "If anyone can
do it Reliance can," says Sanjay Nayar, the CEO of Citigroup in India. After
all, the bigger and faster, the better.
Advertisements

Friends: (0)
Reply With Quote
The Following 2 Users Say Thank You to For This Useful Post:
Reply

Bookmarks

Tags
ambani, coverpage, mukesh, newsweek
Related to Mukesh Ambani on coverpage of NewsWeek
 

Similar Threads

Thread Thread Starter Forum Replies Last Post
Mukesh Ambani on His Childhood, Youth vengabeats Articles !! 3 January 27th, 2007 11:48 AM
Interview: 'Something Out of Nothing'- Mukesh Ambani vengabeats Articles !! 2 July 16th, 2006 09:43 PM
Bigger, Faster, Better- Mukesh Ambani vengabeats Articles !! 0 July 13th, 2006 12:38 AM
Anil's richer than Mukesh vengabeats Articles !! 0 March 16th, 2006 09:03 PM
 


Thread Tools
Display Modes

Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

BB code is On
Smilies are On
[IMG] code is On
HTML code is On
Trackbacks are On
Pingbacks are On
Refbacks are Off


ManagementParadise.com is not responsible for the views and opinion of the posters. The posters and only posters shall be liable for any copyright infringement.



Search Engine Optimization by vBSEO ©2011, Crawlability, Inc.