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India Strategy:
CEOSpeak
Mukesh Ambani: "Dream and
Dare"
You know your company, now know its CEO: This is
the second entry in our new product series, which seeks
to present India’s most famous and successful CEOs
and their views on India, the industries in which they
operate, and the companies they run – plus a bit of a
perspective on what drives them in life.
Mukesh Ambani is Chairman and Managing Director
of Reliance Industries. This report is in the format of
questions posed by Morgan Stanley, followed by Mr.
Ambani’s responses. Among the key insights Mr.
Ambani offered in our discussion are the following:
“India will contribute substantially to global GDP
together with China in the coming few decades.”
“If income generation does not happen in an equitable
way, the demographic dividend that India has can work
against its growth aspirations. India needs to reform
education and agriculture and secure food and energy
supply.”
“We need disruptive policies (in the energy sector) which
will help India leapfrog and realize the growth potential --
speedily and sustainably.”
“I have tremendous expectations from our broadband
digital services business to change the game and
disruptively innovate to address India’s inherent
challenges.”
“Growth through partnerships will be a key part of our
strategy. These partnerships will both address the
Indian markets as well as provide us with entry points
into global markets.”
“Commitment to India will be dominated by investments
in new petrochemical capacity, organized retailing and
digital services.”
Mukesh Ambani: “Dream and Dare”
What is your long-term view on the Indian economy?
Where are we heading in the next 10 years?
I am confident that the India growth story is unstoppable. India
will contribute substantially to global GDP together with China
in the coming few decades. I am also certain that India’s
growth will be more inclusive and broad-based, both socially
and geographically. With the help of the right policies, it is
certainly possible to accelerate growth and, simultaneously, to
make available the fruits of growth to all sections of the society.
Where are we heading? Into India’s most deserved and
promising future. From a Third World country to the third most
economically powerful country in the world. That’s where India
is heading and then it will not be too far from the first two. I
believe that India will be a US$5 trillion economy in the next
10-15 years. What is important is to note the rate of change. It
took us 60 years since independence to be a trillion dollar
economy. By 2020, we should become the third largest
economy in the world. The foundation built on strong growth
will need a supportive governance environment at all levels,
with a commitment to ensure that entrepreneurship is
consistently supported and that the benefits of growth are
inclusive.
On India’s Growth Story:
What is important is to note the rate of change. It took us
60 years since independence to be a trillion dollar
economy. By 2020, we should become the third largest
economy in the world.
Mukesh Ambani, June 2011
What are the downside risks?
As India propels itself on its growth path, the greatest risk is to
leave behind the Indian soul- its culture, its heritage and its
values. It is super critical for India to grow on the back of these
advantages. As I mentioned earlier, there is a need for inclusive
and broad-based growth. Although India is marching on a
prosperous path, there is a need to do this in an equitable
manner – the benefits spreading far and wide. If income
generation does not happen in an equitable way, the
demographic dividend that India has can work against its growth
aspirations. For this, we must firstly reform our system of school,
college, university and vocational education in order to increase
opportunities for India’s children and youth. There has been
some progress at the primary level, but I am concerned that
severe bottlenecks remain at the secondary and higher
education levels. Our education sector needs a strong thrust of
liberalization with the removal of government controls that hinder
quantitative as well as qualitative growth.
Another imperative is that both our education and economic
policies need to be realigned to create at least 300 million
sustainable livelihoods, especially in rural and semi-rural areas.
We must realize that the fundamentals of the Indian economy
still rest on agriculture and hence this sector needs to be focused
on. Further, India must secure its food and energy supply needs
to grow at double digits. Certain dramatic changes in the face of
rising demand could put energy supplies at risk, but the search
for more energy resources must not stop at any cost.
For the next few months, it seems things have turned
pretty grim for India: Alleged corruption scandals may
mean capex will slow down, higher rates could make
projects unviable, high inflation is a big headwind for
consumption and the world is looking murky so India’s
exports could suffer – are you worried about these
developments?
