Thesurveyreported65percentmorebuyersin2004 than2003,and59percent
moresellersoverthepriorperiod.Thisseemstoconfirmthatdealinflationcontinued
in 2004, , partly explaining the increase in multiples. About t 35 percent of f IMAP
members reported d that t it was easier to access bank financing in 2004, and most
expected this to o continue in 2005. . Since bankfinancing hastightened d in n 2008, a
moderatinginfluenceonboththenumberoftransactionsandtheirmultiplescanbe
expected vis-à-vis2008–2009.Thisappearsto beconfirmed byrecentfinancialdata
andfinancialnewsingeneral.
PrivateCo probably falls s in n the category of“Nonproprietary manufacturer.”The
median EBIT T multiples for r this category y are e 6.3 3 and d 5.4 4 in 2004 4 and d 2003,
respectively.
Onequicknote:theIMAPsurveyusesrecastEBIT,notrecastEBITDA,astheincome
stream.Theassumption here isthatdepreciation and capital expenditurescancel each
otherout. Mostintermediaries use EBITDA withoutadjusting fornormalized d capital
expenditures.PrivateCo’sdepreciationandamortizationamountedtoroughly8percent
ofitscashflowin2004.WhenweadjusttheEBITof6.3in2007forthispercentage,we
getanequivalentEBITDAmultipleof5.8(6.3multipleless8percent).
G
ENERAL
P
RIVATE
E
QUITY
G
ROUP
M
ULTIPLES
“Privateequitygroup”referstothevariousorganizationsthatprovideequitycapitalto
privatecompanies.Inthepast20years,equityproviderstocompanieswithrevenuesin
the$5millionto$150millionrangehaveemergedasanindustry.Currently,thou-
sandsof private equity groupsoffermore than n $100 0 billion n in n capital annually y to
privatecompanies.
SeveralorganizationstrackaverageEBITDAmultiplespaidbyprivateequitygroups
acquiring privatecompanies.OnesuchnewsletterisCapitalEyes,whichispublished
everymonthbyBankofAmerica.RecentissuesshowedthataverageEBITDAmultiple
paidforsmallertransactions(likePrivateCo)was7.0.
DISCUSSIONQUESTIONS
1.WhatmarketsegmentwouldPrivateComostlikelyfit?Thus,asastartingpoint,
whatmultipleofEBITDAwouldinvestorsbewillingtopayforthestockofthe
Companybasedonrecentmultiples?
2.WhatisthemarketvalueormarketvaluerangeyouwouldassigntoPrivateCo?
Make yourassumptions explicitand consider arange thatwould reflectboth
whatafinancialbuyerislikelytopayandwhatastrategicbuyerislikelytooffer
forPrivateCobasedonthemultiplesfromrecenttransactions.
3.Howwouldthevaluationmethodusedandthevaluesdeterminedchangeifthe
purposeofthevaluationwasnota100percentsaleofthestockofthecompany,
butrather abuy-sell l between shareholders s or atransferacrossgenerationsof
familymembers?
Thisisanauthenticreport.PrivateCo,thecompany,isasmall($5millionto$6millioninannualrevenues)familybusiness.The
namesandsomeofthefigureshavebeenchangedbothtoprotecttheprivacyofthefirmandfamilyinvolvedandtomakethe
exercisemorestudent-learningfriendly.
354
FAMILY BUSINESS
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CASE
14
RELIANCEINDUSTRIES(PARTA)
MoreinchesofnewsprinthavebeendedicatedtotellingthestoryoftheAmbanifamily
and Reliance e Industries s than n perhaps s any y other r story in Indian n business s history.
DhirubhaiAmbani,apoorschoolteacher’ssonfromtheIndianstateofGujarat,built
India’slargestindustrial empire.Along the way,he rewrote thepractices s ofIndian
enterprise. At t the time of f his death, , the e conglomerate he founded (the Reliance
Group),wassolargethatitaloneaccountedformorethan3percentofIndia’stotal
grossdomesticproduct(GDP)and10percentofthecountry’sindirecttaxrevenue.
TheAmbanifamily’ssharesinthesecompanieswereownedbyawebofinvestment
firms.These,inturn,werecontrolledbyover1000entities,includingoffshoretrustsin
tax-havencountries.Thiscomplexstructureenabledthefamilytoavoidoneroustaxes
andstillretainfamilycontrol.
