Mittal, ambani and tata: Public profiles and perceptions Summary


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Jan. 3, 2007

Mittal, ambani and tata: Public profiles and perceptions

Wal-Mart corporate security asked Stratfor to compare and contrast the public perceptions, lifestyles and personal information available regarding Bharti Enterprises CEO Sunil Bharti Mittal, Mukesh Ambani of Reliance Industries and Ratan Tata of Tata Group. This evaluation is an effort to benchmark the public profile of Mittal compared to that of other high-profile Indian executives.

Compared to Ambani and Tata, Mittal is considered to be a more humble and down-to-earth executive with much less business experience, particularly internationally. Common for all three, however, are allegations of corruption and the use of personal affiliations to gain advantages for their respective businesses. Overall, the public perception and vulnerabilities associated with Mittal are roughly on par with those of Ambani and better than Tata’s.
Public Perceptions

As noted in earlier reports, the general public perception of Bharti Enterprises CEO Sunil Bharti Mittal is a positive one. Businesspeople and general citizens alike believe he is an honest, hardworking and successful businessman. Many note that he is a first generation entrepreneur who has built the family business up from a very small venture in the textiles industry into a family of companies that is worth billions of dollars. Mittal, 49, is known to be well-educated in industry and business matters and holds degrees from universities in both India and the United States.

Personally, Mittal appears to be a well-respected family man, although many reports note that his work prevents him from spending a great deal of time with his wife and children. He is known to follow many Indian traditions and customs and, despite his great wealth and high public profile, is considered to be a humble man, with no reputation for extravagance.

Similarly, Mukesh Ambani, the chairman and managing director of Reliance Industries, is considered to be a very shrewd businessman who has worked hard to maintain the company’s position as the largest private-sector business in all of India. There is also a perception that, despite the 48-year-old Ambani’s business abilities, his path to success has been much easier than that of first-generation entrepreneurs like Mittal because of his inheritance of the family business and fortune. Some say that Ambani’s success is due in large part to his father, Reliance founder Dhirubhai Ambani, who laid the groundwork for making the company as successful as it is today (Reliance’s revenues now account for 3.5 percent of India’s gross domestic product). In 2006, Forbes magazine noted that Ambani is now the second richest Indian, with a net worth of more than US$15.5 billion. Ambani received a bachelor’s degree in chemical engineering from an Indian university and a master’s degree in business administration from Stanford University.
Ambani also has a wife and three children, though several media reports note that he, too, spends little time with his family. There are also rumors in Indian social circles that, despite Ambani’s wife and family, he is actually homosexual and has spent hundreds of thousands of dollars paying for male prostitutes.

Ambani’s personal reputation was somewhat tarnished during a legal dispute between him and his younger brother, Anil Ambani, over how to divide the company’s assets following the death of their father in 2002 (this dispute will be discussed in greater detail later in this report). The conflict received a great deal of media attention, with Anil accusing his brother of hiding company assets in an attempt to keep them for himself and using company resources to wiretap family phones. While the allegations were never proven, they provided nearly two years of news stories that portrayed the family in a negative light, until the brothers agreed to allow their widowed mother to divide the family companies between the two.

Indians Stratfor spoke to for this report note that, while their perception of Reliance has changed little since the feud, they believe both brothers prolonged a dispute that should not have been a serious problem. Businesspeople note that the clash caused unnecessary angst among stockholders, although the long-term value of the company should not be impacted. Stratfor found few indications that Ambani makes an extravagant display of his wealth, although he is well-known for owning a private jet and at least two Maybach ultra-luxury sedans, each of which costs between US$300,000 and $400,000.
Ratan Tata, chairman of the Tata Group, is a millionaire who inherited his fortune and is considered to be one of the most flamboyant executives in India. The 70-year-old is the third generation of leaders of the Tata Group, which was founded by Ratan Tata’s grandfather in the 1800s. Unlike Mittal and Ambani, Tata was educated only in the United States and is known to have a preference for Western food and clothing, a fact that makes some Indians wary of his dedication to improving India for the benefit of Indians. He received a bachelor’s degree in architecture from Cornell University and later completed an advanced management program at Harvard Business School. Tata was originally scheduled to step down from the day-to-day operations of the company in 2007, although his term as chairman was recently extended to 2012.

Businesspeople note that Tata has not maintained direct control over the majority of Tata’s 95 companies and thus has lost any real sense of control as group chairman. As a result, there is no clear corporate strategy and no strategy to move into new industries, which has created a number of grossly inefficient and unprofitable ventures. Tata has taken responsibility for the fact that many of the group’s businesses have not been profitable for several years (including Telco and Tata Steel, both of which have racked up more than 75 percent losses since 2000), even though the Tata Group remains one of India’s three largest private employers. Tata employees Stratfor spoke with said Tata is more interested in maintaining his personal standard of living than in ensuring that the company will be profitable and efficient enough to stay afloat.