I do not agree that things have turned grim for India. We should
not really deprecate ourselves. We have a vibrant society, a
vigilant media, an independent judiciary and are dealing with our
problems in a mature way. We have started on the journey of
systemic reforms to reduce corruption. The Old India is making
way for the New India. The transition will not be an easy ride, but
I have no doubt that we are moving in the right direction.
On the Recent Events in India:
The Old India is making way for the New India. The
transition will not be an easy ride, but I have no doubt
that we are moving in the right direction.
Mukesh Ambani, June 2011
As you point out, energy is probably one of India's biggest
challenges of the coming decade. What policy impetus do
we need to secure our future?
India’s energy security is today an important aspect of national
security. Continued search for energy sources should be
encouraged and emerging avenues like shale gas as also
alternative sources should be pursued. We need disruptive
policies, which will help India leapfrog and realize the growth
potential -- speedily and sustainably. World gas markets
should be integrated with the Indian gas markets. Artificial and
unjustifiable price differentials should go, since they distort the
energy economy and deter fresh investments. As we go ahead,
the government has to be more of an umpire or the tournament
organizer as opposed to getting involved in the game.
On India’s Energy Policy:
World gas markets should be integrated with the Indian
gas markets. Artificial and unjustifiable price differentials
should go, since they distort the energy economy and
deter fresh investments.
Mukesh Ambani, June 2011
A lot has happened in Reliance's energy business - the
entry of BP, the production cut back in KGD6 - how do you
see the energy business' future?
We see a very bright future for our energy business. Our
strategic partnership with BP will enable us to exploit the full
potential of our domestic oil and gas portfolio. BP will make
available to the partnership its sub-surface technical expertise
to maximize recoverable resources from the large domestic
exploration acreage. A joint venture to import gas from global
sources and invest in infrastructure to provide reliable supply of
gas to Indian consumers is also proposed in this partnership.
Our forays in the shale gas exploration business in the USA
hold great promise. All in all, energy will continue to be one of
our flagship businesses.
Reliance is investing in acquiring shale gas technology.
Experts suggest that India has large potential in shale gas.
Is shale gas the next big thing for India?
The development of shale gas plays has emerged as a game
changer for the US natural gas market. Last year, Reliance
entered into this fast-growing opportunity through three
upstream joint ventures. These joint ventures will materially
increase Reliance’s resources base and provide us with an
entirely new platform to grow while simultaneously enhancing
our ability to operate unconventional resource projects in the
future.
As you would know, shale is a common sedimentary deposit,
and India has major shale formations across the country and
hence there is huge potential in India. The challenge will be to
see if we are able to successfully tap this potential source. The
government system should also become more encouraging.
Has Reliance grown too big for the Indian economy? Put
in another way, has Reliance's growth over the past few
years put it ahead of where the Indian economy is
currently? Do you feel Reliance needs to go more global
to sustain its growth?
We have evolved, just as any dynamic and future-focused
business entity, in response to the developing globalization of
business environment. We are doing what is appropriate at
every stage of our evolution. RIL’s plans are, as always, closely
aligned to India’s national goals while we will seek to explore
new geographies and partners. We are proud to be an Indian
company with global aspirations.
Of all the businesses that Reliance is investing in, what
excites you the most?
Almost all our businesses address the unserved or
underserved needs of customers at the best quality and the
lowest costs. Hence, all of them excite me from a customer and
an impact point of view. I have tremendous expectations from
our broadband digital services business to change the game
and disruptively innovate to address India’s inherent
challenges. We hope to fundamentally transform the way
industries such as financial services, healthcare, media &
entertainment operate in India. I also see big potential for
broadband-enabled services to transform the
government-citizen interface, besides agriculture and the
informal sector of the economy, which employ the highest
number of people. It is something which we believe will
revolutionize the consumption of such services in the country –
and Reliance will lead the change.
On Reliance’s Most Exciting Future
Business:
It (broadband digital services) is something which we
believe will revolutionize the consumption of such
services in the country and Reliance will lead the
change.
Mukesh Ambani, June 2011
You are one of the most successful CEOs in the world
over the past decade. What has driven this success?