Dhirubhai Ambani died suddenlyatage 69 withoutawill ora a succession n plan,
leavingtwosonsinexecutivepositionswithinthebusiness.ButunderHindutradition
and succession laws,the eldestson becomes s the successor.Soon n after r Dhirubhai’s
death,hissons,MukeshandAnil,beganarguingaboutmanagementandownership
issuesandlateraccusedeachotherofbusinessimproprieties.Politiciansandfinanciers,
concerned by the e instability that t this family squabble e was having on the e financial
markets,triedunsuccessfullytobrokeranagreementbetweenthesons.Intheend,the
sonswouldlistenonlytotheirmother.Asettlementhasjustbeenannounced.What
werethereasonsfortheconflict?HowdidMukeshandAnilresolveit?Whatwouldthe
founder,Dhirubhaihavetosayaboutthesettlement?
ACHIEVEMENTISHISTORY.
LOOKAHEAD.
1
Dhirajlal AmbaniwasbornonDecember29,1932,into the ModhBania,aHindu
commercial caste based in the arid Saurashtrapeninsula a of India’swestern n Gujarat
state.Dhirubhai,ashewasknown,lefthomeat16toworkasagas-stationattendant
for Shell l Petroleum in Yemen.Within a a fewyears he rose to o the position of sales
manager.
Asuccessfulemployee,Dhirubhaihadanentrepreneur’sabilitytoidentifyandtake
advantageofopportunitiesnotobservedbyothers.WhileinYemen,Dhirubhaireal-
izedthatthelocalcurrency(theriyal)wasworthmoreforitssilvercontentthanforits
purchasingpower.Withthisinsight,hebegantomeltthecoinsintosilveringotsata
smallprofit.
1
Dhirubhaiwaswell-knownformantrasaboutmanagement.Thisadagereflectshisbeliefthatsuccesscomes
frombuildingonachievementandthatachievementbecomeshistorythemomentitisachieved.
CASE 14 RELIANCEINDUSTRIES
(
PART A
)
355
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DhirubhaireturnedtoIndiain1958withhispregnantwifeandinfantsontostarthis
ownbusiness.HefoundedRelianceCommercialCorporationwithUS$100inhispocket
andapproximatelyUS$275inborrowedcapital.Thecompanybeganasatradingcom-
pany,exportingspices,nuts,andothercommoditiestotheduty-freeYemeniportofAden.
InAden,Dhirubhaiusedhismanycontactstohelpdevelopthismarket.
By 1965, , Dhirubhai i shifted d Reliance’s s focus from trading to o textiles to take
advantage ofanother opportunity—governmentprogramsdesigned to promote the
exportofrayon,whichwasplentifulinIndia.Relianceexportedrayonatalossbecause
doingsoenabledthecompanytoimportnylon,whichitsoldatapremium.By1966
theIndianeconomywasgrowing,andthedemandforbetterclothingwastakinghold.
RelianceCorporationopeneditsfirsttextilemilltotakeadvantageofthisnewmarket.
In1978,ReliancebeganfocusingonIndia’sdomesticIndianmarket,afteritssuccessful
initialpublicoffering(IPO)andtheendofthegovernment-sponsoredrayonpromotion.
The Indian wholesaletextile marketwascrowdedandextremelycompetitive.To gain
marketshare and to bypass s the e competitive wholesale market, , Dhirubhai adopted a
competitor’sideaandopenedcompanystores.Hethenexpandedtheideabytraveling
throughoutIndiafranchisingthestoreconceptandpromisingadvertisingsupporttoany
outletthatwouldsellReliancetextiles.Inthiswayhebuiltanationalcustomerbasethat
includedpreviouslyuntappednonmetropolitanmarkets.By1980,Reliancefabricscould
befound acrossIndiain 2100 retail storesand franchised outlets.Duringthisperiod
Reliance established the e Vimal textile brand d (named d for Dhirubhai’s eldest nephew).
Dhirubhaiworkedtocreateastrongbrandimageandwassosuccessfulthatittookmany
yearsforReliancetohavebetternamerecognitionthanVimal.
