The dynamics of the power and influence that the Ambanis and the Tatas hold in the Indian market has evolved considerably in the past few decades. While some may argue that the Reliance group has surpassed the Tata conglomerate, here’s a take on why that’s not even marginally correct.
Preconceived notions, pertaining to money and wealth, are the main reason behind such false assumptions. Mukesh Ambani is indeed the richest man in India with a net worth of $91 billion, while Shri Ratan Tata’s worth is estimated at $1 billion. Based on these statistics alone, people jump to conclusions that the richer party, in this case the Ambanis, is superior to the other side, the Tatas. But is monetary wealth enough of a metric to label which group possesses the higher ground?
The Ambanis are known for their affluent nature and have never shied away from displaying their prosperity. From throwing weddings of the century, hosting private Beyoncé concerts to living in a 27-storey sky palace, ‘Antilia’, they’ve often caused social media uproar and made headlines.
In stark contrast, Tatas live a relatively humble life with 66% of their company stake held by charitable organisations such as the Sir Ratan Tata Trust, Sir Dorabji Tata Trust, Tata Education Trust to name a few. Their primary goal was, and has always been, the financial and social empowerment of the entire nation.
To delve further into the details of this ill-conceived and strikingly biased opinion, one must start to understand the elementary difference between a businessman and an industrialist. The former is more concerned with maximising their own profits while, the latter makes it their concern to consider the best interests of the society at large.
The Booming Businessman
Dhirubhai Ambani and his rise to fortune is a true rags-to-riches story. His success in taking his company public in 1977, expanding from textiles to other sectors such as petrochemicals, which in-turn led to the formation of what we know today as ‘Reliance Industries’, was largely owed to his sharp business acumen, excellent entrepreneurial skills and great oratorship. He was what we refer to as a ‘one in a million’ case wherein a high school dropout, with no significant education, made it big!
One of the major reasons behind his success was the value and vitality he placed on the quality of service that was associated with the Ambani name. He prioritised his promise to the shareholders, declared regular dividends and held annual meetings to strengthen mutual trustworthiness.
After his death in 2002, the company was divided between his two sons, Mukesh and Anil. While the former inherited his father’s business instincts, the same seemed to have been lost in the case of the latter. Mukesh Ambani expanded the spectrum covered under Reliance Industries far beyond expectations, and one of his most remarkable achievements was the launch of Reliance Jio in 2016. Not only was Jio a real game changer, but it also sparked a price war in the super-competitive telecom market in India, and gave otherwise unparalleled companies like Airtel a run for its money.
Reliance was the first Indian company to be included in the Fortune 500 companies list. The consolidated efforts of two generations, branching from Vimal to Jio, resulted in an increase in annual revenue from ₹700 million at the time its IPO was first launched, to over ₹750 billion in the year 2002.
Today RIL is an oil-to-telecom conglomerate with a valuation of about ₹6.10 trillion. It is the first company to have a market capitalisation of ₹9 trillion on the Bombay Stock Exchange (BSE). Out of this, about 48% stake is personally controlled by Mukesh Ambani, and while Reliance did purchase some gas companies in the US and occasionally in Europe, it largely remains an Indian entity.
“Business must serve a larger societal purpose.” – Mukesh Ambani
The above statement is quite ironic as the Ambanis, like most business families, donate only a small fraction of their wealth. To substantiate, in 2018, Ambani donated a seemingly grand amount of ₹4.02 billion, which in reality amounted only to 0.1% of his net worth.
While the world came to a standstill during the pandemic, Reliance Jio continued its successful operations based on the philosophy that the show must go on. Not only did it see a 15.5% growth in net profit to ₹34.89 billion in the fourth quarter of 2020-21, but also an additional increase of 5.2 million customers.
At such times of crisis, despite having enjoyed phenomenal growth and profits, Mukesh Ambani pledged to donate only ₹50 million to Maharashtra Chief Minister’s Relief Fund as monetary contributions whereas Mr. Ratan Tata, Tata Sons and Tata Trusts collectively pledged a total of ₹15 billion for combating the coronavirus pandemic.
The International Industrialist
The journey of the trailblazers began in 1868, when Jamsetji Tata invested ₹21,000 in his own trading business. However, his sight was set on the textile business. Following his newfound objective, he returned from England equipped with knowledge and moved out of Mumbai to Nagpur which was comparatively economical.
What made Tatas the true tycoons was the care they extended to their workers and the importance they laid on the welfare of the society. These measures resonated among the masses with the same level of loyalty and appreciation reciprocated by them.
Jamsetji Tata had four major goals in life: an iron and steel company, a world class educational institution, a hydroelectric power plant and a five star hotel. However, in his lifetime he could only manage to accomplish the task of building the Taj hotel in Mumbai, which serves as a symbol of his glorious march into the future till date. The rest of his dreams were realised by his son Dorabji Tata.
This proud legacy was carried on by JRD Tata, under whom the Tata Group grew from $100 million to over $5 billion, establishing itself as a conglomerate of 95 companies including Tata Tea, Tata Motors & TCS.
Currently, The Tata Group has products and services in 150 countries spread over 6 continents, with a ₹6.11 trillion valuation, $100 billion in revenues, i.e., over ₹11 trillion of market capitalisation and 29 publicly listed companies.
Despite such a remarkable feat it's quite intriguing as to why the Tatas are not the richest businessmen in India, though the Tata Group is India’s numero uno conglomerate.
“Tatas have done much to introduce industrial capitalism in India in place of the old mercantile and petty capitalism. As the companies progressed, they socialised the business by transferring much of the ownership to charitable trusts.” - Professor Gras of Harvard Business School.
Staying true to this promise, Shri Ratan Tata’s personal stake in Tata industries is less than 1%.
Unlike other business tycoons, he donates a big chunk of his wealth to several trusts, the largest being the Sir Dorabji Tata Trust (28%), followed by the Sir Ratan Tata Trust (23.5%).
The Bigger of the Big Fish
In response to when asked why he was not the richest man in the world, Ratan Tata said, “Ambanis are businessmen and the Tatas are industrialists.”
This difference in outlook represents a bigger value difference between the two behemoths and their line of thinking. While both the groups create livelihood for millions and represent big parts of India, one chooses to add to the bottom of the pyramid in his own capacity, while one leaves the bigger machinery to its own devices.
It is moot to discuss who is doing “more”, but if not for his philanthropic nature, Ratan Tata could easily be one of the richest people in the world, let alone India, making it clear without an iota of doubt that Mukesh Ambani may be the richest man in India but the Tata Conglomerate reigns supreme over Reliance Industries.
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