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The Reliance Group – From Dhirubhai to Mukesh and Anil
Born in 1932, Dhirajlal HirachandAmbani (Dhirubhai) was the third son of a poor village school teacher.At the age of
seventeen, with only a matriculation certificate in hand, Dhirubhai went to Aden (Yemen), where he started work as an
attendant at a Shell service station and then went on to work as a clerk at the local affiliate of Burmah Shell. He returned to
India in 1958, with INR 50,000 and the dreamof establishing a petroleumcompany...
The Ownership Squabble at Reliance
Dhirubhai was believed to have died intestate, andwith no legal demarcation of ownership betweenMukesh and Anil,
the future of theRelianceGroup came under a lot of speculation. ButMukesh and Anil displayed no change in theirworking
relationship, and this status quo continued for a period of two years. However, in July 2004, at a boardmeeting of RIL, the
powers and authorities of the RIL Chairman and Managing Director, Mukesh, and the Vice Chairman and Managing
Director,Anil,were redefined.As per the changesmade, all authority to run theReliance group was vested inMukesh,with
all employees, includingAnil, reporting to him...
What Went Wrong at Reliance?
John A. Davis, co-author of the book Generation to Generation: Life Cycles of the Family Business, published by
Harvard Business School, said, “Succession is the ultimate test of a family business…”20 Research conducted by Mass
Mutual, aUS Life Insurance company, revealed that after the second generation takes over control, 67%of all family owned
business enterprises (FOBEs) split, and this figure increases to 90%by the time the third generation takes over.Gurucharan
Das, former CEOof Procter & Gamble (India), stated in his book, IndiaUnbound, “In a sense the life in joint families is like
life under socialism.They do notwork in the long run as socialismdoes not work...
Looking Ahead
In spite of the settlement, there are several financial and corporate governance issues facing the two Ambani brothers.
The statement of Kokilaben while announcing the agreement did not include the specifics of howthe RelianceGroup splitupwould
be accomplished.RICwas expected to be spun-off as part of the plan, but the future course of action related to the
debt the company owedRIL remained uncertain. JohnBand, president of ZoomCortex Ltd, an investment consultant, said,
“The conflictmay be over but we don’t knowhow the settlement is going towork or whether itwill help shareholders unlock
value (in the power and phone businesses).”...
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