Case Studes in Entrepreneurship, Family Businesses, Social Entrepreneurship

Code :FMB0005

Year :2005

Industry :Conglomerates

Region : India

Teaching Note: Not Available

Structured Assignment : Not Available

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Introduction: Within a span of three decades, Dhirubhai Ambani transformed a fledgling textiles business into the Reliance Group, India’s largest business house.With revenues amounting to 3.5%of India’s GDP in 2004, the RelianceGroup contributed more than 6%to the national exports and almost 10%of the country’s indirect taxes.3 Reliance Industries Limited (RIL), the Group’s flagship company was India’s largest private sector company, featured in the 2004 Fortune Global 500 list, and rated as India’s best-managed company by themanagement-consulting firm,A. T. Kearney.

The death of the Reliance Group patriarch, Dhirubhai Ambani, in 2002, gave rise to ownership and control issues between the two Ambani sons,Mukesh and Anil. As the group’s shareholders became aware of the family “squabble”, the image of Reliance suffered with Anil accusing his elder brother Mukesh, the then Chairman and Managing Director of RelianceGroup, of trying to sideline and override his power and authority. The eight-month ownership battle brought to light heretofore-unknown corporate governance and transparency issues in the organization, and created an atmosphere of uncertainty surrounding the future of Reliance. The squabble ended with Kokilaben Ambani, wife of the late Dhirubhai, splitting the interdependent companies of theReliance Group into two parts and effecting a compromise between her two “warring” sons. This division gave rise to questions pertaining to shareholdings and synergies, aswell as the future course and success of the two separate Reliance entities.

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