Business environment Assignment-1 Ambani vs Ambani

Submitted to:Ms.Sunandan Saggu

Submitted by:Aarushi Sharma Roll no:-A08 Section:-R336

AMBANI VS AMBANI

Dhirajlal hirachand ambani lovingly called as Dhirubhai Ambani (28 December 1932 - 6 July 2002), was instrumental in bringing first time Indian investors to stock market. After working in Gulf as dispatch clerk, he returned to India to start Reliance Commercial Corporation with an investment of Rs.15,000. It was engaged in polyster yarn import. He went to lead its evolution as a global leader in materials and energy value chain businesses. He started a textile mill at Naroda, Ahmedabad to manufacture textiles using polyester fibre yarn. He implemented backward integration philosophy and a petrochemical complex at Patalganga in Maharashtra was set up to produce polyesters, intermediates and petrochemicals. Reliance established another petrochemical complex at Hazira near Surat in Gujarat to manufacture ethylene, propylene, ethylene glycols, polymers like polypropylene, polyvinyl chloride, polyester intermediates like pure terephthalic acid, polyester filament yarn etc.

At the time of Dhirubhais demise, Reliance Group had a gross turnover of Rs. 75,000 crore. This was 1000 times its 1976 77 turnover of Rs.70 crore. Reliance came out with their first IPO in 1977 and Dhirubhai convinced people in rural Gujarat that his company would yield substantial returns to shareholders. This happened at a time when the awareness among public about stock markets was minimum.Ambani brothers have been up to the mark to their fathers dreamt expectations but somehow were not able to continue Reliance Group together and decided to part Reliance Group into each other equally by mutual consent and under the due consent of mother kokilaben. Here is the table showing the present position of Ambanis ANIL DHIRUBHAI AMBANI MUKESH DHIRUBHAI AMBANI Chairman of Anil Dhirubhai Chairman and M.D.Reliance Ambani Group industries NET WORTH
US $32.4 billion (october6,2007) Has been a member of rajya sabha from 2004 to 2006

NET WORTH
US $43 billion(october29,2007) Not involved in politics.

AWARDS
Business man of the year award 2006 times of india.

AWARDS
Conferred united states india business council(USIBC) leadership award for global vision 2007 is washington.

COMPANIES
Reliance communication,Reliance capital,Reliance energy,Reliance natural resources.

COMPANIES
Reliance industries,Reliance petroleum IPCL and Reliance infrastructure ltd.

ACHIEVEMENTS
Shifting business scope from traditional business to sector such as television,gaming,radio,etc.

ACHIEVEMENTS
First trillionaire of the world.

GROUP NAME
ANIL DHIRUBHAI AMBANI GROUP(ADAG).

GROUP NAME
RELIANCE GROUP.

Mukesh and Anil Ambani, both of whom listed in the worlds top ten richest men in 2008, are currently locked in a legal battle over business and personal interests. Mukesh, the elder brother, has accummulated a net worth of $43 billion, making him the 5th richest person today behind Warren Buffett, Carlos Slim Helu, Bill Gates and Lakshmi Mittal. The younger anil, on the other hand, is just behind on number six, with a fortune of $1 billion less than Mukesh. The row started with Mukesh dragging Anil to the court after the two came into dispute over the distribution of gas supply and an unsolicited merger talk. With revenge in mind, the latter then filed a defamation suit worth $2.2 when Mukesh appeared to made a comment in an interview linking Anil with immoral business pursuits. Anil was alleged to have used a secret squad in spying the competitors activities and their

weaknessess. The two has been in disagreement ever since the death of their father, which split the company he founded, Reliance apart. Reliance was built from a nobody to Indias most successful business empire. While effort is being made to get the brothers mother to mediate their dispute, harsh reality is in the taking as the business interest seems to come on top of the head instead of family.

