Hamish McDonald | The Reliance split is good for India

Hamish McDonald | The Reliance split is good for India

New Delhi: Hamish McDonald is the author of The Polyester Prince: The Rise of Dhirubhai Ambani, an unauthorized biography of Dhirubhai Ambani published in 1999 and not widely available. Nearly a decade later, in 2007, pirated copies of the book began to be sold at traffic signals in Mumbai. Encouraged by this, and the bitter feud between Mukesh and Anil Ambani, McDonald decided to write an updated version of his book, the Indian edition of which is called Ambani & Sons (the Australian edition is more exotically titled Mahabharata in Polyester: The making of the world’s richest brothers and their feud) and releasing this week. McDonald spoke in an interview about the surprising split of the brothers and what it means for Reliance. Edited excerpts:

Are you anticipating legal trouble with this book?

No, not really. For one, they (Mukesh and Anil Ambani) are not leaping to defend their father’s reputation and there is so much dirt being thrown around by the brothers that anything I say is only repeating what one or the other of them has already said. Also, it’s a different time now. And even the movie Guru drew on quite a lot of incidents that were recorded in the earlier book.

Loading video...

When did you decide that the story has expanded and that there is a renewed interest in the Ambanis?

When the sudden news of the split came about. I just happened to be here in India on a holiday with my family at the end of 2004 when it all burst into the open. We came here to spot tigers and ended up spotting tycoons. The magazines were full of it and it was enthralling and quite astonishing to read.

So, I started getting back into the story then. And then as the feud developed, I kept getting emails and calls from Indians and NRIs (non-resident Indians) asking if I still had a spare copy of the book. And then in early 2007, pirated copies of the original book started appearing in Mumbai and I sort of realized that there was pent-up demand for the background of the Ambani feud. I was intrigued and thought it would be a good time to explore.

When you ended ‘The Polyester Prince: The rise of Dhirubhai Ambani’, did you have an inkling that the second generation of the Ambani family would end up dividing the business?

On the contrary, I thought they were such a tight family team and Dhirubhai brought the boys up in the business and that any friction would take a long time to develop. In fact, I did not think it would happen in their generation. It was such an integrated business when I left it; it was all petrochemicals, petroleum, polyester. So I thought it would have been hard to split then. But I suppose once you start diversifying horizontally into other businesses like mobile phones and new industries like films, etc., then the possibility of separate domains arise. There was also the Cain and Abel kind of rivalry between the brothers. They are both very ambitious people and they couldn’t have worked together. It’s hard for one of them to be (a) second dog for all his life. That would have been a bit galling to always be the junior brother. So maybe it was going to happen, but I didn’t see it coming.

You write in your book that Mukesh started changing the ownership structures of the companies because he wanted to protect Reliance from Anil’s follies. Why do you say that?

Earlier on there was a perception that Anil’s life wasn’t entirely in the company in the way Mukesh’s was, that he wouldn’t spend all his time in the office and he would go off to party and mingle with Bollywood. It’s also now public knowledge that he started making quite autonomous decisions about the power industry and the projects in Uttar Pradesh. Then there was the shock appearance on the Samajwadi Party ticket for Rajya Sabha. That’s really about the time that Mukesh started making protective moves which in the end pushed Anil further out.

In effect, in your view, did the split unlock more value or would a united Reliance have been a better one?

I think the fact they run two separate businesses now is good for India and good for competition. It would have been bad for other players in say the mobile phone industry if one player could feed off the cash flows of Reliance Industries and develop a huge market share. That would be a concentration of economic power that would be worrying for India and would not have been good value for either side. It would also not have been great for investors in Reliance, as it would have led to reckless or careless expansions of near ventures.

Do you not think it is strange that the Sensex has now reached near its top and this time around the Reliance stock has not participated at all? The book details how Dhirubhai Ambani cultivated small investors and how they profited from that investment.

I think the loyalty of Reliance investors has been shaken by the split. After Dhirubhai, I don’t think Reliance investors have the faith that they would be looked after as assiduously as he looked after their interests through the share price. The particular connection of Dhirubhai and the family of investors is certainly broken.

Are the differences over as have been portrayed by reports after the Supreme Court judgement?

I wait and see. There was a statement immediately after the ruling, but very little follow up. People are watching the signs; there were reports that Anil stayed at Mukesh’s guesthouse when he visited Tirupati temple and all that. These are the little straws in the wind that people are picking up. But really I think we should wait to see if there’s just a temporary ceasefire or a settling down to something more amicable.

What are you picking up?

I am picking up very indirectly that feelings are still very tender and that it’s still very delicate. After what they have been through, it’s only natural that they are pretty bruised.