19, Walchand Hirachand Marg
Growth through Commitments. We care about: Quality; Research & Development; Health, Safety & Environment; Human Resource Development; Energy Conservation; Corporate Citizenship.
Reliance believes that any business conduct can be ethical only when it rests on the nine core values of Honesty, Integrity, Respect, Fairness, Purposefulness, Trust, Responsibility, Citizenship and Caring.
The essence of these commitments is that each employee conducts the company's business with integrity, in compliance with applicable laws, and in a manner that excludes considerations of personal advantage.
We do not lose sight of these values under any circumstances, regardless of the goals we have to achieve. To us, the means are as important as the ends.
Reliance Industries Ltd. is India's largest private-sector company, generating revenues of $19.97 billion, or more than 3 percent of India's total gross domestic product. Founded as a textiles company, Reliance has successfully completed a backward integration strategy that has transformed it into India's largest private-sector petrochemicals company, and number two overall (behind state-owned India Oil). Reliance's petrochemicals division is fully integrated and includes exploration and production; refining (the company has built one of the world's largest and most modern refinery complexes at Jamnagar in Gujarat); marketing, through a chain of more than 1,000 service stations; and the production of petrochemicals, including polymers, polyester, polyester intermediates, and others. These chemicals are used to support Reliance's continued textile operations, which focus particularly on the production of polyester fabrics. Following the 2004 acquisition of Trevira, the company has become the world's leading polyester manufacturer, with production levels topping 25 million meters per year. The company's textile range includes other fabrics, such as acrylics, and finished garments.
Reliance Industries represents the continuation of India's greatest corporate success story since the country's independence. Founded by Dhirubhai H. Ambani in 1958, Reliance grew to include holdings in energy production and distribution, telecommunications, and capital finance. After a public feud between Mukesh D. Ambani and younger brother Anil, these operations were split off into a new company controlled by Anil Ambani. Reliance Industries is listed on the Mumbai Stock Exchange. Mukesh Ambani is company chairman and managing director.
Rags in 1958
Dhirajlal Hirachand Ambani (Dhirubhai was a nickname) was born to a lower middle class schoolteacher's family in Chorwad, an impoverished village in Gujarat in 1932. Instead of becoming a teacher himself--because the family could not afford to send him on to university--the young Ambani traveled to the port city of Aden at the age of 16. There, Ambani began working as a clerk pumping gas at a service station. Ambani remained in Aden for nearly ten years, rising to become Burmah Shell's marketing manager. By then, however, Ambani had begun to dream of founding his own business.
Ambani quit Burmah Shell and for a time worked in the insurance field. In the late 1950s, the political situation in Aden had become increasingly unstable. In 1958, therefore, Ambani decided to return to India and start up a new business as an exporter of Indian goods to Aden. Finding housing for his young family in a Mumbai slum, Ambani at first rented office space, or rather a desk, for two hours per day. Initially, Ambani's exports included spices as well as fabrics.
Textiles, starting with textile yarns, which Ambani sold to textile manufacturers, provided Ambani with his strongest sales, and quickly became the company's focus. Ambani also rapidly proved himself adept at negotiating the intricate bureaucracy of the socialist Indian government. In particular, Ambani was able to develop a network of relationships with the country's political leaders, including Prime Minister Indira Gandhi. In this way, Ambani was able to develop a thriving business importing and exporting nylon, rayon, and polyester.
In the mid-1960s, Ambani developed still greater ambitions, becoming determined to enter textile manufacturing. The company set up its first factory in 1966, placing him in competition with his own customers. Success in the new venture came quickly, with the launch of the highly popular Vimal fabric brand. By the end of the decade, Ambani operated four factories. Part of the company's success came from its determination to use only the most modern, highly efficient production equipment. In this way, the company easily outpaced competitors, which relied on equipment often decades old.
