MyValueResearch

RIDING TOO MANY BOATS AT ONE TIME

There is news today in the papers about Anil Ambani now eyeing a 33% stake in Captain GR Gopinath’s cargo airline – known as Deccan Cargo. A 33% stake means Ambani is looking at an investment of Rs.250 crore and that is certainly no small change. Yet, people gave just a cursory glance at the news and moved on, as though this news did not hold any significance at all. The fact that it is in the inside pages of the newspaper and not on the cover, as earlier such stories used to be, is also a pointer to the fact that people no longer take the various ambitious announcements of Anil Ambani too seriously.

Why has this happened? It’s something akin to cry wolf. Anil Ambani seems to have panache for making “big” news and keeps on hitting the headlines with his various plans. If one may recollect, he had earlier announced grandiose plans for getting into the cement sector. He is setting up a 20 million tpa cement unit in Madhya Pradesh for which 1,306 acres of land has been allotted. Why cement? It was explained to us that it was the most logical thing and was an extension of its proposed thermal power project in the state – it will be using the fly ash generated by the thermal power plant for the cement unit. He also announced setting up the Ambani Institute of Information and Communication Technology in capital Bhopal. All this at a price tag of Rs.50,000 crore. Cement at a time when the industry itself is expected to face a glut by 2010? And Rs.50,000 crore?

Then there was also the Rs.2,000 crore foray into shipping, starting with six ships and will operate between Indonesia and Krishnapatnam (in Andhra Pradesh), carrying coal from Indonesia. In the midst of the global financial crisis in September, he announced his plans to enter the banking sector when the industry opens up and infuse Rs.2,000 crore in its two insurance arms, besides venturing into asset reconstruction, institutional broking and private equity. He also announced a Rs.40,000 crore investment in steel in Jharkhand. All this apart, his plans for his entertianment division also remain equally big. In early October 08’, he met Steven Spielberg to seal their US$1.5 billion deal to make 35 films over the next 5 years. Well, the list goes on and on….

Sky is the limit for ambition and yes, its good to have such ambitious industrialists, who want to do everything and anything. But such ambitions should be realistic too. Today, because he carries the “Ambani” tag behind his name, people at least listen and publish his ambitions but if the same had come from anyone else, it would have been ignored as just wishful meanderings.

More importantly, people do not take these ambitions of Anil Ambani seriously as he has yet to clear his past trackrecord which has not exactly been trailbalzing. The pain inflicted by Reliance Power is still too raw and people are yet to forget, forgiveness is too far away. Then there was the proposed and withdrawn IPO of Reliance Infra. When the report card has so many red markings, who will believe when the child says that he will become a nuclear scientist?

For people to now take him and his plans seriously, Anil Ambani will have to first show some performance. Maybe, once he gets his UMPPs going or even if the stock price of Reliance Power manages to wash away the pain, then probably such utterings and investments of his would evoke a positive response. For now, people just eye his ambitions warily and choose to ignore it.