Despite Reliance Jio, Mukesh Ambani is still in search of his imprint


Reliance Industries Ltd (RIL) chairman Mukesh Ambani has an insatiable appetite. This was evident during his appearance at the Hindustan Times Leadership Summit last week where he signalled his readiness to look at a fresh investment cycle in areas like healthcare, agriculture and education.

This, at a time when Reliance Jio Infocomm Ltd, which capped the group’s last investment cycle is off to a flying start with Ambani exuding confidence in the numbers for the next few quarters.

In its strictest sense, an investment cycle covers the period, usually spanning several business cycles, from the time of the investment until the point where it stops generating cash flows. On this basis, Ambani should be in consolidation mode, especially since his group’s oil and gas business is purring along nicely and the markets are bullish on its future as evidenced by its stock price which has been hovering around its all time high.

So, what else would he want? The cue to that lies in the man Ambani invoked at the same event, a man he called a “friend” and one who he has always cited as a philosopher and guide. That man is his father Dhirubhai Ambani, possibly the most unsung of Indian heroes. The founder of India’s largest private sector company in his own lifetime achieved the double helix of pioneering an entirely new industry while simultaneously creating a massive cash generating engine. In doing so, Dhirubhai left behind an extraordinary legacy, one that must be invoked every time an Indian thinks of entrepreneurship.

Some men and women live for the moment. Actor Salman Khan who appeared on the same stage the previous day admitted with disarming candour that he lives his life in the here and now. Others, as in former US President Barack Obama, the man who preceded Ambani at the summit, need more, a higher goal as it were. But while Obama’s body language suggests a man at peace with what he has achieved, Ambani isn’t quite there, yet.

And therein lies the roots of his constant search. He needs something more to cement his life’s work, that “one superlative song, existence the price”, that author Colleen McCullough talks about in her book, The Thorn Birds.

For the fact is, despite mega dollar investments in retail and telecom over the last 15 years, Reliance Industries remains dependent on its traditional oil and gas business.

In 2006, when Reliance first forayed into retail, it planned to span the entire supply chain with hypermarkets at the front end and a nationwide cold storage chain as well as contract farming at the back end. 10 years after it commenced operations, Reliance Retail’s revenues of Rs33,765 crore in 2016-17 are less than 10% of the group’s sales while Ebit (earnings before interest and taxes) at Rs1,203 crore for that year, are minuscule. Even if it continues to grow at the 30% rate that Ambani has targeted for the next 10 years, it will be nowhere near replacing the flagship business.

Significantly, the retail business also did little to disrupt retailing in India, that role being performed by online e-commerce companies like Amazon India and Flipkart. Disrupting existing businesses is a Mukesh Ambani hallmark, a kind of underlying driver for any new foray: will Reliance’s entry into the business change its dynamic and kickstart the market in a significant enough way. In that pursuit, the group rarely bothers with shibboleths like trying to be the first mover.

The entry into telecom, both the first time around and with Reliance Jio, came well after others had got in. Even the entry into retail wasn’t an original idea. By 2006, a number of Indian companies had already made their mark.

This isn’t the first time Ambani has spoken about the latent potential of the agriculture sector which has been a laggard and a drag on India’s growth. In any case, the idea of corporate farming dates back to the mid 1990s when following a Mckinsey report on the subject, a number of large groups made initial investments in farming. Regulatory issues in the states put paid to that early adventurism which also means the opportunity still exists. Ambani has already disrupted the telecom services business in India, triggering an almighty churn that has seen multiple losers but no clear winners yet. If his gamble on data succeeds and India becomes a truly data-driven economy, he would consider it his defining imprint on the world of business. If not, his quest will continue.