The second Incumbent

IIPM PUBLICATION

Or is he the second emperor? Anil Ambani remains the dynamism behind the spirit of Reliance

In the spring of 1991, when 50,000 guests crowded Anil Ambani’s wedding with Bollywood star Tina Ambani, no media pundit could have even dreamt that India’s first business ‘Family’ will one day disintegrate into truncated pieces. The flamboyant Anil then was the perfect foil for the taciturn and low key Mukesh. They were the classic ‘Brothers in Arms’. All that is history. Now, armed with a mandate from the mother Kokilaben Ambani, Anil is all set to jog his way to success and glory of his empire.

At the moment, Mukesh runs a business enterprise where the major competitors - if any - are in the public sector. Anil, on the other hand, faces stiff competition from big boys in the telecom and power business. The telecom business is the one that Anil might find the toughest to handle initially. Till the brothers’ fight became public, the only controversies about Reliance Infocomm were whispers about ‘not managing the environment’.

Then came the famous rift and the subsequent battle when Anil’s camp ‘leaked’ stories about the many ways in which Infocomm was conducting its business. The authorities promptly announced investigations into how Mukesh Ambani acolytes flagrantly violated the law. Now that Anil controls the business, his immediate headache may be to ward off a serious scrutiny of Infocomm dealings.

India’s mobile phone market is full of heavyweights like Tata, Bharati (Airtel), Hutch, BPL, Spice and Idea, to name just a few. Can Anil Ambani boast of deep pockets any more? As a unifi ed entity, Infocomm could simply behave like a typically younger sibling and guzzle money from parent Reliance. That option doesn’t exist any more.

No wonder, sceptics have begun to write off Reliance Infocomm as the first major Ambani venture (not counting their foray into media - the daily ‘Observer of Business and Politics’) that did not pan out. About 15 years ago, the same skeptics had written off Anil’s ‘page three’ marriage with Tina Munim.

Of course, Infocomm will soon be awash with money because of the imminent IPO. But then, the second emperor Anil Ambani has to ensure that Infocomm generates enough profits to pay dividends to shareholders who might jump ship otherwise. How would this empire generate fat profits beyond the Rs.54 crore (2004-2005 figures) at just 40 paise per minute calls? That’s the first real dilemma confronting Anil Ambani in his newly acquired telecom business.

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Source : IIPM Editorial, 2007

An IIPM and Professor Arindam Chaudhuri (Renowned Management Guru and Economist) Initiative

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