Columbia Model United Nations in New York

CMUNNY IV

Columbia Model United Nations in New York IV

October 15-18, 2009

Reliance Board of Directors

Background Guide

Written by: Sudeep Moniz

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Letter from the Chair

Dear Pioneers of India Inc.,
SECRETARIAT
My name is George Mu, I am a junior at Columbia College
majoring in Economics and Political Science, and will be Chair of
the Reliance ADA Group committee. I was born in China, but grew
up for most of my life in Salt Lake City, Utah. I will be positioned
Anurag Saraf as Tina Ambani, Anil Ambani’s wife through the committee. On
Secretary-General behalf of Vice-Chair Shiva Datwani and Crisis Director Sudeep
sg@cmunny.org Moniz, I am writing to welcome you to the Reliance Board of
Directors. I began my Model UN career last year at CMUNNY III
vice chairing the Development Executive Group, an international
Alyson Cohen development consulting organization. I am especially interested
Director-General in international business and worked this summer with the
director.general@cmunny.org
Scottish Government in Glasgow to help entrepreneurs develop
their businesses.

Karen Woodin Rodríguez Reliance as a national and international corporation has

Under Secretary-General for
Committees
usg.committees@cmunny.org
Heather Hwalek
Under Secretary-General for
Crises
usg.crises@cmunny.org
Sophia Fleischer
Under Secretary-General for
Public Relations
public.relations@cmunny.org
come far from its early beginnings in the 1960s and today stands
as India’s foremost entrepreneurial success. Our committee has
assembled to work through the changing landscape of corporate
India, develop a plan for future expansion nationally and
internationally, and crush any threats to our corporate
dominance. I hope you will share my passion for growth and use
this opportunity to propel Reliance out of a post-financial crisis
slump.
I look forward to meeting you in the upcoming weeks.
Please do not hesitate to contact me with any questions or
concerns (gjm2120@columbia.edu).
Best Regards,

George Mu
Maggie Herman
Under Secretary-General for Chair, Reliance Board of Directors
Administration
admin@cmunny.org

Chuck Roberts
Under Secretary-General for
Finance
finance@cmunny.org
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Committee Structure
The committee will be run like a board meeting, with lose parliamentary procedure. It
can either be in continuous moderated caucus, but the chair will likely test a free-for-all,
because committee members are senior, dignified business leaders; they shouldn’t need much
direction. The chair will be in charge of moderating debate and will be one of Anil Ambani’s
wife, Tina Ambani. The delegates can either just submit action orders individually or issue
joint statements and directives collectively. Each directive needs a majority to pass. These will
be seen as recommendations to Mr. Ambani who has the final say in the ultimate path the
business should take. The likelihood of something being carried out by Mr. Ambani is
proportional to the support in the committee. Mr. Ambani has the right to veto (and to
ridicule) the committees directives. Each delegate has power over the parts of the business
which they control, and over their own extensive resources. Action orders, if within the
personal jurisdiction of a specific board member, can be taken autonomously without approval
of Mr. Ambani. Board members are obviously accountable to customers, to workers, to
shareholders and to Anil Ambani. Their positions, and in extreme cases their lives, can be in
danger. Board members can expel another member from the board with a two-thirds majority
after there is a hearing with witnesses, arguments and brief conclusions. Board members can
even choose to arrange meetings with politicians or heads of other organizations if they so
choose.

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History
Starting as a small textile trading company in 1958, Reliance Corporation is one of
India’s greatest rags-to-riches corporations. Dhirubhai Ambani began his small trading
operation with little more than 1,000 USD and the help of his wife and two sons. Reliance
Corporation imported polyester yarn and exported spices in a small 350 square-foot building.
In 1966, Reliance opened its first textile mill in India which marked the beginning of Reliance’s
history of backward vertical integration1. The initial investment was Rs. 15,000 (US$ 375).2
Dhirubhai’s relentlessly marketed his goods to consumers under the name Vimal, which would
later become a household name. Within four years “Dhirubhai operated four factories. Part of
the company's success came from its determination to use only the most modern, highly
efficient production equipment. In this way, the company easily outpaced competitors, which
relied on equipment often decades old.”3 Demand for Vimal products grew to the point where
retail outlets sold only Vimal goods. Reliance began its meteoric growth when a visiting team
from the World Bank certified Reliance Corporation as one of India’s most outstanding
companies. This acknowledgement was one of the first indications that Reliance would
become a national and possibly global force in the corporate world.

Recognizing Reliance’s voracious appetite for growth and capital, Dhirubhai used
Reliance to fuel the concept of equity in Indian financial markets. He took Reliance Corporation
public in 1977, and nearly 60,000 investors from across India participated in the Initial Public
Offering. At this point, Reliance had already begun to expand into petrochemicals and Reliance
soon diversified its activities to telecommunications, information technology, energy, power,
retail, textiles, infrastructure services, capital markets and logistics. The BBC would describe
Reliance as a business empire with an estimated annual turnover of $12 Billion USD and a
workforce of over 85,000. Reliance has the distinction of being the only public limited
company whose many annual general meetings had to be held in stadiums with more than
350,000 shareholders in attendance. The decision to give up complete autonomy in favor of
large pools of capital was a revolutionary one. It changed the model for success for other
rapidly growing firms, and is partially credited for converting India from an agricultural to an
industrial center.