One of Dhirubhai’s mantras stated: : “Growth h has no limit—keep revising your
vision.”Dhirubhaididjustthatafterearninghisfirstmillionintextiles.Hebeganto
“backwardly integrate”fromfabricweavingtoestablishingplantsto make polyester
filamentyarnin1981.Hisphilosophyofentrepreneurialgrowthwasevidentwhenhe
builtafactoryatPatalganga(asmallvillageoutsideofMumbai,formerlyBombay)that
could produce4000 moretons s ofpolyesteryarn than n the Indianmarketrequired.
Soonafterthefactorywascompleted,thegovernmentissuedlegislationthatlimited
theuseofpolyesterfilamentyarntosmalltextilebusinesses.Toincreasedemandfor
Reliance’syarn,Dhirubhaiarrangedtosellyarntothesesmallloomsandthentobuy
thefabricthattheyproduced,finishingitandsellingitundertheVimalname.Two
yearslater,in 1983, , he again n moved backward in the supply chain and gained the
licensetomanufacturepurifiedterephthalicacid,oneofthechemicalsthatcanproduce
polyesterfilamentfiber.
Fromtheproductionofyarnandfiber,Relianceintegratedhorizontally,andbegan
producing productsincluding high-and low-density polyethylenesused d by y plastics
processors.Reliance slowly began themanufacture of petrochemical intermediaries,
includingmonoethyleneglycolandn-paraffin.Relianceachieveddominationinthese
industries soon n after r its entry, becoming g the world’s s second-largest producer of
polyesterfiberand filamentyarn, , the third-largestproducerofparaxylene,and the
fourth-largestproducerofpurifiedterephthalicacid.
From chemicals,Reliance entered theoil and gasexploration business and built
refineries through Reliance Petroleum Limited, fulfilling g a a dream Dhirubhai had
cherishedsincehehadworkedforShellPetroleuminYemen.ReliancePetroleumwent
publicin1993inwhatwas,atthetime,India’slargestpublicoffering.
356
FAMILY BUSINESS
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RelianceIndustriesfullyenteredtheworldindustrialstagebybuildingAsia’sbiggest
chemicalcomplexin1991.TheHazirafacility,theworld’slargestsingle-feedethylene
cracker
2
wasbuiltinDhirubhai’shomestateofGujarat.Buildingthefacilityexhausted
thelocalGujaratiresourcesandrequiredDhirubhaitocreatehisowninfrastructureto
supporttheplant.ReliancePetroleumwentpublicin1993inIndia’slargestto-date
publicstockoffering.OtherfinancialfirstsincludebeingthefirstIndiancorporationto
raise fundsthrough overseascapital marketsand beingthe firstprivatecompanyin
Indiatoberatedbyinternationalcreditagencies.Theabilitytofinancegrowthenabled
Reliance to o enter high-growth h sectors s outside the petroleum and petrochemicals
business.TheReliancecorporatefamilyalsoincludesfinancialservicesandinsurance,
power,telecommunication,anddigitalcommunicationinitiatives.(SeeTablesIand J
foradditionalinformationaboutReliancecompaniesandproducts.)
A second world-class facility,and the world’s largestrefinery, was then builtin
GujaratatthecostofUS$6billion.Thisfacility,knownastheJamnagarplant,extends
over31squarekilometers(thesizeofManhattansouthofCentralPark)andrepresents
thesinglelargestinvestmentevermadeatasinglelocationinIndia.Jamnagarisoneof
onlyafewrefineriesintheworldthatcantakethickhigh-sulfurhighlyacidgradesof
crude oil and turn n them m into purelow-polluting gasoline and diesel l fuel. Like e the
Haziraplant,building Jamnagarrequiredthe creation of infrastructure,including a
350-megawattpowerplant,twochemicalplants,105milesofroad,housingfor3000
families,aseawaterdesalination plant,andan information technology(IT) network
thatconnects50serversand2500terminalswith200kmoffiberopticcables.
ThedecisiontobuildJamnagarillustratesReliance’sinnovativebusinessapproach.
