BUSINESS

Reliance: A unique firm with unmatched energy

By T N Ninan
April 26, 2003 14:16 IST

I'm not sure what the stock market expects, so I am mystified by its downbeat response to the Reliance results.

To show 40 per cent growth in profits at a time when most people strain to get into double digits, is extraordinary. To deliver profit margins that are about 9 per cent of turnover in what is a commodity business speaks more volumes.

And as (Reliance vice chairman) Anil Ambani pointed out, this is a year when Reliance has acquired two large companies (IPCL and BSES), merged the parent company with its petroleum offshoot, struck what gives every impression of being a major gas field, and readied its super-ambitious telecom project.

To pack that kind of action into 12 months and chart out lines of growth in completely new areas while the basic business goes into overdrive takes a special kind of organisation, and one barely notices that the company's founder is no longer around.

So, despite loud whispers of divisions at the top, a smooth transition from one generation to the next is another achievement for the year. The next 12 months will not see the company idling: it will finally get into oil retailing, and will presumably bid for one of the oil companies getting privatised (if indeed it gets privatised).

The telecom launch (or re-launch) will happen, and the groundwork will be laid for getting the gas field to start commercially producing and transporting gas in three years' time. So, even if the stock market is not impressed, I must confess that I am. As I suspect even rival businessmen are, whether they will admit it or not.

Reliance is not short of critics, and Business Standard has been one of them on several occasions -- including on the manner in which it has played the telecom game. But even the critics have to recognise what stares them in the face and acknowledge a unique company with unmatched energy.

Rival telecom majors scoff at what is on display at the group's telecom headquarters on the outskirts of Mumbai, but it is impossible not to be mightily impressed, as indeed most visitors have been whenever they have visited the group's other showpiece, the outsize oil refinery at Jamnagar.

The scale of the enterprise is daunting, and the size of the ambition that is on display makes comment pretty much superfluous. As he drives and walks you around the complex, Mukesh Ambani reels off the statistics: how many million square feet built up in how few months, how low the cost per square foot is, how much capacity there is in the pipes laid to connect hundreds of cities, how only NASA has a wall of plasma screens the size that Reliance InfoComm does (some 150 feet across and 40 or 50 feet high). . .

Others show you the kinds of services that will be rolled out over the coming months, and the creative work that has gone on behind the scenes.

Many readers will find it odd that anyone should go on about the Infocomm project when the company has bitten the dust with its launch programme, been forced to admit embarrassing boo-boos and gone back to the marketing drawing board.

Also, there is the real possibility that the company will run into regulatory trouble; for among all the business opponents that Reliance has taken on in its rambunctious history, it has to be admitted that the telecom guys have proved to be the most worthy rivals.

Or, may be, India has changed and is signalling that the rules now matter more than before. Still, it is hard to believe that Reliance will not remain a player in the telecom game, and that it won't get a sizeable chunk of a rapidly growing business.

And if the oil marketing and gas businesses take off too, followed by the planned expansion in power, then as an enterprise Reliance will be where, as a country, the US is today: too big to bother about what the critics say.

Anil Ambani likes to quote Dhirubhai: When an elephant walks through a village, the dogs will bark, but the elephant goes its way undisturbed. Makes you think, doesn't it?

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