A confident Mukesh is now riding the increased spending capacity of consumers and the groundwork done by established retail players. By implementing the plan of opening Wal-Mart in India with low-cost supply chain model, which involved massive economies of scale. The strategy was to set up a chain of supermarkets, hypermarkets, speciality chains and convenience stores in 800 cities across the country. The idea is to do things differently. If Mukesh is going great guns, brother Anil isn't far behind. Industry watchers say he is the number one private telecom player in the country, straddling both GSM as well as CDMA technology. And he have spent over Rs 700 crore (Rs 7 billion) - one of the largest makeover budget in the country - to create a new identity and logo. Anil's strategy of convergence of telecom with entertainment was unravelled with his acquisition of a majority stake in Adlabs. Reliance Communications is a bevy of services - from IPTV on the broadband, mobile TV, video on demand services. It has a fibre optic backbone, which can be used to distribute movies to the multiplexes. On the energy front, the company has set up power projects in neighbouring countries like Nepal and Bangladesh and even in

West Asia; it is scouting for partners to bid for gas exploration overseas and even look at acquisition of coal mines in global locations, which fed the power plants in India. Anil Ambani has of course fixed stiff targets. Reliance Energy for instance is already building over 2,850 Mw of new capacity and the target is that by 2011 it would double this to over 15,300 Mw. The Anil Ambani group has seen erosion of almost one-sixth of the market value of the companies under its fold since January 17, when the demerger of Reliance Industries took effect. Reliance Communication Ventures has contributed the maximum to the erosion in market capitalisation of the group. It has lost Rs 15,424 crore (Rs 154.24 billion) worth of market value from its peak level and Rs 8,470 crore (Rs 84.7 billion) after its listing. The Mukesh Ambani group, on the other hand, has added to its market capitalisation by Rs 59,703 crore (Rs 597.03 billion). Following the listing of Reliance Petroleum, Rs 28,193 crore (Rs 281.93 billion) worth of market capitalisation was added to this group. The flagship Reliance Industries, too, added to its market capitalisation by Rs 31,636 crore (Rs 316.36 billion). IPCL is the only laggard in the group, losing market capitalisation worth Rs 225 crore (Rs 2.25 billion), when the formal split took place. The newly listed RPL put up a big show on its listing with the stock touching an all-time high of Rs 101.95 against its issue price of Rs 60 and ramping up a market cap of Rs 45,888 crore (Rs 458.88 billion). The correction thereafter shaved off Rs 17,685 crore (Rs 176.85 billion) market cap of RPL when its market price dipped below the issue price.

The market value of Mukesh Ambani group stood at Rs 163,226 crore (Rs 1632.26 billion) with his flagship Reliance Industries accounting for Rs 128,360 crore (Rs 1283.6 billion). The newly-listed RPL has chipped in with Rs 28,192 crore (Rs 281.92 billion) while IPCL and Reliance Infrastructure together added another Rs 6,674 crore (Rs 66.74 billion).

The Anil group companies aggregate market capitalisation is to the tune of Rs 56,067 crore (Rs 560.67 billion). Reliance Communication has a market cap of Rs 27,105 crore (Rs 271.05 billion), followed by Reliance Cap {Rs 9,689 crore (Rs 96.89 billion)}, Reliance Energy {Rs 9,442 crore (Rs 94.42 billion)}, Reliance Energy Ventures {Rs 3,963 crore (Rs 39.63 billion)}, Reliance Capital Ventures {Rs 2,575 crore (Rs 25.75 billion)}, Reliance Natural Resources {Rs 2,409 crore (Rs 24.09 billion)} and Adlabs Films {Rs 885 crore (Rs 8.85 billion)}. The valuation gap between the two groups has been widening. Immediately after the split, the market capitalisation of the Anil Ambani group companies was 66 per cent of the Mukesh Ambani group. The Mukesh Ambani group, which has taken lead in market capitalisation at the ratio of 2.9:1 over the Anil Ambani group, is also ahead in terms of financials like turnover, profits and assets.

The Mukesh Ambani group is ahead of the Anil Ambani companies in the ratio of 10.6:1 in net sales, 5.9:1 in profits and 7.6:1 in fixed assets. The Anil Ambani group companies have a higher price/earning multiple of 15.29 compared with P/E 13.46 of the Mukesh Ambani group

Refrences 1.Hindustan Times. 2.www.theindiastreet.com 3.www.reliance.com 4.www.ril.com 5.www.relianceworld.com