Tracking RIL's relentless upward journey

As RIL breaks new records, we reminisce the rise of the colossal business empire across the years.

Aug 28, 2018 02:08 IST India Infoline News Service

On 28th August, 2018, shares of Reliance Industries Ltd. touched a record high of Rs1,319.5 on the BSE. Earlier, on Aug 23, 2018, RIL had scored yet another record as the first Indian company to cross the Rs8 lakh cr market cap mark.

As per CNBC, RIL's market cap is now more than 30% of Nifty 50 companies and is equal to the market value of 15 companies comprising the Nifty 50 index, reflecting the weight the stock carries in the index. 

These achievements are nothing short of a miracle, given that the founder, Dhirubhai Ambani, built the conglomerate only from a seemingly impossible dream, sheer grit, and a handful of money. As the company breaks new records, we reminisce the rise of the colossal business empire.

No one would have expected great things from a petrol-pump attendant and later a clerk at an oil company in Aden when he decided to return to India in the 1950s with a mere Rs500.

It was in 1958 that this ambitious man started a tiny trading business from a one-room chawl in the Bhuleshwar area of Mumbai, mainly dealing in fabrics and spices, walking his talk as he said “If you don’t build your dream, someone else will hire you to help them build theirs.”

Dhirubhai’s life took a significant turn after eight years as he acquired a small spinning mill at Naroda near Ahmedabad, the polyester cloth came to be sold under the Vimal brand; he later set up a polyester plant in the 1980s. The rest, they say, is history.

Named Reliance Trading Corporation, which was engaged in the trading of spices and polyester, later, Reliance Textiles Corporation, and now Reliance Industries, the journey from Rs500 to a ~Rs8 lakh cr (RIL’s market cap) conglomerate is quite a story.

A first of all sorts

In 1977, Reliance became the first Indian company to come out with an initial public offering. This was at a time when capital market participation in India was restricted only to the wealthy and elite. With as little as Rs10/share, Reliance issued shares to a large number of people hailing from the middle class, most of whom weren’t even aware of what capital markets and stocks were back then. It took a great deal of convincing from the master influencer to gain the common man’s trust.

And boy, was it amazing with the company making another record in India’s corporate history for conducting its 1986 AGM with an attendance of 30,000 stockholders. Such was Dhirubhai’s influence.

Then again, it wasn’t just the influence but also the massive returns investors reaped in the years to come. Millionaires were made. Ambani became a hero for his investors. He was often lauded for his financial expertise and skills extraordinaire.

Reliance was also the first to tap global depository receipts (GDRs), the only Indian company to raise 50 and 100 year bonds from overseas debt markets, and the first to borrow from foreign banks at cheaper costs.

However, Dhirubhai was no stranger to controversies.

While his rise from a humble, menial job to flamboyant riches has gathered adulation, his critics say that Dhirubhai was no stickler for rules, was highly opportunistic, and had his way of influencing powerful people. However, it may be fair to say that his peers at the time also “bent rules” to get to the top of the game.

In an interview to India Today magazine, Dhirubhai said that he was “willing to salaam anyone” in the government as the most “important external environment is the Government of India.”

Also famous is his quote, “We cannot change our rulers, but we can change the way they rule us.”

From politicians to other corporate houses, Dhirubhai managed to cultivate favors and forge friendships and also invited staunch enemies, popularly referred to as the R-positive and R-negative groups, respectively. Doubts have also been cast as to how the senior Ambani managed to obtain all licenses and permissions to carry out his petrochemical and polyester businesses.

Dhirubhai suffered a vascular stroke in 1986, which paralyzed the right side of his body. Despite this, he was involved in aggressively entering the petrochemicals, oil refining, telecommunications, and financial services businesses in the 90s.

When he passed away in 2002, Reliance found a spot in the global Fortune 500 list, again a first for an Indian private company.

Where is Reliance now?

An ugly spat between sons Mukesh and Anil followed his death, only to be intervened by Dhirubhai’s wife Kokilaben. The company was amicably split in two business in 2005. While Mukesh Ambani kept the core energy business under Reliance Industries (RIL), Anil ended up with the telecom, financial services, and power arms under the Reliance ADA Group.

As can be seen over the years, Mukesh has maneuvered the business quite well with the sectors he retained too having supported him. Jio has been the latest success of the company and a big hit among Indian consumers. As the shares of RIL scale new heights, the new avatar of Reliance now led by the next generation, Isha and Akash Ambani, continues to revolutionize one of the finest investment offers India has ever seen.

Anil’s business, however, has dwindled given that his power and telecom businesses had mounting debts and suffered massive losses. Brother Mukesh bailed the companies out by buying most assets of RCom in 2017.

Last month, Mukesh, Chairman of RIL, expressed his 10-year vision for the conglomerate, saying that he would like to focus more on consumer businesses (e-commerce, healthcare, education, fibre connectivity, and retail) and reduce reliance on the energy sector. RIL currently derives 80% of its sales from refining and petrochemicals.

He called the coming decade a “golden" one with RIL expected to double in size. From the modest spinning mill to being the king of Indian markets, Reliance treads rock steady on Dhirubhai’s path, as his saying goes “Our dreams have to be bigger. Our ambitions higher. Our commitment deeper. And our efforts greater.”

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