Opinion

Mukesh Ambani vs Anil Ambani : Why Is Mukesh Ambani USD 82.2 Bilion Richer Than Anil Ambani?

Why is Mukesh Ambani more successful than Anil Ambani?

Mukesh Ambani’s vision and perseverance helped him built businesses of scale which any other company would fear to take on while Anil Ambani dabbled in many businesses and invested in sectors which would give quick returns. Anil Ambani could not even sustain the family telecom business, which was once started by Mukesh Ambani in 2002.

But Mukesh Ambani started a new telecom venture – Reliance Jio Infocom – 14 years after RCom started its operations and within three years, became the number three in the industry and forced his younger brother and others shut their telecom business.

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.

Mukesh Ambani vs Anil Ambani: What went Right/Wrong?

After both the brothers married, the usual things ( 🙂 ) happened. Finally they decided to separate the business.

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.

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

Mukesh had just one entity – RIL.

What was the difference between Mukesh and Anil?

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.

Horizontal Spread vs Depth Spread

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.

Waiting For Cash vs Quick Cash

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.

Seeking Investors vs Project Management

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.

Grand Vision vs Execute Vision

Mukesh has 25X grand vision than Anil and he has patience to execute that vision. Look at the World’s biggest startup -JIO.

Create Business vs Profit From Market Trend

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.

Long Term Implications vs Quick Returns

Do you see the the difference between the two brothers and their basic thinking processes and the approach to business?

Mukesh Ambani always thinks in the long term implications, thereby actually de-risking his business.

Anil is myopic. His casual flirting with the “quick returns in every sphere” has cost him a lot today

Cash Is King , Don’t Get Into Business That Can Be Disrupted & Stick To Core Competency

With the wisdom of hindsight, one could say that there are several learnings for Anil Ambani.

Cash is king: Unlike his elder brother who had large cash flows from RIL most of the junior Ambani’s wealth was in marketcapitalisation. This compelled him to use leverage to grow business. Every business house needs a cash cow. In the case of Tatas it is TCS. ADAG did have BSES (later Reliance Energy) but the cash was just not enough.

Dont get into business that can be disrupted: Anil Ambani’s forays into entertainment and telecom lost money because of disruption. The entertainment and distribution industry lost money due to digitisation. Adlabs was the biggest processor of films but today movies are beamed to theaters through satellite. Similalry, today only those telecom companies with 4G capability are in a position to survive.

Stick to core competency: Anil Ambani inherited Reliance Communications as part of settlement although it was Mukesh’s baby. His core area was capital raising and capital being the raw material for finance he could have concentrated energies there. As against Anil who got into half a dozen different businesses – telecom, entertainment, power, finance, defence and ports RIL remained largely focused on Energy and telecom. True the group did diversify into retail and media but this was only a small fraction of its business.

Operation vs Finance

✓ When both brothers working together under the Great Leadership of Dhirubhai, Mukesh was handling the operation while Anil was involved in financial issues and fund generation and meetings and engaging investors. So he looks everything on Excel sheets while Mukesh understand the ground level realities.

This might be a reason that Anil’s RCAP and Reliance Nippon insurance were doing great.

✓ Mukesh does a foolproof planning, You will be amazed to know that when RCom was launched then we have got a data from people sitting at DAKC (his core group at Dhirubhai Ambani knowledge city) before executing the network at ground level in villages and towns and the data was much better than census data carrying exact population, Name if Gram Pradhan, location ring where we can install the tower etc.

✓ Mukesh knows the man management and respect all employees while Anil is only busy in balance sheets. The moment this change happened in RCom every where Chaos started happening, from vendors payment to electricity bills as he wanted everything to be handled from corporate office.

Trader vs Entrepreneur Mindset

Basically Anil Ambani has a traders mindset – get a license, get a loan, and milk that. He has not produced any innovative entrepreneurial idea – he has never even tried to build a better mice trap.

Mukesh Ambani is an entrepreneur par excellency. The refinery he built – under cost and on schedule – can take any type of oil, and its margin per barrel of oil is one of the highest in the world. When he was setting up Reliance retail his minions were all over Iraq buying up all the surplus refrigeration trucks and equipment that the US army had shipped for the Iraq war for cents on the dollar.

Predicting The Future

Now if you look back a little in the past, Anil Ambani was thired richest man in India. Back then Reliance Telecom was doing veey well with CDMA and GSM dominating the Industry back then.

Then comes the era of 3G AND 4G networks. From here the decline of Reliance Telecom began.

So , as Anil’s Reliance Telecomm didi’nt predicted the future and was facing some loss, the big brother came in to buy his younger brother’s firm and bought all the optical cables with it. We all know how important optical cables are to transfer data, as they are the fastest to transfer data with minimum losses.

Now, thus decision of Mukesh Ambani proved to be one of the best decision of his life. As otger telecom companies( Airtel, Vodafone, Idea) had to rent the cables to provide 4G data to us, thus had absurd prices, but Reliance already owned undersea Optical cables, and thus invested heavily ( about $30 billion) in setting up the towers, and other miscellaneous things and thus, JIO was born.