Despite the astonishing success of Reliance was accompanied by numerous attacks and
threats, both internal and external, to India’s largest corporation. In 1982, a group of hostile
traders began selling Reliance shares short 4 in order to destabilize Reliance shares.
Unperturbed, Dhirubhai backed the price of Reliance with his personal fortune and within

1 To form a business a business around an input to the current business; Example: Furniture maker
starts a logging business instead of buying customized wood from logging firms.
2 http://www.mouthshut.com/review/Reliance_Industries-52644-1.html
3 http://www.answers.com/topic/reliance-industries
4 To pay cash and borrow a stock, sell it immediately on the market, hope the price falls and buy it later

for cheaper, and return it immediately at the original rate, in return for the cash originally paid.
Essentially, a way to make money when a stock loses value. Short selling also drives a price down. So the
more traders short sell, the more the short sellers make – there is a momentum effect.

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minutes, Reliance shares grew by 18% in value and the Bombay Stock Exchange was closed for
three days to settle the trading positions.

Reliance also faced significant challengers from the industry. Nusli Wadia headed
Bombay Dyeing group, one of Reliance’s largest competitors, and was well known for using his
political influence to force favorable changes from the Indian government. Indian regulators
introduced licensing schemes for importing Purified Terephthalic Acid, a raw material
essential for manufacturing polyester yarn, Reliance’s core business. Reliance weathered this
and many other political storms. Part of their competitive edge stemmed from their
determination to use only the most modern and efficient production techniques. Rivals, many
of whom used decades-old equipment, attempting to lower costs, were left with higher costs
and inferior products.

From the early 1980s Dhirubhai’s sons, Anil and Mukesh became involved with
company operations. Both were educated in America and prepared from childhood to take
over what was now an empire.5 In the 1980s and 1990s Dhirbhai proved himself to be adept at
negotiating the socialist Indian bureaucracy. With heavy regulation, most businessmen
succeeded by forming government networks, getting permits expedited and negotiating
favorable tax contracts. Dhirubhai is said to have had a strong relationship with then Prime
Minister Indira Gandhi.

The firm’s push to backward integrate led them to begin producing the petrochemicals
used in their textiles. Their first plant in 1986 produced Purified Terephthalic Acid. Dhirubhai
Ambani had a stroke that year and became partially paralyzed. Though he was still the man in
charge and the guiding force behind Reliance until his death in 2002, Mukesh and Anil took
over company operations from then on.6 Backward integration turned into diversification
after Dhirubhai’s death, and the firm never looked back. The brothers realized they could
share resources between the company’s arms, weather demand slumps in certain industries,
and maintain stable profits throughout. Since 2002 Reliance has set up operations in the
industries of telecommunications, assets management, entertainment, retail and more.

Mukesh and Anil have had their differences, and these began to surface after
Dhirubhai’s death in 2002. The brothers primarily disagreed about company strategy and
corporate governance, and a public feud brewed through early 2005. Their mother, Kokilaben
Ambani, finally brokered an amicable split in June 20057.

Mukesh's new empire had annual revenues of about $17 billion with net income of
about $190 million. By contrast, Anil's group had revenues of about $2.4 billion and net
income of just about $16 million. In an attempt to level the field, Mukesh wrote a check for Anil
that company watchers estimate at between $2.3 billion and $3.5 billion. Anil resigned as vice
chairman and managing director of Reliance Industries, where Mukesh is chairman and
managing director. The brothers also signed a 10-year non-compete agreement where Mukesh
will not enter power, telecommunications or financial services, and Anil will steer clear of
petrochemicals, oil and gas. Both groups will use the Reliance brand and logo, but Anil's
companies will carry the tag line, "A Dhirubhai Ambani Enterprise.”8 Mukhesh now owns

5 http://www.mouthshut.com/review/Reliance_Industries-52644-1.html
6 http://www.answers.com/topic/reliance-industries
7 http://knowledge.wharton.upenn.edu/article.cfm?articleid=1238
8 http://knowledge.wharton.upenn.edu/article.cfm?articleid=1238

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Reliance Industries Limited and Anil owns the Reliance Anil Dhirubhai Ambani Group
(Reliance ADAG).

