Ambani Brothers and In Laws

 

Both Mukesh and Anil sat quietly (in the same room) observing Dhirubhai conducting business for years. So practically, they were trained by the same man with the same input and in the same workshop. Yet, one guy couldn’t replicate the success of another.

Why? Why both the brothers, with enough capital available at their disposal, looked at the business ( telecom ) so differently?

Dhirubhai Ambani, the founder of Reliance Industries died in 2002 after suffering a massive stroke.

The patriarch hadn't left a will and his elder son Mukesh Ambani became chairman and managing director of Reliance Industries Ltd while his younger son, Anil Ambani was made vice-chairman.

Mukesh reportedly tried to oust Anil from the board. Mukesh Ambani and his brother Anil Ambani have been in a bitter feud ever since the death of their father in 2002. Ambani's death sparked a feud for control which ultimately lead to the split of the Reliance Group.

Their mother brokered a demerger in 2005, which gave Mukesh control of oil and gas, petrochemicals, refining and manufacturing while Anil took reign over electricity, telecoms and financial services.

Since the split, the brothers have feuded via press conferences, meetings with the ministers, letters to the Prime Minister, interviews to news channels and dragging each other to court.

June 2005: Their mother, Kokilaben, intervenes and splits Reliance Group into 2

December 2005: The split is approved as Mukesh gets Reliance Industries & IPCL, and Anil gets Reliance Infocomm, Reliance Energy, and Reliance Capital.

Before the separation, Mukesh managed Petrochemicals. He also built the Telecom business single handedly. Anil was handling Finance and energy/electricity.

Anil was the the public face of Reliance. He also interfaced with the investors. Mukesh kept himself busy building the assets and mostly stayed in the background.

Initial idea was that allow the brothers to keep the business(es) they were handling. Anil did not agree. On request from Kokilaben, Mr Kamath of ICICI became the advisor. It was decided that no business must be split. A business in its entirety must be transferred to one party. Mukesh was deep into Petrochemical business and he was managing it well. Anil was managing finance. So it became apparent that Mukesh would get Petro chemicals and Anil would keep the finance and energy business.

Anil wanted Telecom, though it was a Mukesh's baby, to maintain the parity. Mukesh was reluctant. Because he had grand plans for telecom.

After a lot of heart burn, Mukesh handed over Telecom and more than 25000 crore ( the actual amount might vary but I remember it was in that magnitude) cash to Anil.

[ The valuation of Reliance Telecom went UP and DOWN in just few weeks. Market manipulation ? That’s another story. :) ]

So after separation, Anil had large cash, new fast growing Telecom, old finance and promising energy business.

Mukesh had just one entity - RIL.

Now Anil was more than happy. He had new found freedom, large cash. Now the brothers could decide the future course of their own business. Till then, Anil was known as the face of Reliance, more of a party hopping type and Mukesh a backroom type businessman.

Now Mukesh started attending the public parties and Anil started investing in many businesses to prove that he too was a business builder.

The initial days were great. Anil started flying high. Mukesh stayed busy with RIL.

The Bombay High Court approved the de-merger for Reliance Industries shareholders after it was accepted by the Bombay Stock Exchange and the National Stock Exchange.

Mukesh Ambani got Reliance Industries and IPCL, while Anil was given control of Reliance Infocomm, Reliance Energy and Reliance Capital.

Some shareholders opposed the decision saying it was more a family arrangement than a business separation.

November 2006: Anil Ambani's Reliance Group challenges a gas contract signed by Mukesh's company during the split.

2009: Brothers live close-by but barely speak

The Ambani brothers lived in "Seawind" in an upscale neighborhood of South Mumbai, and restricted meetings to family gatherings or conferences. The Guardian reports:

"There's no conversation, let alone warmth. Sometimes they are forced to shake hands, but they do not look at each other," said the friend.

"It's a tragedy because they were a class act. One used to start a sentence and the other would finish it. How does that kind of chemistry go wrong?"