Its all about Vision, if you can look and predict future and invest ypir money , you ought to turn a profit.

That’s why Mukesh Ambani is Richer than Anil Ambani.

Career of Anil and Mukesh Ambani

Beginning

Anil Ambani joined Reliance in 1983 as Co-Chief Executive Officer and is credited with having pioneered many financial innovations in the Indian capital markets. For example, he led India’s first forays into overseas capital markets with international public offerings of global depositary receipts, convertibles and bonds. He directed Reliance in its efforts to raise, since 1991, around US$2 billion from overseas financial markets; with a 100-year Yankee bond issue in January 1997 being the high point. After which people regarded him as a Financial Wizard.

Mukesh Ambani joined Reliance in 1981 and initiated Reliance’s backward integration from textiles into polyester fibers and further into petrochemicals. In this process, he directed the creation of 60 new, world-class manufacturing facilities involving diverse technologies that have raised Reliance’s manufacturing capacities from less than a million tonnes to twelve million tonnes per year.

Business Philosophy of Mukesh vs Anil Ambani

Mukesh Ambani has always been touted as the next Dhirubhai Ambani with skills and business styles in matching with the Reliance founder. Ambani’s Reliance group always believes in doing things on a large scale with Reliance Retail and Reliance Petroleum projects being two examples. Anil Ambani, on the other hand, forms the new line of businessmen with expertise in Finance. He is believed to follow new age business principles in running his ADAG group companies.

The difference in Mukesh and Anil lies in focus and execution. While Mukesh keeps a close watch on his business and his strategies and manages the business from the micro level but Anil Ambani lacked that acumen.

The gap in the valuation of Anil and Mukesh led groups could be attributed to the stark contrast in their managerial style. It isn’t just a case study but a life lesson for all aspiring businessmen.

The Managerial style of both brothers is very different. The leadership style of Mukesh Ambani epitomizes the traditional Indian style running a Hindu undivided family business.

He involves himself in every large-scale project, and is known for his ability to visualize, conceive and implement mega projects down to the last screw and nail. He has planned and overseen some of the country’s grand projects, including the Rs 15,000 crore Reliance Petroleum plant in Jamnagar, the single biggest investment in post-liberalization India.

Monopoly In The Markets

He is known to work for monopoly in the markets, similar to his father. In the early days of the business his father monopolized thread-making business, and now he is himself doing the same in the telecommunication market.

Anil, on the other hand, is more like a western businessman. He is flashy, flamboyant, urbane, high-profile, and accessible, he used to be dear to the media as he regularly threw lavish parties for them.

Data

Mukesh Ambani believes that the next biggest opportunity lies in “Data”. In his own words, “Data is the new Oil”.

The Ultimate Leaders

A formidable team helps Mukeshmake such decisions and, more importantly, follow through to steer the colossal, and complex, empire that he inherited from his legendary father Dhirubhai Ambani to new heights. In that team are family and friends, old aides and new professionals, business heads and ‘environment managers’.

The Ultimate Leaders: Nita Ambani

The only woman in the top set, Mukesh’s wife is called ‘bhabhi’ by one and all. Although she is best known as the woman who turned around the Mumbai Indians cricket franchise , Nita plays a larger role in RIL than is widely perceived. When brothers Mukesh and Anil were involved in a bitter fight for the Reliance empire, it was said that one of Anil’s grouses was that Nita, Anand Jain and Manoj Modi mattered more in the company than him.

Nita played a key role in RIL’s decision in 2010 to buy 14.8% in East India Hotels, where she is now on the board of the company along with Manoj Modi. She has also been involved in RIL’s retail operations.

Nita made her mark as part of the team that built the Jamnagar refinery, particularly her initiative to transform the arid zone into a green belt with mango plantations. She is also the founder-chairperson of the Dhirubhai Ambani International School and is actively involved in the Reliance Foundation. A gracious host, Nita throws lavish parties at the new Ambani residence, Antillia, where politicians, cricketers and Bollywood stars rub shoulders.

The Ultimate Leaders: Manoj Modi

His visiting card carries no designation. He does not officially head any business. And he’s not on the board.

Yet, Modi is an inseparable part of every big move RIL makes and has a say in pretty much each of its businesses. There is no designated CEO at RIL, but if there were to be one, Manoj Modi—55, Mukesh’s classmate from engineering college— would be the man.

MM, as he is called, is a hands-on, serial builder of large projects for Reliance: the Hazira petrochemical complex, the Jamnagar refinery, the first telecom business, Reliance Retail and, now, the 4G rollout. He won Mukesh’s confidence with his execution of the Jamnagar refinery when he refined the art of dealing with vendors and contractors, often in an aggressive language.

Mukesh vs Anil: why did one Ambani brother go bankrupt, when the other became Asia’s richest man?

Back in 2008, Anil was named by Forbes the sixth richest person in the world. His net worth was an estimated whopping US$42 billion at the time. But just 12 years later the once-powerful businessman claims he is worth nothing.

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