View from Delhi: Reliance leads India Inc with ambitious plans

These are record-breaking times for India's corporates. Company after company is breaking records one after another, led by giants such as Reliance Industries and Tatas.

Yet another high was reached last week when Reliance Industries, which happens to be the country's biggest company, became the first to clock $1 billion net profit.

In a country where even a billion-dollar turnover is considered a mark of distinction, Reliance was able to score a first that will remain unbeaten for a long time.

This billion-dollar obsession is a new thing for Indian corporates. Two IT firms, Infosys Technologies and Wipro Technologies, which happen to be the No 2 and No 3 software companies, crossed billion-dollar sales last week and became the toast of the town. There are probably not more than half a dozen such companies in India with billion-dollar sales.

Meticulous

Reliance Industries became a member of the billionaires' club years ago, when the founder of the group, Dhirubhai Ambani, was alive. He was so meticulous in his planning that he knew when he would make it. He also knew when Reliance would become India's No 1 company, for he had it all worked out.

I remember dropping in on him at his Nariman Point office in Mumbai one day where I found him poring over figures on some paper slips. That was when Dhirubhai was hardly known outside Mumbai or even outside the artificial silk industry. He said that he would overtake Tata Iron & Steel Company (Tisco), the jewel in the Tata crown, by such and such year.

He also knew how he would do it. He had just set up his own textile mill near Ahmedabad in the state of Gujarat and was in the midst of a big advertisement campaign. But it was a small business, with a turnover of less than Rs1 billion or $60 million. Tata Steel was far bigger, almost ten times as big. How would he make the leap?

Although he didn't say so, it was clear he had a definite plan of action in his mind. It would be a case of upward integration, in modern management lingo. He would go on from sarees to synthetic fibres, from fibres to other petrochemicals, from petrochemicals to oil refining and from refining to oil drilling.

The Reliance empire would take a seamless route from textiles to crude oil, and dominate the corporate world.

And that is what happened and it happened so quickly, right before our eyes, that many of us didn't realise it was happening. Dhirubhai went on to set up a large petrochemicals plant near Surat, and an oil refinery, the largest in India if not Asia, near Jamnagar, not far from the place where he was born.

He then started drilling for oil on the east coast and also near his refinery, and struck gas in such large quantities that it is supposed to be the largest gas finds in this part of the world.

When he passed away two years ago, his empire had overtaken every business group in the country, including Tatas. The group has since diversified into telecom and electric power, but oil is still its main business.

There are plans to set up hundreds of petrol pumps across the country, which will make the group bigger than any other oil company operating in India.

His two sons, Mukesh and Anil, are now managing the business. What is their next goal? An entry into Fortune 100, and who knows, later in the Fortune Top Ten. In the meantime, the company aims to double turnover to Rs1,000 billion in five years.

- The author is an India-based senior economic adviser