In1996,whentheprojectwaslaunched,refinerieshadahistoricreturnoncapitalof6
to 8 percent, while the e cost t of capital was 12 percent. To get adequate returns,
Reliance focused on n developing g efficiencies both in n constructing and running the
facility. According to a family y story, Dhirubhai traveled to Jamnagar r during g con-
structiontocheckontheprogress.Hewentforawalkatnightandfoundthatwork
had ended for the e day. He e asked d his s eldestson Mukesh, who o was s managing the
project,whyworkhadstoppedandobservedthattherewasnoreasonwhytheycould
notrun three shifts.Mukesh called in the contractorsthefollowingdayandmade
arrangementsforthemtoreceivebonusesformeetingorexceedingprojectdeadlines
and,inturn,togivebonusestotheiremployeesformeetingorexceedingthedead-
lines.TheJamnagarcomplexwascompletedwithin36monthsandtherefinery’stotal
costwasreducedto thepointthatitoperatesata30to50percentlowercostthan
similarrefineriesinAsia.ThiswasthefirstsignificantbusinessachievementbyMukesh
after leaving the business school at Stanford d and joining the family enterprise at
Dhirubhai’srequest.
While most t refineries specialize in n a a small number of products, the Jamnagar
refinerycanproduceawiderangeofpetrochemicals.Thisflexibilityenablesittotake
advantage of market fluctuations s and d consistently y focus s on producing g high-profit
products.Jamnagarisabletochangeitsproductmixinresponsetomarketdemand,
whichenablesittorefinetheproductwiththebestprofitmarginatanygiventime.
Fromexplorationtoproductiontopipelines,Relianceownsapieceoftheentireoiland
gasvaluechain,exceptforgasstations,which,inIndia,havetraditionallybeenowned
bythegovernment.
2
“Cracking”isthenameoftheprocessthatethane(anaturallyoccurringgas)goesthroughtobecome
ethylene.Ethaneisheatedtoapproximately800degreesCelsiusinareactorcalleda“cracker.”
CASE 14 RELIANCEINDUSTRIES
(
PART A
)
357
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table
I
RelianceIndustriesProductListingbyBrandNameandType
Polymers,Chemicals,Fibers,andFiberIntermediates
Location:Hazira,Gujaratstate
Repol
Reon
.Polypropylene
.Polyvinylchloride
.Purifiedterephthalicacid
Recalir
.Ethyleneoxide
.Linearlow-densitypolyethylene
.Monoethyleneglycol
Relene
.Diethyleneglycol
.High-densitypolyethylene
.Triethyleneglycol
Recron
.Ethylene
.Recronstablefiber
.Propylene
.Recronfilamentyarn
.Benzene
.Recronfiberfill
.Toluene
Relpet
.Xylene
.Polyethyleneterephthalate
.Carbonblackfeedstock
.Vinylchloridemonomer
RefineryProducts,Polymers,andFiberIntermediates
Location:Jamnagar,Gujaratstate
Refinery
RPetrochemicals
.Liquefiedpetroleumgas
.Paraxylene
.Propylene
.Polypropylene
.Naphtha
Portandterminals
.Reormate
.Power
.Motorspirit
.Middledistillatepool
.Sulfur
.Coke
Textiles
Location:Naroda,Gujaratstate
Vimal
Recron
.Suitingsandshirtings
.Texturizedyarn
.Dressmaterialsandsarees
.Twisted/dyedyarns
Harmony
Ruerel
.Furnishingfabrics
.Suitings
.Daycurtains
Reance
.Automotiveupholstery
.Shirts
Slumberel
.Trousers
.Fiber-filledpillows
.Jackets
Oilandgas
Powergeneration
Location:Panna&Mukta,offBombayHigh
Facilities:
Tapti—NorthwestofMumbai
.DahanuThermalPowerStation
.Crudeoil
.JogimattiWindFarmProject
.NaturalGas
.BSESKerlaCombinedCycleStation
.Exploration&Production
.GoaPowerStation
OtherInitiatives
.Telecommunications—RelianceTelecom
.Financialservices—RelianceCapital
.Engineering,procurement,construction
.Infrastructure—RelianceIndustrialInfrastructure
.Infocomm—RelianceInfocomm
.Insurance—RelianceGeneralInsurance
358
FAMILY BUSINESS
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FINANCINGGROWTH
Findingsufficientcapitalisachallengefacedbymostenterprises.InIndiainthe1970s,
thechallengewasmagnifiedbyagovernment-controlledfinancialsystem.Theleading
sourcesofcapitalwereslow-movingstate-owned financialinstitutionsthatwere not
alwayswillinglendersandfrequentlychargedhighratesofinterest.In1977Reliance
solved itsfundingchallengeinauniqueway.ItlaunchedthefirstIPOofcompany
sharesinIndianbusinesshistory.ThisadvanceisrecordedontheReliancewebsiteas,
“DhirubhaiAmbaniintroducedequitycultinIndia,anewmodelofbusinessleader-
shipfromabaseofthebroadestpublicshareholding.”