The role of my father Shri Dhirubhai Ambani has been
invaluable. He has been my teacher, my guide. He had very big
dreams for Reliance and for India and I have inherited those
dreams. The guiding principle has always been to evaluate if
we are creating value for the shareholders and, through the
assets developed by the company, contributing to meaningful
nation building. True success lies in the real assets that you
build, the institutions you nurture and the impact you can make
on society. Needless to say, behind every successful CEO
there is a passionate and a committed team that believes in his
vision and delivers against all odds. And, I have a fantastic
team at Reliance.
Reliance has delivered a compounded annual return of
20% over the past 20 years. What in your view are the
factors that have contributed to this phenomenal
performance? How do you see things panning out in the
coming decade?
Believing in and committing to India’s growth has been the
fundamental principle of Reliance’s evolution. Since inception,
Reliance has taken several strategic initiatives which we refer
to as value creating cycles. We have always invested in
building new competencies which form the basis for a larger
footprint in the future. In fact, even at the peak of the global
financial crisis a couple of years ago, the Group continued to
stay committed to its large projects. We are probably the only
company in the world to have successfully commissioned two
large projects including a large refinery at Jamnagar and the
hydrocarbons production facility at KG basin when the general
global trend was to cut costs and investments.
A strategic shift in the recent past has been our focus on
developing successful partnerships. Over the past five years,
Reliance has entered into over 50 partnerships. These
partnerships bring new products, competencies, technologies
and new markets. Growth through partnerships will be a key
part of our strategy. These partnerships will address both the
Indian markets as well as provide us with entry points into
global markets. Our partnerships in shale gas and joint
ventures in retail are a few examples towards implementing
this strategy.
For the future, we have stepped up our commitment to build
organizational capacity, management bandwidth and enhanced
ability to execute our strategic initiatives. We are committed to
build a process- and performance-based organization with a
On Reliance’s Future Growth:
A strategic shift in the recent past has been our focus on
developing successful partnerships. Over the past five
years, Reliance has entered into over 50 partnerships.
These partnerships bring new products, competencies,
technologies and new markets.
Mukesh Ambani, June 2011
shared vision. Commitment to India will be dominated by
investments in new petrochemical capacity, organized retailing
and digital services. The new projects announced by us represent
the largest ever investment by Reliance in a sector and largest
capital commitment in the global arena as well. We are gearing up
for the next phase of growth through a combination of our own
initiatives and forging new partnerships with leading companies.
Again, at the end of the day, any company is as good as its
people. We have been blessed with extraordinary talent,
unmatched passion and dedicated responsible leaders. We will
continue to invest in our human resources. Let me make one
thing clear here. Investment in a company’s human resources
does not mean only, or even primarily, financial investment. Far
more important is the need to create a value system and an
environment that supports our people to realize their full
potential as individuals and as teams. Honesty, integrity, trust,
team spirit and readiness to help others – and, especially,
readiness to encourage young talent in the company – these
are values that Reliance has been consciously promoting.
What is your advice to upcoming entrepreneurs?
My father Shri Dhirubhai Ambani had once said, “For those who
dare to dream, there is a whole world to win. Dream and dare. Do
not accept defeat in the face of odds; and challenge negative
forces with hope, self-confidence and conviction. I believe that
ambition and initiative will finally triumph. The success of the
young entrepreneur will be the key to India’s transformation in the
new millennium.” All of us, in a sense, struggle continuously all the
time, because we never fully get what we want. The important
thing to learn is that we not give up. The combination of India's
liberalized economy and business talent will power India into the
future. However, entrepreneurs should have a larger purpose and
build businesses that change the lives of millions of people.
Business should reconnect to society in a new format. This is what
India needs. Moreover, this is also the real entrepreneurial
opportunity and social transformation opportunity.
How do you unwind?
My duty is my meditation! A dynamo gets recharged when it
works. I never unwind in a sense – staying focused is
something that I have always considered important. However,
one needs to refresh oneself and my favorite way is to spend
time with nature and wildlife in the happy company of my family.
It recharges me and I learn a great deal from nature and its
miraculous ways.
