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Vol. 231 No. 10 |
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| NELL LUKOSAVICH, ASSOCIATE EDITOR |
Spice trade to global empire: The evolution of Reliance Industries
With its recent burst onto the US shale gas market and a series of new oil and gas discoveries, it is rare for a week to go by without a major news headline about Reliance Industries. With an annual turnover of $45 billion, the Mumbai, India-based conglomerate is the largest private sector company in India, and its founding family ranks the second-richest in the world behind the Waltons. Now a broad-based syndicate with a diverse array of business operations, the Reliance Industries empire started with a small spice business and one man’s unstoppable drive to dream big.
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Reliance Industries founder Dhirubhai Ambani with sons Anil (left) and Mukesh.
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Dhirubhai Ambani, founder of Reliance, was born in 1933 in Gujarat, India, to a school teacher. Known to seek new opportunities, Ambani started his entrepreneurial career at the age of 16 working for A. Bess & Company in Aden, Yemen. After working as a distributor for Shell products, Ambani worked as a spice trader and even melted Yemini Rial silver coins and sold them to London traders.
In 1958, Ambani and his cousin started Reliance Industries (RIL) as a yarn trading business in a 350-sq-ft office in Mumbai. Through opening a series of textile mills and franchise retail outlets, with a strategic marketing program promoting its products, RIL became a household name in India by the late 1970s. The company’s IPO launched in 1977, with a staggering 58,000 initial investors.
After a series of expansions, RIL diversified into energy, petrochemicals and plastics in 1982. During this time, Ambani’s two sons, Mukesh and Anil, came onboard with RIL. While they worked to advance the company’s core businesses, each son began to look at yet further diversified business arenas. Anil, the younger son, spearheaded an initiative to lead India’s venture into global capital markets. Anil also entered into the radio, television and film sectors, even acquiring a 50% stake in Steven Spielberg’s Dreamworks Studios in 2008.
Mukesh, the elder son, focused on Reliance’s core businesses: manufacturing and petrochemicals. He developed the Jamnagar petroleum refinery at Gujarat, the single largest refining complex in the world, with a current capacity of 1.2 million bpd. “People perceive India as a land of a billion problems, but I see it as a land of a billion opportunities,” Mukesh said during an interview on the Indian business news channel, ET Now. With a current net worth of $63.2 billion, Mukesh has become the first trillionaire of India and, in 2007, was declared the fifth-richest person in the world, after Bill Gates, Warren Buffet, Mexican telecommunications tycoon Carlos Slim Helú and Ikea founder Ingvar Kamprad.
Although Dhirubhai Ambani passed away in 2002 at the age of 69, his hard work and drive to seek new opportunities lives on through the continuous evolution of RIL, fulfilling the vision encapsulated in a statement attributed to him on the company’s website: “Our dreams have to be bigger. Our ambitions higher. Our commitment deeper. And our efforts greater. This is my dream for Reliance and for India.”
In its upstream division, RIL has made a series of significant oil and gas discoveries, primarily offshore. In 2000, RIL moved into the arena of deepwater exploration, beginning with operations in the Krishna-Godavari (KG) Basin off East India. RIL hit a major milestone in 2002, with its discovery of more than 7 Tcf of gas in the deepwater KG-D6 Block—the first hydrocarbon discovery by a private Indian company. To date, RIL has made 18 gas discoveries, one oil discovery and is India’s largest gas producer, with output of about 2.1 Bcfd.
In 2009, RIL began the production of sweet crude oil in the KG-D6 Block just two years after the initial oil discovery. The rapid turnaround time leading up to production has made this operation the world’s fastest greenfield deepwater oil development project.
While RIL continues to make discoveries in the Cambay and Krishna-Godavari Basins, the company has partnered in exploration operations in several eastern countries, including Yemen, Colombia, Oman, Peru, Kurdistan and Australia. Its latest venture brings the company to the other side of the world. In 2010, RIL partnered with US-based Atlas Energy for the exploration of over 300,000 net acres of undeveloped land in the Marcellus Shale. RIL acquired 40% of Atlas’ interest in the acreage, which holds a potential 13.3 Tcfe. RIL has also recently entered into a joint venture to acquire 60% of Carizzo Oil & Gas’ Marcellus acreage. In June 2010, RIL acquired a $1.3 billion stake in the Eagle Ford Shale from Pioneer Natural Resources.
With each passing year, RIL continues to add to its wide array of business holdings. The company is also very active in supporting the communities within its home country. For instance, Mukesh Ambani is the president of the Deendaydal Petroleum University, founded in 2007 in Ahmedabad. The Reliance Foundation, provides volunteers and financing for a variety of programs that support education, healthcare, rural infrastructure and disaster assistance. As Mukesh said in 2009 at the launch of the Reliance Foundation, “I strongly believe that we can, and should do, much more. I also believe that this effort has to bring into play RIL’s strengths of strategic planning, meticulous detailing and flawless execution on a large format.” 
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