Raising funds in the midst of a pandemic is no joke. Mukesh Ambani should be applauded but is his nervousness justified?
On the day Reliance Industries held its first virtual annual general meeting, India’s largest and most valuable private enterprise announced that search giant Google has invested $4.5 billion into Reliance’s Jio platforms, the conglomerate’s digital arm. This raises the amount that India’s richest man, Mukesh Ambani, has raised for Reliance Jio to close to $20 billion, an impressive feat in the best of times. But given that the world is suffering a healthcare meltdown, thanks to the Coronavirus pandemic, this is an extraordinary feat. In all, Google plans to pump $10 billion over the next five to seven years in the Indian market to help accelerate the adoption of digital technologies. A flurry of deals made in recent times has given the much-needed financial backing to Ambani’s ambition to morph Reliance from an energy company to an e-commerce giant. Almost all the funds have been raised by American technology firms and financial institutions. Both Google and Facebook are part of the firm, much like its parent Reliance Industries. Jio is trying to become completely vertically integrated. It is doing it all — from creating 5G infrastructure at home to manufacturing smartphones for users, the creation of software services like Jio Meet as well as expanding Reliance’s huge media play by owning a host of entertainment and news channels. The biggest single positive here is that Mukesh Ambani, like his father Dhirubhai Ambani before him, is a believer in India and the capabilities of this nation. He plans to build capacity within the country rather than import it. This was something made vitally important to every single Indian after the fire-breathing Chinese Dragon singed us last month. We can argue ad nauseam about how China might have lost the Indian market for a couple of generations but nothing speaks like action. While he might not look like it, Mukesh Ambani is a man of action. And for all this, he must be applauded.
However, and there’s always a however, the way Reliance has garnered its funds and the fact that it is on the verge of becoming a monopolistic venture in telecommunications and technology services with only a couple of rivals — one of which is almost bankrupt — it does raise some concern. It remains to be seen how Ambani will deploy the funds raised in the Indian market. Will he buy out rivals in the e-commerce and groceries space? Or will every Indian have to move from one Reliance store to the next, albeit in the guise of other brands, thanks to Reliance retail owning the rights of several multinational brands in India? Or is there another way of looking at it? Should India nurture and raise national champions like Reliance Industries? The old guard of Indian companies could not scale enough or be scaled in different areas. As for Reliance, the pivot towards Jio and telecom has been a long time coming. The family feud meant that Mukesh Ambani had to wait for a decade and for his brother to mess up to get back into this space. He is not wasting any time now and his ambitions have scaled up from the time he launched Reliance Infocomm. With a clear roadmap for the future, his execution capabilities and striking a string of deals, Mukesh Ambani has proved just how an extremely competitive industry like telecom can yield striking returns. He is also securing the future for the Ambani clan for another half a century and possibly doing more to secure India’s digital future away from the Chinese than any other individual.