Reliance Industries is rated Overweight by Morgan Stanley
Indian Energy analyst Vinay Jaising. The share price closed at
Rs944.50 on June 10, 2011.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
India Strategy:
CEOSpeak
Mukesh Ambani: "Dream and
Dare"
You know your company, now know its CEO: This is
the second entry in our new product series, which seeks
to present India’s most famous and successful CEOs
and their views on India, the industries in which they
operate, and the companies they run – plus a bit of a
perspective on what drives them in life.
Mukesh Ambani is Chairman and Managing Director
of Reliance Industries. This report is in the format of
questions posed by Morgan Stanley, followed by Mr.
Ambani’s responses. Among the key insights Mr.
Ambani offered in our discussion are the following:
“India will contribute substantially to global GDP
together with China in the coming few decades.”
“If income generation does not happen in an equitable
way, the demographic dividend that India has can work
against its growth aspirations. India needs to reform
education and agriculture and secure food and energy
supply.”
“We need disruptive policies (in the energy sector) which
will help India leapfrog and realize the growth potential --
speedily and sustainably.”
“I have tremendous expectations from our broadband
digital services business to change the game and
disruptively innovate to address India’s inherent
challenges.”
“Growth through partnerships will be a key part of our
strategy. These partnerships will both address the
Indian markets as well as provide us with entry points
into global markets.”
“Commitment to India will be dominated by investments
in new petrochemical capacity, organized retailing and
digital services.”
Mukesh Ambani: “Dream and Dare”
What is your long-term view on the Indian economy?
Where are we heading in the next 10 years?
I am confident that the India growth story is unstoppable. India
will contribute substantially to global GDP together with China
in the coming few decades. I am also certain that India’s
growth will be more inclusive and broad-based, both socially
and geographically. With the help of the right policies, it is
certainly possible to accelerate growth and, simultaneously, to
make available the fruits of growth to all sections of the society.
Where are we heading? Into India’s most deserved and
promising future. From a Third World country to the third most
economically powerful country in the world. That’s where India
is heading and then it will not be too far from the first two. I
believe that India will be a US$5 trillion economy in the next
10-15 years. What is important is to note the rate of change. It
took us 60 years since independence to be a trillion dollar
economy. By 2020, we should become the third largest
economy in the world. The foundation built on strong growth
will need a supportive governance environment at all levels,
with a commitment to ensure that entrepreneurship is
consistently supported and that the benefits of growth are
inclusive.
On India’s Growth Story:
What is important is to note the rate of change. It took us
60 years since independence to be a trillion dollar
economy. By 2020, we should become the third largest
economy in the world.
Mukesh Ambani, June 2011
What are the downside risks?
As India propels itself on its growth path, the greatest risk is to
leave behind the Indian soul- its culture, its heritage and its
values. It is super critical for India to grow on the back of these
advantages. As I mentioned earlier, there is a need for inclusive
and broad-based growth. Although India is marching on a
prosperous path, there is a need to do this in an equitable
manner – the benefits spreading far and wide. If income
generation does not happen in an equitable way, the
demographic dividend that India has can work against its growth
aspirations. For this, we must firstly reform our system of school,
college, university and vocational education in order to increase
opportunities for India’s children and youth. There has been
some progress at the primary level, but I am concerned that
severe bottlenecks remain at the secondary and higher
education levels. Our education sector needs a strong thrust of
liberalization with the removal of government controls that hinder
quantitative as well as qualitative growth.
Another imperative is that both our education and economic
policies need to be realigned to create at least 300 million
sustainable livelihoods, especially in rural and semi-rural areas.
We must realize that the fundamentals of the Indian economy
still rest on agriculture and hence this sector needs to be focused
on. Further, India must secure its food and energy supply needs
to grow at double digits. Certain dramatic changes in the face of
rising demand could put energy supplies at risk, but the search
for more energy resources must not stop at any cost.
For the next few months, it seems things have turned
pretty grim for India: Alleged corruption scandals may
mean capex will slow down, higher rates could make
projects unviable, high inflation is a big headwind for
consumption and the world is looking murky so India’s
exports could suffer – are you worried about these
developments?
