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Mukesh Ambani’s Reliance Industries Runs Into Trouble Mukesh Ambani’s Reliance Industries Runs Into Trouble
(about 1 month later)
NEW DELHI — With his full frame, studious face and good-boy hairstyle, Mukesh Ambani, the richest of all Indians whose incomes are known, has the appearance of a dependable family man who would make money for those who trust him. It is a process he often calls “creating value” for people, whom he usually refers to as “shareholders.” NEW DELHI — With his full frame, studious face and good-boy hairstyle, Mukesh Ambani, the richest of all Indians whose incomes are known, has the appearance of a dependable family man who would make money for those who trust him. It is a process he often calls “creating value” for people, whom he usually refers to as “shareholders.”
But this image has been diminished of late, even though his Reliance Industries Ltd., India’s largest privately owned company, which has interests in oil and gas, retail and telecommunications, is richer than ever.But this image has been diminished of late, even though his Reliance Industries Ltd., India’s largest privately owned company, which has interests in oil and gas, retail and telecommunications, is richer than ever.
This month the government imposed, yet again, a penalty on the corporation for failing to meet a predetermined level of production of natural gas from India’s largest reserve, situated in a river basin in southern India. The latest penalty takes the total to more than $2.3 billion, an amount that Reliance would have to forgo when it tries to recover its costs from the sale of the natural gas.This month the government imposed, yet again, a penalty on the corporation for failing to meet a predetermined level of production of natural gas from India’s largest reserve, situated in a river basin in southern India. The latest penalty takes the total to more than $2.3 billion, an amount that Reliance would have to forgo when it tries to recover its costs from the sale of the natural gas.
A few politicians and government officials have alleged that Reliance has deliberately reduced gas production in the hope that it will be able to sell it at a high price later when the government raises its price. Reliance has been demanding that the government, a major buyer of natural gas, raise its price, but it has said that the low production levels now are the fault of geological and other factors.A few politicians and government officials have alleged that Reliance has deliberately reduced gas production in the hope that it will be able to sell it at a high price later when the government raises its price. Reliance has been demanding that the government, a major buyer of natural gas, raise its price, but it has said that the low production levels now are the fault of geological and other factors.
In the months leading up to the general elections in May, Arvind Kejriwal, the leader of a nascent party that was born out of an anticorruption movement, said that Mr. Ambani “owned” the two major national political parties and that he was “running the country.”In the months leading up to the general elections in May, Arvind Kejriwal, the leader of a nascent party that was born out of an anticorruption movement, said that Mr. Ambani “owned” the two major national political parties and that he was “running the country.”
But it is not such charges that have diminished Mr. Ambani’s image. In the Indian consciousness, the perception of Reliance is complex. Close ties between the corporation and the political class would not surprise the public. The poor hate all corporations in any case, whereas the richer layers of society tend to condone and even admire Reliance for its rumored ways (even though they are less tolerant in measuring the morality of politicians).But it is not such charges that have diminished Mr. Ambani’s image. In the Indian consciousness, the perception of Reliance is complex. Close ties between the corporation and the political class would not surprise the public. The poor hate all corporations in any case, whereas the richer layers of society tend to condone and even admire Reliance for its rumored ways (even though they are less tolerant in measuring the morality of politicians).
What has diminished Mr. Ambani in the eyes of the moneyed classes is that, for once, he has failed at his work. He has not managed to get the government to raise the price of gas, even though there are reasonable economic grounds for such an increase. The new government, headed by his friend, Prime Minister Narendra Modi, has deferred the decision on higher prices. Instead, it has maintained the previous administration’s policy of imposing penalties on Reliance for declining production.What has diminished Mr. Ambani in the eyes of the moneyed classes is that, for once, he has failed at his work. He has not managed to get the government to raise the price of gas, even though there are reasonable economic grounds for such an increase. The new government, headed by his friend, Prime Minister Narendra Modi, has deferred the decision on higher prices. Instead, it has maintained the previous administration’s policy of imposing penalties on Reliance for declining production.
The journalist Paranjoy Guha Thakurta, who co-authored the book “Gas Wars: Crony Capitalism and the Ambanis,” told me that the natural gas controversy had “adversely affected the image of Mukesh Ambani” among the middle class and the business elite. “For the latter, it is less an issue of business ethics and more an issue relating to investments having gone sour.”The journalist Paranjoy Guha Thakurta, who co-authored the book “Gas Wars: Crony Capitalism and the Ambanis,” told me that the natural gas controversy had “adversely affected the image of Mukesh Ambani” among the middle class and the business elite. “For the latter, it is less an issue of business ethics and more an issue relating to investments having gone sour.”
Also, Reliance Industries is facing insider-trading charges and accusations that it won its license to provide 4G mobile telephone services by improper means.Also, Reliance Industries is facing insider-trading charges and accusations that it won its license to provide 4G mobile telephone services by improper means.
Mr. Thakurta’s book, which argues that Reliance tried to influence the previous government to raise the price of natural gas by leaning on favorably inclined politicians and officials, is yet another blow to Mr. Ambani’s image — not only for what it says but also for the fact that Mr. Ambani’s threat of legal action against the authors if the sale of the book is not stopped has been laughed away by them.Mr. Thakurta’s book, which argues that Reliance tried to influence the previous government to raise the price of natural gas by leaning on favorably inclined politicians and officials, is yet another blow to Mr. Ambani’s image — not only for what it says but also for the fact that Mr. Ambani’s threat of legal action against the authors if the sale of the book is not stopped has been laughed away by them.
The book has been largely ignored by the mainstream Indian news media. “Not too many want to antagonize India’s richest man, who is also one of the country’s biggest advertisers and a person who heads a corporate conglomerate that wields considerable influence on the working of India’s political economy,” Mr. Thakurta said.The book has been largely ignored by the mainstream Indian news media. “Not too many want to antagonize India’s richest man, who is also one of the country’s biggest advertisers and a person who heads a corporate conglomerate that wields considerable influence on the working of India’s political economy,” Mr. Thakurta said.
But if Mr. Ambani has managed only to prevent reviews of the book and not its sales, this represents the triumph of free speech over expensive lawyers.But if Mr. Ambani has managed only to prevent reviews of the book and not its sales, this represents the triumph of free speech over expensive lawyers.
Follow Manu Joseph, the author of the novel “The Illicit Happiness of Other People,” on Facebook.Follow Manu Joseph, the author of the novel “The Illicit Happiness of Other People,” on Facebook.