table
J
TheRelianceFamilyofCompanies
RelianceIndustriesLtd.
In2002,RelianceIndustriesandReliancePetroleummergedinto
RelianceIndustries,India’slargestpetrochemicalfirm,secondlargest
company,andlargestexporter.Polyestersandpolymersaccountfor
mostoftheRelianceGroup’ssales.Thecompany’sleadingproducts
areusedwidelyinagriculture,clothing,consumergoods,and
electronics.Petrochemicalproducts,includingbenzene,
polypropylene,andpolyvinylchlorideareusedinpackaging,
kitchenware,andfurniture.
RelianceCapitalLtd.
RelianceCapitalisoneofIndia’sleadingnongovernment-sponsored
financialservicescompanies.Itfocusesoninfrastructureprojectsthat
offeropportunitiesforenormousgrowthandsignificanttaxbenefits.
RelianceEnergy
(formerlyBSESEnergy)
RelianceEnergygeneratestransmitsanddistributeselectricityto
morethan5millioncustomersinportionsofIndia.Itsservicearea
coversmorethanamillionsquarekilometersandincludesthecities
ofMumbaiandDelhi.
RelianceGeneral
Insurance
RelianceGeneralInsuranceisoneofthefewcompaniesinthe
nongovernmentalsectortoprovideacompleteinsurancesolution.It
isalsooneofthefirstnonlifeinsuranceproductscompaniestobe
licensedtooperate.
RelianceIndustrial
Infrastructure
Thecompanywasincorporatedin1988toservethePatalgangaPlant.
Ittransportspetroleumproductsthroughproductpipelinesandraw
waterthroughwaterpipelines.Thecompanyboaststhattherehave
beennofailuresorleakageofthepetroleumduringthepast11years
ofoperation.
RelianceInfocommLtd.
RelianceInfocommisIndia’slargestmobileserviceprovider,with
over7millioncustomers.Launchedin2003,ithasestablishedapan-
Indiahigh-capacityintegratedanddivergentdigitalnetworkand
offersservicesforenterprisesandindividuals,applications,and
consulting.
RelianceMutualFund
RelianceMutualFundwasestablishedasaTrustin1995withReliance
CapitalAssetManagementLtd.Itisamongthefastest-growing
mutualfundcompaniesinIndia.Thecompany’svisionistobeIndia’s
largestandmosttrustedwealthcreator.
RelianceTelecom
RelianceTelecomprovidescellularservicesin10Indianstates.It
recentlyintroducedinternationalroamingservicesthroughoutIndia.
RelianceLifeScience
Establishedin2001,RelianceLifeServicesisanewinitiativeofthe
RelianceGroup.Thecompanyisdevelopingbusinessopportunitiesin
medical,plant,andindustrialbiotechnology.Italsoconductscontract
researchandclinicaltrials.
SOURCE:TheEconomicTimes,November,23,2004,andhttp://www.hoovers.com.