I do not agree that things have turned grim for India. We should
not really deprecate ourselves. We have a vibrant society, a
vigilant media, an independent judiciary and are dealing with our
problems in a mature way. We have started on the journey of
systemic reforms to reduce corruption. The Old India is making
way for the New India. The transition will not be an easy ride, but
I have no doubt that we are moving in the right direction.
On the Recent Events in India:
The Old India is making way for the New India. The
transition will not be an easy ride, but I have no doubt
that we are moving in the right direction.
Mukesh Ambani, June 2011
As you point out, energy is probably one of India's biggest
challenges of the coming decade. What policy impetus do
we need to secure our future?
India’s energy security is today an important aspect of national
security. Continued search for energy sources should be
encouraged and emerging avenues like shale gas as also
alternative sources should be pursued. We need disruptive
policies, which will help India leapfrog and realize the growth
potential -- speedily and sustainably. World gas markets
should be integrated with the Indian gas markets. Artificial and
unjustifiable price differentials should go, since they distort the
energy economy and deter fresh investments. As we go ahead,
the government has to be more of an umpire or the tournament
organizer as opposed to getting involved in the game.
On India’s Energy Policy:
World gas markets should be integrated with the Indian
gas markets. Artificial and unjustifiable price differentials
should go, since they distort the energy economy and
deter fresh investments.
Mukesh Ambani, June 2011
A lot has happened in Reliance's energy business - the
entry of BP, the production cut back in KGD6 - how do you
see the energy business' future?
We see a very bright future for our energy business. Our
strategic partnership with BP will enable us to exploit the full
potential of our domestic oil and gas portfolio. BP will make
available to the partnership its sub-surface technical expertise
to maximize recoverable resources from the large domestic
exploration acreage. A joint venture to import gas from global
sources and invest in infrastructure to provide reliable supply of
gas to Indian consumers is also proposed in this partnership.
Our forays in the shale gas exploration business in the USA
hold great promise. All in all, energy will continue to be one of
our flagship businesses.
Reliance is investing in acquiring shale gas technology.
Experts suggest that India has large potential in shale gas.
Is shale gas the next big thing for India?
The development of shale gas plays has emerged as a game
changer for the US natural gas market. Last year, Reliance
entered into this fast-growing opportunity through three
upstream joint ventures. These joint ventures will materially
increase Reliance’s resources base and provide us with an
entirely new platform to grow while simultaneously enhancing
our ability to operate unconventional resource projects in the
future.
As you would know, shale is a common sedimentary deposit,
and India has major shale formations across the country and
hence there is huge potential in India. The challenge will be to
see if we are able to successfully tap this potential source. The
government system should also become more encouraging.
Has Reliance grown too big for the Indian economy? Put
in another way, has Reliance's growth over the past few
years put it ahead of where the Indian economy is
currently? Do you feel Reliance needs to go more global
to sustain its growth?
We have evolved, just as any dynamic and future-focused
business entity, in response to the developing globalization of
business environment. We are doing what is appropriate at
every stage of our evolution. RIL’s plans are, as always, closely
aligned to India’s national goals while we will seek to explore
new geographies and partners. We are proud to be an Indian
company with global aspirations.
Of all the businesses that Reliance is investing in, what
excites you the most?
Almost all our businesses address the unserved or
underserved needs of customers at the best quality and the
lowest costs. Hence, all of them excite me from a customer and
an impact point of view. I have tremendous expectations from
our broadband digital services business to change the game
and disruptively innovate to address India’s inherent
challenges. We hope to fundamentally transform the way
industries such as financial services, healthcare, media &
entertainment operate in India. I also see big potential for
broadband-enabled services to transform the
government-citizen interface, besides agriculture and the
informal sector of the economy, which employ the highest
number of people. It is something which we believe will
revolutionize the consumption of such services in the country –
and Reliance will lead the change.
On Reliance’s Most Exciting Future
Business:
It (broadband digital services) is something which we
believe will revolutionize the consumption of such
services in the country and Reliance will lead the
change.
Mukesh Ambani, June 2011
You are one of the most successful CEOs in the world
over the past decade. What has driven this success?