Unlike Mitta and Ambani, Tata is unmarried and has no known children. Media reports note that he considers himself a “minimalist,” although he admits that the “small number” of his possessions are all of the highest quality possible. Sources Stratfor spoke with indicate that, while Tata has created the public image that the Tata Group strives for the highest level of quality in its products instead of market share, some of the company’s products are of decidedly low quality.
Personal and Business Affiliations

All three of these executives are known to have good working relationships with Indian Prime Minister Mahmohan Singh and often spend time with him. According to media reports, Ambani -- who has taken a personal interest in increasing Reliance’s share of India’s retail market -- personally encouraged Singh to lift restrictions on allowing foreign retailers into India, saying he believes Reliance and other Indian firms will be able to beat foreign competitors by using their superior knowledge of local markets.

While media reports do not mention any attempts by the three executives to use political connections to achieve their specific business objectives, Stratfor’s conversations with Indian sources suggest this practice is not uncommon in India. Of the three men, Ambani is thought to wield the most influence over Indian government affairs due to his family’s strong business reputation and historical connections to India’s largest political parties.

Of the three men, only Tata appears to have close political connections in the United States. While studying briefly in Los Angeles, he served as a volunteer in John F. Kennedy’s presidential campaign and is thought to maintain close ties to Sen. Ted Kennedy and other members of the U.S. Democratic Party. In addition, there are many suspected ties between Tata and U.S. public policy institutions; Tata currently serves as chairman of the RAND Center for Asia Public Policy. In the late 1980s and early 1990s, he met frequently with former U.S. national security official Brent Scowcroft when visiting the United States. Tata also maintains close ties to leaders in U.S. industry, including Microsoft chairman Bill Gates.

Stratfor was not able to uncover any actual or alleged ties between Mittal, Ambani or Tata and any criminal organizations.

Derogatory Information

Unsubstantiated allegations that the three executives have used their political connections to influence government policy and decision-making are common. For Mittal, these allegations primarily center on the deregulation of India’s telecommunications laws. For Ambani, the allegations span a number of industries, including chemicals, retail, telecommunications and energy, although our sources most often mentioned the retail sector, likely because the issue of foreign retailers entering India remains in the media spotlight. Tata is similarly accused of convincing government officials to retain restrictions on the importation of motor vehicles, including buses for use in public transportation, in order to increase business for Tata Group subsidiary Telco.

Stratfor found no evidence that charges have been filed against any of the three men for their involvement in any incidents of corruption or bribery.

The largest scandal involving any of the three executives was one connected to the feud between Ambani and his younger brother following the death of their father in 2002, though the fighting did not become a matter of public debate and speculation until late 2004. According to media reports, Reliance founder Dhirubhai Ambani had made careful estate-planning decisions before his death to prevent a power struggle that would divide the company, including a choice to make Mukesh the primary leader with Anil playing a large role in company affairs. Shortly after Dhirubhai’s death, however, both sons claimed they should be the rightful chief of Reliance. Thought to be the more media-savvy of the brothers, Anil essentially conducted negotiations with his brother through press releases, accusing Mukesh of hiding company assets, decreasing the value of the corporations to get a better personal deal, using company equipment to wiretap family phones and evading corporate governance policies. None of these claims were ever proven and no charges were ever filed against Ambani.

Due to the nature of the eventual settlement, which split Reliance into several parts, each controlled by one of the brothers, the Mumbai High Court became involved in the case. A final settlement was reached in June 2005, although both sides claimed in 2006 that the other side was delaying implementation of the approved deal. Despite the breakup, both Reliance factions have become even more profitable since they were separated.
In 1992, Mittal, Ambani and Tata and their respective companies were among Indian companies at the center of an investment scandal involving stockbroker Harshad Mehta, who manipulated the Indian banking system and artificially inflated the price of some stocks, eventually causing a stock market crash. All three men were considered friends of Mehta and were eventually investigated due to claims that they may have been involved in the scam. Bharti and Mittal emerged from the ordeal with the fewest problems, although neither Ambani nor Tata were formally implicated in any wrongdoing.
In December 2006, Ambani received a notice from Indian income tax authorities claiming he owed US$590 million in back taxes from the 2005 tax year because of his acquisition of 500 million shares of Reliance Infocomm stock in March 2004. Media reports say Ambani plans to contest the tax notice on the grounds that “no tax can be levied on notional income.”
In December 2006, the nationalist Trinamool Congress party threatened to sue Tata for defamation for saying that protests held by the party against a proposed new automobile plant in West Bengal state were being supported by Tata’s corporate rivals.

© 2007 Strategic Forecasting, Inc.


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