CASE 14 RELIANCEINDUSTRIES
(
PART A
)
359
table
K
AmbaniFamilyandRelianceIndustriesMilestones
l
DhirubhaiAmbanistartsRelianceCommercialCorporationinMumbai.(1958)
l
RelianceentersthetextileindustryandsetsupamillNaroda,Ahmedabad.(1966)
l
WorldBankteamvisitsmillanddeclaresthatitisasmodernandwell-managedasthosein
developedcountries.(1975)
l
ReliancegoespublicwithIndia’sfirstIPO.(1977)
l
DhirubhaicallsMukeshhomefromStanfordUniversity’sSchoolofBusinessafter1yearofstudy
towardhisMBA.MukeshbeginsworkingatRelianceandlatercompleteshisMBAdegree.(1981)
l
AnilearnshisMBAfromtheUniversityofPennsylvania’sWhartonSchoolandbeginsworkingat
Reliance.(1983)
l
MukeshAmbanimarriesNita.(1985)
l
Reliancetotalassets:$227million.(1985)
l
RelianceCapital,amerchantbank,iscreated.(1986)
l
Dhirubhaisuffershisfirststroke.Hereturnsaschairman.MukeshandAniltakeonadditional
responsibilitiesasco–managingdirectorsofReliance.(1986)
l
RelianceIndustrialInfrastructure,apetroleumpipelineprovider,comesonline.(1988)
l
Reliancesalesexceed$404million.(1988)
l
Hazirapetrochemicalplantcommissioned.(1991)
l
AnilAmbanimarriesTinaMunim.(1991)
l
RelianceisthefirstIndiancorporationtoraisecapitalfrominternationalmarketsthroughGlobal
DepositoryReceiptsoffering,andsetsarecordwithaRelianceissuethatreceivedover1million
investorapplications.(1992)
l
ReliancePetroleumgoespublicinIndia’slargestpublicofferingtodate.Salesexceed$909
million,makingReliancePetroleumIndia’slargestpubliclytradedcompany.AlsoRelianceoffers
thefirstEuroConvertiblebondissue.(1993)
l
AwardedCompanionMembershipoftheTextileInstitute(UK).Awardislimitedto50members
whohavesubstantiallyadvancedthefiberindustry.(1994)
l
OffersthesecondEuroissueofGlobalDepositoryReceipts.(1994)
l
Reliancenetprofitexceeds$242million.(1995)
l
RelianceMutualFunds,anassetmanagementandmutualfundprovider,islaunched.(1995)
l
RelianceisfirstcorporationinAsiatoissue50-and100-yearbondsintheUnitedStates.(1997)
l
World’slargestmultifeedcrackercommissionedinHazira.(1997)
l
Reliancerevenuetops$3billionandtotalassetsapproach$8billion.(1998)
l
World’slargestpetroleumrefinerycomplexcommissionedatJamnagar.(1999)
l
RelianceInfocomm,amobileserviceprovider,islaunched.(1999)
l
Reliancerevenuesexceed$4billion,andtotalassetsare$11.8billion.(2000)
l
RelianceIndustriesLtd.andReliancePetroleumLtd.mergeintoRelianceIndustries(2002).The
newfirmisnamedtotheForbesGlobal500in2003,enteringatposition306.
l
DhirubhaiAmbanidiesonJuly6.(2002)
Conversionrate:1IndianRupee=0.022727U.S.dollar.
SOURCES:www.ril.comandwww.indiapublicsector.com.
360
FAMILY BUSINESS
Bysellingsharestothepublicinsmalllots,Dhirubhaiintroducedordinarypeople
who had d never owned shares s to the e financial markets while e financing g Reliance’s
growth.Inashorttime,somanyindividualsownedsharesthatReliancewasforcedto
rentfootball (soccer) stadiumseach year r to provide a venue large enough h for r the
annualmeeting.
Someentities,suchasRelianceInfrastructureand RelianceCapital,wereformed
primarilytosupportRelianceIndustries.Otherunits,suchasRelianceTelecommand
RelianceLifeSciencewere created to propelReliance intonewtechnologiesandto
takeadvantageoftheopportunitiespresentedbythegrowingIndian economy.(See
TableKforadditionaldetails.)
THENEXTGENERATION
DhirubhaiandKokilabenAmbani hadfourchildren:Mukesh,Anil,Nina,andDipti
(FigureQ).Intheearlyyears,Dhirubhai,Kokilaben,Mukesh,Anil,andDhirubhai’s
mother,uncle,andbrotherlivedtogetherinaone-bedroomhouseinalower-middle-
class neighborhood in n Mumbai.As s Relianceflourished,the family moved d to o more
spaciousaccommodationsandmostrecentlytoSeaWind,thefamilyestate.Ninaand
DiptimovedfromMumbaiwheneachmarried.