Into the early 1970s, however, India's economy remained dominated by a handful of families; between them, and under the auspices of the Indian government, they controlled virtually every industry. This included the textile industry, whose distribution side soon formed an obstacle to the growth of Ambani's fabric sales. In response, Ambani became determined to set up his own distribution arm, which later included not only the sale of raw fabrics, but also the company's own clothing fashions.
Public Offering Revolution in 1977
The "old boy" network that dominated India's political, industrial, and financial circles also meant that Ambani had to look elsewhere for investment capital to back his growing ambitions. Cut off from funding from the Indian government, Ambani instead took the then-revolutionary step of turning to the stock market. In 1977, Ambani launched Reliance Textile Industries' initial public offering (IPO). The IPO, of 2.8 million shares, raised $1.8 million, and was considered among the largest in India at the time. By circumventing the traditional reliance on the state for capital investment, Ambani sparked a revolution in India, and was widely credited for setting the stage for the country's emergence as a major regional industrial center.
Ambani's deftness at working the Indian bureaucracy enabled him to take advantage of the country's arcane license system, which also imposed stiff import duties, virtually assuring license-holders of a captive market. In 1981, for example, Ambani received a license to construct a factory in Patalganga to produce polyester filament yarn. Soon after the factory launched production, the Indian government sharply raised import duties on polyester yarn. The Patalganga plant completed its second phase in 1985. The following year, the site added a new polyester staple fiber plant as well.
Into the early 1980s, Ambani was joined by sons Mukesh and Anil. Both had been sent to the United States for their education and, upon their return to India, played a prominent part in implementing Reliance's next phase of growth. Just as the company had moved from the sale of textiles to their manufacture, Reliance became determined to continue its backward integration in order to produce the chemicals from which the textile yarns were made.
The company's new strategy led it to enter the petrochemicals industry, building its first plant for the production of purified terephtalic acid in 1986. In that year, following a stroke that left Dhirubhai Ambani partially paralyzed, the company's day-to-day direction was taken over by brothers Mukesh and Anil. Their father nonetheless remained chairman and the guiding hand of the business's growth until his death in 2002.
The following year, the company added a unit for the production of linear alkyl benzene, followed by the opening of a paraxylene plant in 1988. The company then began developing a new petrochemicals complex at Hazira, which began production of vinyl chloride monomer and polyvinyl chloride. In this way, the company developed market leadership both in polyesters and in polymers. By 1992, the company had launched production of high-density polyethylene at the Hazira complex as well.
Indian Petroleum Giant at the Start of the 21st Century
Reliance's vertical integration strategy naturally led to an interest in extending its operations to petroleum refining, and even to exploration and production. Yet these sectors remained tightly under state control, following the nationalization of the Indian oil industry in 1976 amid the global oil crisis. Although the state-owned oil companies were able to meet domestic demand through the 1980s, by the early 1990s, the country's existing oilfields were showing signs of depletion. At the same time, demand had been rising steadily, yet the oil companies, propped up by state subsidies, were too strapped for cash to invest in further exploration efforts. An initial attempt to liberalize the production and refining sectors failed, however, amid strong union protests.
In the meantime, Reliance made preparations for its move into the petroleum industry. In 1991, the company set up a new subsidiary, Reliance Refineries Private Ltd., clearly signaling its objectives. The subsidiary later changed its name to Reliance Petroleum Limited, and in 1993 launched a public offering, which at that time was India's largest ever IPO. While Reliance affirmed its plans to construct India's largest oil refinery, the company began developing its petroleum products marketing and distribution operations, including a network of some 1,000 service stations.
Reliance continued to pioneer financing channels in India. In 1993, for example, the company became the first Indian company to raise capital on the foreign market, through a Global Depositary Receipt (GDR) issue in Luxembourg. The company completed a second successful GDR issue in 1994. The company used the new capital in part to expand its petrochemicals wing, building the world's largest multi-feed cracker at the Hazira site. The company also added production plants for monoethylene glycol, polyethylene, and purified terephthalic acid. The new units launched production in 1998.