The role of my father Shri Dhirubhai Ambani has been
invaluable. He has been my teacher, my guide. He had very big
dreams for Reliance and for India and I have inherited those
dreams. The guiding principle has always been to evaluate if
we are creating value for the shareholders and, through the
assets developed by the company, contributing to meaningful
nation building. True success lies in the real assets that you
build, the institutions you nurture and the impact you can make
on society. Needless to say, behind every successful CEO
there is a passionate and a committed team that believes in his
vision and delivers against all odds. And, I have a fantastic
team at Reliance.
Reliance has delivered a compounded annual return of
20% over the past 20 years. What in your view are the
factors that have contributed to this phenomenal
performance? How do you see things panning out in the
coming decade?
Believing in and committing to India’s growth has been the
fundamental principle of Reliance’s evolution. Since inception,
Reliance has taken several strategic initiatives which we refer
to as value creating cycles. We have always invested in
building new competencies which form the basis for a larger
footprint in the future. In fact, even at the peak of the global
financial crisis a couple of years ago, the Group continued to
stay committed to its large projects. We are probably the only
company in the world to have successfully commissioned two
large projects including a large refinery at Jamnagar and the
hydrocarbons production facility at KG basin when the general
global trend was to cut costs and investments.
A strategic shift in the recent past has been our focus on
developing successful partnerships. Over the past five years,
Reliance has entered into over 50 partnerships. These
partnerships bring new products, competencies, technologies
and new markets. Growth through partnerships will be a key
part of our strategy. These partnerships will address both the
Indian markets as well as provide us with entry points into
global markets. Our partnerships in shale gas and joint
ventures in retail are a few examples towards implementing
this strategy.
For the future, we have stepped up our commitment to build
organizational capacity, management bandwidth and enhanced
ability to execute our strategic initiatives. We are committed to
build a process- and performance-based organization with a
On Reliance’s Future Growth:
A strategic shift in the recent past has been our focus on
developing successful partnerships. Over the past five
years, Reliance has entered into over 50 partnerships.
These partnerships bring new products, competencies,
technologies and new markets.
Mukesh Ambani, June 2011
shared vision. Commitment to India will be dominated by
investments in new petrochemical capacity, organized retailing
and digital services. The new projects announced by us represent
the largest ever investment by Reliance in a sector and largest
capital commitment in the global arena as well. We are gearing up
for the next phase of growth through a combination of our own
initiatives and forging new partnerships with leading companies.
Again, at the end of the day, any company is as good as its
people. We have been blessed with extraordinary talent,
unmatched passion and dedicated responsible leaders. We will
continue to invest in our human resources. Let me make one
thing clear here. Investment in a company’s human resources
does not mean only, or even primarily, financial investment. Far
more important is the need to create a value system and an
environment that supports our people to realize their full
potential as individuals and as teams. Honesty, integrity, trust,
team spirit and readiness to help others – and, especially,
readiness to encourage young talent in the company – these
are values that Reliance has been consciously promoting.
What is your advice to upcoming entrepreneurs?
My father Shri Dhirubhai Ambani had once said, “For those who
dare to dream, there is a whole world to win. Dream and dare. Do
not accept defeat in the face of odds; and challenge negative
forces with hope, self-confidence and conviction. I believe that
ambition and initiative will finally triumph. The success of the
young entrepreneur will be the key to India’s transformation in the
new millennium.” All of us, in a sense, struggle continuously all the
time, because we never fully get what we want. The important
thing to learn is that we not give up. The combination of India's
liberalized economy and business talent will power India into the
future. However, entrepreneurs should have a larger purpose and
build businesses that change the lives of millions of people.
Business should reconnect to society in a new format. This is what
India needs. Moreover, this is also the real entrepreneurial
opportunity and social transformation opportunity.
How do you unwind?
works. I never unwind in a sense – staying focused is
something that I have always considered important. However,
one needs to refresh oneself and my favorite way is to spend
time with nature and wildlife in the happy company of my family.
It recharges me and I learn a great deal from nature and its
miraculous ways.
Reliance Industries is rated Overweight by Morgan Stanley
Indian Energy analyst Vinay Jaising. The share price closed at
Rs944.50 on June 10, 2011.
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