Mukesh,Anil,andtheirfamiliesalsoresidedatSeaWind.Whileeachfamilyhadits
ownlivingquarters,theextendedfamilyusuallyhaddinnertogether.Dhirubhaiwas
knownforquizzinghisgrandchildrenaboutcurrentevents,apracticehebeganwhen
hisownchildrenwereyoung.
Siblings raised togethercan n be asdifferentin their r personalities as people from
differentfamilies.MukeshandAnilAmbaniarenoexception.Eachhadanespecially
closerelationshipwithoneparent.Mukeshwasreportedlyhisfather’sfavorite.Itwas
Mukesh whomDhirubhai consulted firstaboutbusinessmatters,before askingAnil
hisopinion.Asachild,Anilwasclosesttohismother,andtheirspecialrelationshiphas
continuedovertime.Tothepubliceye,Mukesh andAnilweregroomedforcareers
withReliance andgotalongwell.Disputesweresettledintheprivacyofthefamily
compound.Whenmediationfailed,DhirubhaiwouldreprimandMukeshandAniland
imposeasolution.Dhirubhai’sgoalwastoseeReliancesucceedandtoprovetothe
worldthatIndiawastheplacetoinvest.Familydisputeswerenotgoingtogetinthe
wayofthesegoals;MukeshandAnilwereexpectedtoworktogethersuccessfullyfor
thebenefitofRelianceandallofIndia.
In 1997,when n Mukesh and d Anil were jointly honored d as“Businessmen of f the
Year,”theycommentedthattheyfeltliketheyhadbuiltthecompanywiththeirfather,
ratherthan simplybenefitingfromhisefforts.Intheirofficialcorporate biographies
bothbrotherstakecreditforbringingaboutfinancialinnovationtotheIndiancapital
market through the e introduction n of f international l offerings of f Global l Depository
Receipts,convertibleissues,and bonds.TheireffortsarecreditedwithraisingUS$2
billioninthepast12yearstofundReliance’saggressivegrowth.
MUKESHAMBANI
Mukesh,theeldest,wasborn in Yemen in 1957.He isdescribedas s analytical l and
detail-oriented; he e is s known n for r taking detailed notes during meetings and con-
versations.Mukeshisaprivatepersonwhorarelyspeakspublicly.
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MukeshearnedaBachelorofChemicalEngineeringattheUniversityofMumbai
andcontinuedhisgraduatestudiesatStanfordUniversity.Afterhisfirstyearin the
MBAprogram,DhirubhaicalledMukeshhome.Hewas24yearsold.Mukeshrecalls
that“myfathertoldmeyouwilltakethisoverandIwillgiveyouoneotherperson
fromReliance.Everyoneelsehastobenew.”
Thetaskhewasgivenwastooverseetheconstructionofthepetrochemicalplantat
Patalganga.Thetechnology theyselectedforthe plantcame fromDuPont.To get
DuPont to sell l their r technology, , Dhirubhai i sold everything but equity. He later
explained,“Technology isavailable forthe askingin the international bazaar. Why
shouldImakeaforeigncompanymypartnerandgivethem51percent?”Theplant
wascompletedin14months,aheadofacompetitorwhohadstartedbuildingbefore
Reliance. Being g first to market gave e Reliance e a significant advantage in the
marketplace.
Afterthe successatPatalganga,Mukesh quickly gained areputation forbuilding
new mega-plants under r budgetand d ahead d of f schedule. He has since directed d the
creationofover60new,world-classmanufacturingfacilities.
Mukeshhappilyenteredintoanarrangedmarriageatage28.Hismotherreportedly
sawhisfuturewife,Nita,atarecitalandcamehomeandtoldDhirubhaithatshehad
found the rightmatchforMukesh.Dhirubhai interviewedNita,and thematchwas
made.Fromthestart,Nitawasafamilyinsider,takingresponsibilityforfamilyphi-
lanthropy. A A former r teacher, she is s responsible e for the creation n of the Dhirubhai
International School, a a premiere K–12 2 private school l that opened in n 2003. Nita
Ambaniservesastheschool’schairperson.
figure
Q
AmbaniFamilyTree
Dhirubhai
Ambani
1932–2002
m. 1954
Kokilaben
(Patel)
b. ~1936
Akash
Isha
Anat
Anmal
Anshul
Arjun
Nayant
Ishik
Vikram
Tina
b.1960
Anil
b.1959
m. 1991
Bhadrashyam
Kothari
Nina
b.1962
Dattaraj
Salgaocar
Dipti
b.1961
Nita
b.1963
Mukesh
b.1957
m. 1985
362
FAMILY BUSINESS
ANILAMBANI
AniljoinedReliancein1982,adayafterhegraduatedfromWhartonwithanMBA.
