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Published by: Asian Business Case Centre
Originally published in: 2011
Version: 5 July 2007
Length: 22 pages
Data source: Published sources

Abstract

The case depicts how Dhirubhai Ambani founded the Reliance Group with only Rs 50,000 in the late 1950s and grew it into an US$17 billion conglomerate in a span of fifty years. The founder completed large expansion projects in record time, acquired related businesses and ventured into new businesses. In 2005, the Reliance Group comprised of textiles, petrochemicals, telecom, power and financial services businesses. He tapped domestic investors to fund expansion and growth, created an equity cult among Indian investors, and built a tradition of rewarding loyal shareholders. Since the early 1990s, the founder co-managed the Reliance Group with his two sons, Mukesh and Anil. Following the founder's demise in 2002, differences between the brothers led eventually to a need for division of corporate assets. In November 2005, the share price of Reliance Industries Limited (RIL), the Group's flagship company, tumbled following the break-up announcement. The Board of RIL hoped to unlock the value of acquired businesses and new ventures by rewarding loyal shareholders with stakes in new businesses. However, analysts were unsure about the size of returns to investors due to uncertainty of the drop in RIL's value and valuation of Reliance Infocomm Limited, an unlisted telecom company in the Group.
Location:
Size:
Largest private sector enterprise in India
Other setting(s):
2002-2006

About

Abstract

The case depicts how Dhirubhai Ambani founded the Reliance Group with only Rs 50,000 in the late 1950s and grew it into an US$17 billion conglomerate in a span of fifty years. The founder completed large expansion projects in record time, acquired related businesses and ventured into new businesses. In 2005, the Reliance Group comprised of textiles, petrochemicals, telecom, power and financial services businesses. He tapped domestic investors to fund expansion and growth, created an equity cult among Indian investors, and built a tradition of rewarding loyal shareholders. Since the early 1990s, the founder co-managed the Reliance Group with his two sons, Mukesh and Anil. Following the founder's demise in 2002, differences between the brothers led eventually to a need for division of corporate assets. In November 2005, the share price of Reliance Industries Limited (RIL), the Group's flagship company, tumbled following the break-up announcement. The Board of RIL hoped to unlock the value of acquired businesses and new ventures by rewarding loyal shareholders with stakes in new businesses. However, analysts were unsure about the size of returns to investors due to uncertainty of the drop in RIL's value and valuation of Reliance Infocomm Limited, an unlisted telecom company in the Group.

Settings

Location:
Size:
Largest private sector enterprise in India
Other setting(s):
2002-2006

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