/24-7PressRelease.com/ - New Delhi, India - May 14, 2005 - Dhirubhai Ambani, who is credited with heralding the investor cult in India, worked on the simple tenet that investment in Reliance is not gambling; it is genuine investment. His corporate philosophy was: better company results and better value for investors. Reliance has always remained close to the common man.
When most industrialists looked up to banks and financial institutions for funds, Dhirubhai went to the public. So what if his company incurred huge costs in servicing his massive shareholder base? Reliance is the only company, which had to hire a stadium to hold its AGM, so large, was the shareholder attendance.
Reliance today has a retail investor base of 3.5 million the largest in the country and perhaps in many parts of the world. In fact, every fourth investor in India is a Reliance investor.
Dhirubhai realized that the future growth of the company lay in building a strong customer interface, especially through the services sector. And so, Reliance is now a multiple-service provider that has the opportunity and wherewithal to increase returns to its investors.
The strategy of integration adopted by Reliance was one of the steps towards giving better value to the investor. The model is based on convergence ? where one group company feeds the other.
All this not only ensures cost-effectiveness, efficiency, productivity and high returns but also makes Reliance India's largest company in terms of market capitalization (US $ 10 billion comparable to global giants). It accounts for 11.3 per cent of the Sensex - the 30-scrip Bombay Stock Exchange (BSE) benchmark - and 3.5 per cent of the country's gross domestic product (GDP).
The mega-merger of Reliance Industries and Reliance Petroleum created India's first fully-integrated oil and petrochemicals major, which was the first private corporate house from India to make it to the Fortune Global 500 list.
Reliance, was among the first Indian companies to realize that the best corporate governance practices are not adopted in response to the dictates of regulators or under pressure from investors.
The ownership of Reliance is publicly held by millions of shareholders including the Ambani family. The architecture of this ownership was configured by Dhirubhai into a framework of companies, thus obviating the need for a formal will.
The affairs of the company are governed by a board of directors and responsibility and authority of all Reliance functionaries including the chairman and the vice chairman come under the purview of the board. The company's management philosophy is based on the "ownership principle", where everyone is the owner in the domain of his or her responsibility.
Dipayan Mazumdar is a media consultant
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