Dhirubhaigreetedhimsaying,“YouhavegotanAmericanMBA,nowyoumustgetan
IndianMBA,”meaningthattheAmericandegreeprovidedgoodtheorybutcouldnot
beappliedtoIndian realities.Anil’sfirstexperience withReliance wasin the textile
business,wherehestayedfor4years.
AfterDhirubhai’sfirststrokein1986,Anilassumednewresponsibilities.Hehan-
dled corporate e finances s and d became e Reliance’s s spokesperson. . Anil is considered
aggressive and has strong financial and d networking g skills. . Anil likes the e limelight.
NewspaperaccountsaboutAnilandhisfamilyarecommon—heisfrequentlyfeatured
attendingsocial eventsoradvocating physicalfitness.Anil wasvoted YouthIcon in
2003inanMTV-sponsoredsurvey,andhehashisownwebsite.
Anilmarriedtheformer“MissIndia”andfilmstar,TinaMunim.TinaandAnilare
saidtohavemetataparty,whereAnilwasimmediatelysmitten.Whenthetwodecided
tomarry,Dhirubhaiopposedthemarriageandtriedhisbesttobreakthealliance.He
wentso farasto encourage governmentforeign currencyinvestigationsinto Tina’s
accounts. After the e marriage, , Tina was reportedly y given the cold shoulder in the
Ambanihousehold.
T
HE
E
ND OF AN
E
RA
IndiabadeanemotionalfarewelltoAmbani,whopassedawayonJuly6,2002,two
weeksafterhesufferedamassivestroke.Thousandsofmourners,both famousand
common,linedthe streetstheday ofhisfuneral.OnedayaftercarryingDhirubhai
Ambani’sbodytothepyre,hissonswerebackatwork.
One of Dhirubhai’s s last major r decisions s was to merge e Reliance e Industries and
Reliance Petrochemicals s into o Reliance e Industries Limited. . The merger r proclaimed
Dhirubhai’sdesiretokeepthecompany,hislegacy,together.HedidnotwantReli-
anceIndustriesLimited(RIL)tosufferthefateofotherIndianfirmsthatwerebroken
intopiecestosatisfythenextgeneration,onlytofindindividualsinthatgeneration
fightingeachotherinthemarketanddestroyingthevaluecreatedbythefounder.The
mergeralsocreatedabusinessthatwaslargeenoughtoberecognizedintheForbes
Global500listingoftheworld’slargestcompanies.RelianceIndustrieswasselectedfor
thelistin2003,ayearafterthemerger.ItwasthefirstIndianbusinesstoqualifyfor
thelistingandwasrankedthe306thlargestbusinessintheworld.
AtthetimeofDhirubhai’sdeath,RelianceGroupwasIndia’slargestprivate-sector
business,withtotal revenuesofUS$22.6billion,exportsofUS$3.6 billion,andnet
profitsofUS$1.4billion.Relianceexporteditsproductstomorethan100countries
aroundtheworld.ThecompaniesoftheRelianceGroupincludedoilandgasexplo-
rationandproduction,petrochemicals,textiles,financialservices,andinsurance.
RelianceGroup’srevenueisequivalenttoapproximately3.5percentofIndia’stotal
GDP. It contributes s nearly 10 0 percent t of India’s s indirect t tax x revenues s and over
6percentofthecountry’sexports.Asoneofthefirstprivatefirmstooffersharestothe
public,ithad3.1millionshareholders;enjoyingthelargestparticipationbyinvestorsof
anycompanyinIndia.Today,oneineveryfourIndiansholdssharesinReliance.
AtthetimeofDhirubhai’sdeath,theAmbanifamilydirectlyorindirectlyowned
46percentofRelianceIndustries,including5percentheldbythefamilyinthenames
of individual family members. Additional shareswere held by a web of companies
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