2002: Dhirubhai's Legacy

     Print Edition: Jan 9, 2011

It was a rags-to-riches story that captivated India. From a small trader of polyester yarn in the 1960s, who started the business with just Rs 15,000, to creating a petrochemicals giant, it was a meteoric rise. Indeed, the passing away of the doyen of the Rs 75,000-crore Reliance Group, who also pioneered India's equity cult in 2002, marked the end of an era.

Dhirubhai, though, courted controversy during his lifetime for his alleged ability to manage the political environment. There seemed to be a smooth transition at the top in the group with the baton being passed on to the Ambani offsprings, Mukesh and Anil, and the group continued to power ahead. Reliance Industries Ltd (RIL) became the first Indian private sector company to record a net profit of over Rs 1,000 crore in a single quarter with the merger of Reliance Petroleum with RIL - a step designed to take advantage of the expected deregulation in the oil sector.

The merger created India's first Fortune 500 private company, with businesses spanning oil exploration, refining, petrochemicals and textiles. RIL also acquired the government's 26 per cent in Indian Petrochemicals Corporation Ltd that year.

Nobody at this stage could have predicted the bitter falling out between the Ambani brothers in 2004.

MNCs delist
With the equity markets languishing in 2002, the mid- and small-sized multinational companies or MNCs flooded the market with exit offers through buybacks and open offers to cash in on the relative cheap valuations. Philips, AstraZeneca and Carrier Aircon, among others, moved closer to delisting. The fund-raising plans of India Inc., though, were hit. The year was marked by only six initial public offerings or IPOs and the fund mobilisation was a meagre Rs 1,981 crore.

The BPO Rush
Indian software services giants scaled up their business process outsourcing (BPO) operations aggressively to capture a bigger share of the global BPO market. Wipro acquired Spectramind in an all-cash, Rs 407 crore deal, while Infosys Technologies launched its BPO arm Progeon (now Infosys BPO) as a 74:26 joint venture with Citibank Investments (Infosys bought out the Citibank stake in 2006). HCL Tech BPO acquired the Belfast-based Apollo Contact Centre for $11.5 million.

Did you know?
FM Yashwant Sinha signalled the end of the broker-run stock exchanges by announcing their corporatisation in his 2002 Budget speech.

Quote of the year
Commercial organisations are economic organs of the society. You have to subordinate shareholder value to societal values.
Y.C. Deveshwar, Chairman, ITC


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