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2009 IS THIS THE DO-OR-DIE YEAR FOR Anil D. Ambani?
BIG can mean Bold, Innovative and Grand. BIG can also mean Boastful, Insecure and Grandiose. By the end of 2009, the verdict will probably be out on the BIG ambitions of Anil Dhirubhai Ambani. The crash of the Indian markets and the global meltdown couldn’t have come at a worse time for ADAG. But analysts say that he might stumble, only to soar again...

Without gas at the pre- agreed price, the entire financial edifice of Anil Ambani’s energy plans will have to be re-built from scratch. And his group would have lost precious years in the meanwhile. That is not something ADAG can afford to do right now; nor can it raise money for the plans till the gas issue is sorted out. Even otherwise, the energy and power sectors are prone to government and political interference. Admits Lalit Jalal, CEO, Reliance Infrastructure, “You see, the biggest problem is politicisation of power rates. Politicians create hurdles by stepping in and asking us not to increase the selling price. This makes the whole process unsustainable.” This candid admission is remarkable in that Anil Ambani and his top managers realise the enormous lobbying challenges that they face in the sector. Of course, who can doubt his legendary lobbying skills? But as the bitter and protracted battle over the Godavari basin gas supply reveals, Anil Ambani is not the only one who can successfully ‘manage’ the environment in Delhi! Reliance Infrastructure is finding the going tough even in the implementation of the Mumbai Metro projects, though company officials insist that it will be completed well before the scheduled target of 2012.

While his energy plans may need a boost, Anil Ambani’s BIG plans in entertainment and media are going great guns at the moment. The year 2008 saw Reliance BIG Entertainment reach two significant milestones. The first was the dream like deal with US based DreamWorks SKG controlled by the legendary Hollywood film maker Steven Spielberg. The deal, worth $1.5 billion has both ADAG and DreamWorks equally sharing equity in a new vehicle based in Los Angeles that will deliver six movies every year. Considering that an average Hollywood movie costs at least $100 million to make, you are again reminded that Anil Ambani thinks BIG all the time! The deal with Spielberg was not the only connection to be established with Uncle Sam. BIG Entertainment also acquired more than 220 movie theatres across United States. And these are not the niche ones that show Bollywood movies to NRIs! Many in the industry think this move is a gamble that could prove costly in the long run. In fact, the original promoter of Adlabs (which Anil Ambani acquired and absorbed into his entertainment empire) publicly aired his unhappiness with these strategic moves and resigned from the board. Not that Anil Ambani was fazed!

The other milestone for BIG was the launch of Reliance BIG DTH services (through the RCOM platform) with a lot of hoopla. Apart from old players Dish and Tata Sky, Anil Ambani will battle it out here with familiar rival, Sunil Bharti Mittal. As per market reports, the venture has already captured 15% market share in just three months and crossed the magic figure of 1 million subscribers. Says Sanjay Behl, Group Head, Marketing & Branding, “Our features are designed for easy manoeuvrability in the most user friendly manner. Such user friendly initiatives will help us maintain our leadership position in the evolving Indian DTH market.”

That’s good news no doubt. But Anil Ambani will not really find much time to celebrate such “small” victories this year because really BIG challenges and hurdles lie in 2009 and beyond. His ambitious forays into energy, infrastructure, power and telecom will require huge investments, both in terms of equity and debt. Take the power sector for example. Just 1 MW of capacity needs a capital investment of Rs.5 crore or so and we are talking of more than 50,000 MW! By any yardstick, the younger one in India’s most famous sibling rivalry will not find it easy to raise the money, especially with liquidity troubles plaguing all and sundry. His backers can only hope that he draws inspiration from his father and pulls up many rabbits from his hat. He has a huge incentive: after all, if he fails, it is Mukesh who will well and truly inherit the Ambani legacy!

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