Now Mr. Big’s ambitions are bigger than ever. Since the breakup, Ambani, 49, has finalized plans to invest more than $11 billion over the next decade to build two new satellite cities outside creaking, overcrowded Mumbai and Delhi. He foresees these metropolises emerging within just four years, each with a population of 5 million people making $5,000 a year on average (seven times Indias norm), and hosting top multinational companies. And that is all pretty simple–a development on steroids–compared with the idea that really gets him going. Ambani’s favorite scheme aims to revolutionize in one swoop two of India’s largest but most backward sectors: farming and retail. Despite boom times, India is still a nation where 100 million mostly small farmers work with ox and plow, where 96 percent of retail stores are mom-and-pop shops and most of the roads between farm and store are mud tracks. Ambani plans to invest $5 billion by 2011 to modernize both farms and retail, connecting upgraded fields through the latest logistics technology to a cutting-edge network of stores–or what he calls a “Wal-Mart in India.” In the process, he aims to create enough of a surplus to generate $20 billion in agricultural exports annually.
In China, plans this grand would be hatched by the Communist Party. In India, the government is neither visionary nor efficient enough. But Mukesh Ambani is both. “This new business model excites me the most,” said Ambani, wearing a white polyester-blend, safari-style shirt and dark blue slacks, in an interview in his Mumbai office recently.
Ambani is an extreme example of the explosion in an entrepreneurial energy India has seen every time it opens a new industry to competition. The Reliance conglomerate got its start as a family textile business in 1966 and has grown in spurts, often triggered when the government released its grip on one sector or another. Mukesh Ambani’s new cities were born, for example, from a recent reversal in the attitude of both state and federal governments, which are now willing to give private businessmen control over huge projects. “Can you imagine the change in mind-set?” he says. “The government is ceding its powers.”
Reliance has always had a complex relationship with the government. In a sea of family monopolies, it was a genuine start-up. Yet it quickly acquired deep and sometimes murky connections with politicians, who have often helped Reliance along the way. Mukesh retains the extraordinary clout of his late father, Dhirubhai, the company’s founder. But many who have dealt with him say he has also created a company that succeeds based on merit, not political good will. In that sense India’s complex and controlled reform process has been perfect for market-savvy insiders like Ambani.
Ambani is not the only major Indian entrepreneur who sees India’s farmers as an army of opportunity. Others are investing heavily in fruit and vegetable exports to Europe, information services for farmers, and consumer credit in the countryside. What unites them is both pursuit of profit, and a perhaps uniquely Indian mission to spread the wealth, which is arguably becoming a business necessity in a democracy whose growing income gap could prove explosive, particularly for the superrich. What distinguishes Ambani is the sweep of his plans, and his track record. “His genius, his strength, is that he’s enormously good at executing large projects,” says Nandan Nilekani, the CEO of Infosys, India’s huge IT company. He is able to assemble large numbers of people, the project-management skills, the capital, and then execute.
Ambani wants to build a chain of both small and supersize stores across India, creating 1 million jobs and reaching $25 billion in annual sales. If his plan succeeds, he says, consumers will get fresher food at lower prices, rural incomes will soar and, farmers will become active consumers. The agricultural-export boom will bring Indias farmers into the global economy, as IT has done for its college grads. We are rebalancing the world, says Ambani. We are, in fact, lucky to be at the right place at the right time, contributing to our self-confidence as Indians. That’s what energizes me. Its a vision in which everyone wins, which helps explain the silence of any doubters.
They were not so silent earlier. Mukesh Ambani got his start implementing the dreams of his father, Dhirubhai, who founded Reliance. In 1980 Dhirubhai summoned Mukesh back from his M.B.A. studies at Stanford to begin a risky attempt at “backward integration” of the company’s textile mills. The plan was to move from sewing clothes to creating the fabric, and eventually refining and pumping the oil from which synthetic fabrics are made. At almost every step, naysayers would dismiss Ambani’s plans as too grand for the Indian market. Mukesh first took charge of building a polyester plant at Patalganga, and then a huge petrochemical plant to feed the Patalganga complex. “The son learned at his father’s feet how to think big,” says Vallabh Bhanshali, a Mumbai investment banker.
By 1996, the Ambanis were launching the next step in their grand plan: an oil refinery. Mukesh lived in a shipping container at the arid site in Jamnagar, 850 kilometers northwest of Mumbai on the Gulf of Kutch, while managing a work force of 80,000 and finishing in just three years. Soon after the plant came online in 2000, India started exporting refined petroleum, becoming a net energy exporter for the first time. While other nations like Angola and Turkmenistan have achieved a similar turnaround, they did it by simply exploiting existing oil reserves–not by creating an industry, as Ambani did for India. Mukesh says he is driven by a favorite phrase of his fathers: “To create something out of nothing.”
Dhirubhai died in 2002, setting off a power struggle between Mukesh and his younger, more flamboyant brother, Anil, 47, that became a tabloid sensation and prompted rumors that Reliance itself might fold. Mukesh pushed ahead, taking advantage of the deregulation of the telecom sector in 2003 to launch Reliance Infocomm, now the third largest telecom in India, and realized another dream of his fathers: cutting the price of a phone call down to a penny a minute in India.
The question that some Indian businessmen ask, in private, is whether Ambani can apply his talent for rapid execution outside his field of expertise, energy. While Reliance touts its new business teams as topflight, many old family friends remain in the upper ranks.
They need to be near flawless to deliver on Ambani’s schemes. To transform Indian farmers into quality suppliers for his new retail chain, Ambani plans to create 1,600 farm-supply hubs across India, providing technical know-how and credit, selling seeds, fertilizer and fuel, and buying produce. He also plans to build some 85 logistics centers, and to train tens of thousands of new employees by early 2007 to do everything from erecting prefab warehouses to transporting fresh produce. “There will be mistakes, he admits. But we are not scared. We will correct our mistakes fast and move on.”
Ambani’s basic bet is on the future of the Indian market of 1 billion consumers. This is virgin territory, in which the 96 percent share held by family-run shops is high even compared with China (80 percent). That makes it a relatively easy market to conquer, and Ambani predicts retail sales will surpass refining as Reliance’s main source of revenue. In the past two years Reliance has built 1,250 modern service stations, and already has 15 percent of the retail gas market, with plans to double the number of Reliance stations by December. Mukesh predicts consumer sales will surpass refining as Reliance Industries main source of revenue within seven years. In a sign of confidence, he has urged the government to remain true to its free-market reforms by not trying to block the real Wal-Mart from entering India. Ambani thinks he can beat the American giant on his home turf based in part on superior local knowledge.
Reliance executives understand, for example, the political power of small retailers, and are moving to incorporate them into the chain. A trial partnership with the Sahakari Bhandar chain has already transformed this string of 19 supermarkets in Mumbai. Since May, Reliance has renovated and computerized these stores, tripling revenues and customer traffic. Ambani next plans to build new superstores on the outskirts of small cities before expanding into the big ones.
Many obstacles are melting in Ambanis path. Last year, Parliament created special economic zones that grant developers greater freedom than they enjoy even in China’s zones on which Ambani’s new cities are modeled. The government is a small and largely silent partner in these projects, and Reliance plans to build just about everything, from roads and rail links to power and water supplies. There will be a one-stop licensing agency, jointly run by Reliance and the government, to cut through India’s infamous red tape. Can it be done by 2010? “If anyone can do it, Reliance can,” says Sanjay Nayar, the CEO of Citigroup in India. After all, the bigger and faster, the better.