Reliance's opportunity for entry into petroleum refining came in 1997, when the Indian oil industry reached a state of near collapse. Unable to fund further exploration operations, and lacking the capital to expand its existing production, the government was forced to liberalize the sector. In that year, Reliance announced a plan to build one of the world's largest and most modern petroleum refining complexes in Jamnagar, Gujarat, at a cost of some $6 billion. The government agreed to the plan, and granted the company the right to import petroleum directly, rather than going through Indian Oil, which helped Reliance greatly drive down operating costs.
Constructed in record time, the Jamnagar site was commissioned in 1999. The site's production capacity was double that of any other Indian refinery and ranked among the top five in the world. The addition of the new facility also placed Reliance at the top rank of the country's private-sector companies. In 2002, Reliance Petroleum was merged into Reliance Industries, which then became one of the country's top three companies, including state-owned entities.
Breaking Up in 2006
Dhirubhai Ambani died in 2002, and the Ambani brothers took over as heads of the company. In that year, the company increased its dominance of the country's petrochemicals sector through its acquisition of main private-sector rival Indian Petrochemicals Corporation. Also in 2002, Reliance launched a diversification effort, targeting the telecommunications sector, especially the fast-growing cellular phone market. Reliance set up its own phone service, Reliance Infocomm, in that year.
Yet the petroleum industry remained the company's major growth focus. In 1999, the Indian government auctioned off 25 blocks for exploration; bids were given in the form of royalty percentage offers. Reliance won 12 of the blocks and promptly set in place its own team of exploration experts, backed by oilfield services from Halliburton and Schlumberger. Reliance's investment quickly paid off with the discovery of natural gas reserves estimated at some 14 trillion cubic feet, the largest natural gas field discovered in India in decades, in the Krishna-Godavari Basin in the Bay of Bengal. In 2004, the company struck again, locating a new gas field in the Bay of Bengal, off the Orissa Coast.
Buoyed by its successful exploration efforts, Reliance unveiled an ambitious expansion program for the second half of the 2000s. The company's plans included a $6 billion extension of the Jamnagar site, doubling it in size and making it the world's largest refinery by 2009. The company also announced that it intended to spend $10 billion on further oil exploration efforts, targeting the international market. In this way, the company hoped to increase its production tenfold by the end of the century. At the other end of the petroleum market, the company launched a $1.5 billion expansion of its Reliance gas station chain, with the goal of 6,000 stations. The company also expanded internationally, becoming the world's leading manufacturer of polyester yarn with the acquisition of Germany's Trevira. In addition, the company boosted its telecommunications wing, acquiring U.K.-based FLAG Telecom, an operator of a 50,000-kilometer underwater fiber-optic cable network.
In the meantime, rising tensions between Mukesh and Anil Ambani came to a head in late 2005, when a long-simmering disagreement over company strategy broke out into an open and highly publicized feud. In the end, a truce was brokered by the brothers' mother, who proposed a breakup of Reliance Industries into two roughly equal components. Mukesh Ambani remained as head of the company's petroleum, petrochemical, and textiles operations, and Anil Ambani regrouped the company's telecommunications, energy, capital finance, and other operations into a new company. The breakup of the company took place in 2006. As a result, Reliance Industries emerged as a focused and highly integrated petroleum and petrochemicals challenger to the global heavyweights.
Reliance Industrial Investments and Holdings Ltd.; Reliance Infrastructure Limited; Reliance Middle East DMCC (U.A.E.); Reliance Netherlands B.V.; Reliance Petroleum Limited; Reliance Retail Limited; Reliance Strategic Investments Limited; Reliance UK Ltd. (50%); Reliance Ventures Ltd.
Indian Oil Corporation Ltd.; Hindustan Petroleum Corporation Ltd.; Bharat Petroleum Corporation Ltd.; Indian Petrochemicals Corporation Ltd.; Mangalore Refinery and Petrochemicals Ltd.; Kochi Refineries Ltd.; Chennai Petroleum Corporation Ltd.; Parker Agrochem Exports Ltd.