I am pretty pissed off with Reliance (Industries Limited) run by Mr. Mukesh Ambani. The Q4 results for year ending March 2015 were the best in last 7 years and yet the stock corrected 5% downwards signalling a pessimistic future. The share has been trading in a band of Rs 650 - Rs 1200 for the last 5 years and has hardly delivered any value to me or any loyal shareholder despite a general belief that theoretically it should be 5 times the current value. At the time the Company was split in 2005 by the feuding sons of Mr. Dhirubhai Ambani (soon after his death in 2002); the shareholders of Reliance felt that the divided group would now be run by 2 super stallions - namely Mukesh and Anil - and both would deliver a multiplier growth to stock value of the companies they held based on the wealth creation ethos set by their late father. However, the very people who used to swear by the Company and the Ambani family in the times of Dhirubhai swear at the Companies run by the Ambani boys now.
Dhirubhai has been one of the greatest wealth creators in India's commercial history. Under his helm; investors considered an investment in Reliance stock as safer and certainly better than even gold. A family's good times and pension were directly linked to the amount invested in Reliance. He was considered the next best entity to God and he was respected as one by the investment community; several of whom built small and large fortunes in trading Reliance's stock. He was a hero for the manufacturing community for breaking the hold of legacy wealth run companies in the textile and petroleum sectors. He had the knack of overcoming his adversaries and it did not matter how powerful they were in terms of wealth or influence.
Back in the late 1950's; he became friends with my Uncle. Our family ran a large hosiery trading and manufacturing unit at Chakala St. in South Bombay under "Bombay Hosiery House" (BHH); and Dhirubhai used to come by to sell imported twisted yarn. My Uncle was the very hospitable sort and loved to engage in talks with brokers and traders to get a pulse of the market. Tea, cold drinks and snacks were never in short supply and for a man on his feet all day; such generosity was God sent. It was this open heartedness of my uncle that must have attracted Dhirubhai to him as he too shared the same ideology. They were both great believers that small good to a large number of people was returned by a larger good to one. Both were curious and clever minded visionaries ambitious about breaking the super rich glass and class barrier; and great story tellers - specially about what they had achieved and how. Business in India's then socialist model involved a whole lot of regulatory Catch 22 situations; and therefore involved a whole lot of circumvention. Import of Japanese twisted yarn was just as twisted in the way it was procured and distributed. Dhirubhai was a master at cracking the import policy code; therefore procuring import licenses; and could manage supply of yarn in quantities and price that were beyond imagination at that time. That price arbitrage was all that a small outfit like BHH needed to take on a fight with the big boys of the time; and Dhirubhai was always the one to support the underdog.
Of course, the big guys could not have the small fries thumbing their nose at them; and, using their power and influence got the import of twisted yarn banned in the Open General License (OGL) category. This meant that import of twisted yarn was now the exclusive domain of the big few. In those days of despair; Dhirubhai introduced my Uncle to a textile technologist who explained to him that while import of twisted yarn was banned - import of "S" and "Z" yarn was not - and spun together - it was the same as twisted yarn. My Uncle imported the machinery for making twisted yarn and beat the big boys at their game yet again. Seeing him as an emerging threat; the big boys did what they do best - one of them made him an offer that he could not refuse and bought him out. For our family that had come to India as refugees less than a decade back; this was a major jump in our wealth status.
Dhirubhai suggested that my Uncle use the new found wealth to partner with him and consider setting up a mid sized polyester blended cloth weaving unit as demand for such cloth was on the rise. My Uncle had other plans. He saw import of stainless steel and real estate as much more profitable bets. Maybe spurning the offer of partnership did not go too well with Dhirubhai and with time; as both grew in their respective chosen fields; they drifted apart; and their friendship diluted into a kind of acquaintanceship. Years later, towards end of 1986, my Uncle met Dhirubhai again to ask him for a confirmed allocation in Reliance's public issue of convertible shares. Dhirubhai welcomed him like he would his brother but said he could not as it was too late in the day and all preferential allotments were closed. Guess my Uncle realized then that Dhirubhai still held the grudge of parting against him. Though Dhirubhai was 10 years my Uncle's junior; he always remained his hero figure, and each time he read about his exploits in the papers; there was a sense of pride that he had known this man closely. As a family, we grew to newer financial heights too; but, it was no where close to the meteoric rise of the "reliable" Reliance Group.
I don't know if Forbes takes all listed and unlisted assets into account; but as per its listing; this year 2015; Mr. Mukesh Ambani, the elder of Dhirubhai's 2 sons; at a personal net worth of some US$ 20.3 billion is the richest Indian - a title he has been holding for the last 8 years - despite the group's profits remaining more or less stagnant. He is also ranked in the top 50 richest in the World. Some say the younger brother Anil got a raw deal in the family partition; but back in 2008 he was ranked number 6 and his elder brother number 5 in terms of world's richest at a net worth of US$ 42 and 43 billion respectively. Today; he is listed as No. 19 in India and No 418 in the world at a net worth of US$ 3.7 billion. Both have taken a slide down in terms of dollar net worth - officially at least - and maybe that's the reason the old Reliance value of rewarding shareholders seems to have been replaced by reward your own self first and then the people immediately connected to the new leader's perspective. Ironically, this was exactly what Dhirubhai strongly opposed and fought against in his good times and bad. No wonder Reliance is not considered "reliable" anymore by shareholders like me; and we are replacing this stock as an anchor in our portfolios to an insignificant holding (a few like me for maybe honouring the icon called Dhirubhai).
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