May 2010: Ambani's mother brokers a peace agreement between the brothers

Kokilaben brokered a peace agreement between the brothers. Officials of Reliance Industries Ltd. and Anil Dhirubhai Ambani Group both received notes that said the Ambani brothers would draft a non-compete agreement, to replace an earlier one that obviously didn't work.

What was the difference between Mukesh and Anil?

Their basic way of thinking.

Anil loved to dabble with too many things. That gave him high. Mukesh loved doing one thing right. Anil looked for horizontal spread while Mukesh looked for the depth.

If Mukesh was an Aircraft Carrier, then Anil was a frigate. If Mukesh was an elephant, Anil was a leopard.

Mukesh would think of a businesses at a much larger scale. He could wait for years for the cash. But he always wanted his business to run at a certain scale. On the other hand, Anil always wanted the quick return of cash. In fact, he would collect cash from the public first then take years to build a business. Mukesh would take years to build a business and then go public much later.

So Anil became the darling of quick return seeking investors and Mukesh became GOD for the project management professionals.

Anil loved flashy lifestyles, rarely managed business at a micro level. It was said Mukesh could conduct a meeting for hours without taking a loo break. He was always the God of details. You must study him in depth to understand his personal contribution to any business.

Their businesses are easily differentiated today because of their personal characteristics, not because one business was more profitable than the other or the luck factor.

Study both brothers carefully and you would know this was to happen. I hate to say "I told you so.", but I always maintained Mukesh would race ahead though many of my corporate friends disagreed at the time of the split of Reliance.

Mukesh has 25X grand vision than Anil and he has patience to execute that vision.

Look at the World's biggest startup -JIO.

Who would invest and create a new telecom business after handing over the Reliance Telecom to his brother?

A madman or Mukesh Ambani.

Years back, Mukesh chose CDMA over GSM because he believed in DATA. Anil never understood that. To him telecom was just another business like the film production! That’s why Reliance Telecom failed after Anil took over. He didn’t have the passion for the business.

To mukesh, telecom meant different thing altogether. That's why he is back with JIO.

Mukesh creates business. Anil profits from the market trends.

Is the difference obvious between the brothers?

One more indicator :

After the split, Mukesh said he would NOT waste a single minute in future. Anil publicly thanked Tina, his wife, for guiding him through the split and said “we (together) did it!” !!!

Do you still need more explanations why one brother is more successful than the other?

Tina had a successful career before marriage. Unfortunately, she got caged in that limited success. She and Anil were like any other regular rich couple and Tina lived a predictable life.

On the other hand, Nita took Mukesh as her mentor and friend. It's said Nita would listen to Mukesh's dream projects with rapt attention late into night. Mukesh needed somebody to bounce his ideas while they were still at ideation stage and Nita was eager to learn from Mukesh's entrepreneural journey. It was almost like Nita was dreaming along with Mukesh. While Mukesh was away at the project site for a long time, it's said Nita landed there out of curiosity and got involved with the development and ancillary activities. She developed the zeal to learn. While Tina watched Anil's projects falling apart, Nita was playing an active role in a growing empire. Both Anil and Tina thought since they attended the glamorous social parties, they were the social face of the Ambani family. They presumed Mukesh and Nita to be drab, unglamorous. They forgot one simple fact that one needs only a good event manager and good amount of money to throw the most talked about party in the town. So Tina was on a fragile ground. People forget it takes great efforts to make money not to spend money. Tina's so called superior industry connection and social popularity got busted when everyone became eager to be on Nita's phone book and loved to be seen at her party. Simplistically, while Tina was consuming her existing wealth to stay competitive, Nita was building her wealth. It was natural that Nita would outshine Tina after some time.

Sad to see Mukesh Ambani losing faith in his basic traits and adopting populism. The exogenous factors finally have started to impact Mukesh Ambani. The spurious elements creeping into his thought process? If yes, the downward slide begins.

It wasn’t really that difficult to make an Anil Ambani out of Mukesh Ambani, after all!