Today, Reliance’s operations are heavily grounded in India, with Reliance being nearly
a lifeline to the Indian economy. Reliance comprises over 3% of India’s GDP, 5% of total
exports and 10% of the central governments indirect tax revenue9. While it is a source of pride
for employees to say they work at Reliance, rumors are abound that employees are paid below
what they would otherwise receive on the market, decision making is centralized and
management is often forceful with their negotiations and goals. Dhirbhai is known to have
espoused the philosophy, “Think big, think fast, think ahead.”10 Reliance survives today as
India’s only company listed in the Fortune’s top 500 firms, and with over 8 million
shareholders, it is one of the world’s most widely held stocks.11

Between 2005 and 2008, The Reliance ADA Group saw three years of unprecedented
growth. Reliance Communications’ stock price, for example, grew from Rs. 250 in June 2006 to
Rs. 800 in early 2008. Other subsidiaries have followed the same trajectories. However, since
early 2008, with a slump in the Indian economy, a burst of the Indian stock market bubble
(index halved from early 2008 to early 2009) and the global finance crisis, almost all Reliance
stocks prices have fallen sharply. Reliance Communications from Rs. 800 in January 2008,
traded at Rs. 135 in March 2009, most other subsidiary stocks, in March 2009 were 25% of
their January 2008 value. Anil Ambani’s fortune followed in suit. From the 6th richest person in
the world in 2008 with over $40 Billion, Anil had a paltry $10.1 Billion in March 2009. 12
Between 2007 and 2008 Anil made more money than anyone on the planet, and the following
year he lost more than anyone in the world. The rags-to-riches story was nearly reversed in
last year, but there now appears to be forward momentum. Following India’s positive election
result in April 2009, with the incumbent Congress party and its allies winning nearly a 60%
majority, sentiment for the Indian economy has rebounded. Most Reliance stocks doubled or
tripled from March to June 2009 and Anil’s wealth is expected to rebound with them.
However, threats still exist to the growth and success of the Reliance ADA Group; in July 2008,
Mukesh vetoed a merger between Reliance Communications and South Africa’s MTN,
threatening to sue and claiming that he had right to first refusal.13 Finally in late April 2009, an
attempt was made on Anil Ambani’s life, when gravel was found inside his helicopter fuel
nozzle which could potentially choke the engine and force a crash mid-flight. The mechanic,
Bharat Borge was found dead three days later as a Mumbai railway station. The cause of death
is still unknown.14

9 http://www.mouthshut.com/review/Reliance_Industries-52644-1.html
10 http://www.mouthshut.com/review/Reliance_Industries-52644-1.html
11 http://www.answers.com/topic/reliance-ada-group
12 http://www.forbes.com/lists/2009/10/billionaires-2009-richest-people_Anil-Ambani_VX6G.html
13 http://www.forbes.com/lists/2009/10/billionaires-2009-richest-people_Anil-Ambani_VX6G.html
14 http://www.dancewithshadows.com/business/bharat-borge-found-dead-suicide-or-murder/

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Committee Topics

Growth and Expansion of the Reliance ADA Empire

The Mumbai-based Reliance ADA Group currently has a net worth in excess of US$ 14
Billion15.
With Asia leading the way in a potential post-financial crisis global recovery, there is
ample opportunity and a push for the ADA group to expand its presence in India and abroad in
order to harness resources across the global and stay competitive against upcoming
competition from India and abroad. Below is graph of Reliance Capital’s share price since
October 2008 Indian National Stock Exchange (NSE) (trend is indicative of other subsidiaries):
1200

1000

800

600

400

200

In a potential bull market consumption across virtually all categories of products

steadily increases but more importantly raising capital from the public becomes much easier as
they expect to see high returns on their investments. So capital, the most significant constraint
on business expansion, is currently available and growing. A good indicator of the value of
stocks in a stock index is the price/earnings (p/e) ratio in that index. This is the level at which
the public values a set of companies divided by their cumulative earnings for shareholders in a
year. A low p/e ratio indicates stocks are undervalued and vice versa. In early 2009 stocks on
the National Stock Exchange saw the lowest p/e ratios in a decade. Below is a graph of p/e
ratios on the Bombay Stock Exchange (would look practically the same for the NSE)16:

15 http://www.bigtv.co.in/about-us.html#
16 http://varghgeorge.googlepages.com/indexo-meter_sensex_p_e_ratio.bmp

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It is easy to raise capital when people expect stock prices to go up. This happens either
when p/e ratios are low (meaning that the public is undervaluing a stock) or when earnings are
expected to rise. Currently, p/e ratios are at a medium level but on the rise, and earnings are
expected to increase over the coming year. Below are recent and planned growth avenues for
each of the Reliance ADA subsidiaries.

Reliance Entertainment (“BIG”)

In 2005 the Reliance ADA group acquired Adlabs Films Limited, which was one of the
largest entertainment companies in India. Adlabs was extensively involved in film production
and processing. Today according to BIG’s website:

“[India] is at the crossroads of an exciting phase that will shape its cultural and social
framework forever. Reliance BIG Entertainment has evolved out of the group’s vision of
meeting young India's aspirations and assuming a leadership position in communications,
media and entertainment.”17

BIG aims to develop media platforms for the masses to access as much content as
possible through gaming, movies, animation, movies and radio and television broadcast.18

Since the acquisition BIG has launched a multitude of media ventures, these include:

 Big 92.7 FM: a nationwide radio station, spread across 44 cities, 1,000 towns and
50,000 villages.19 BIG launched its first major international radio station (BIG
Bollywood) in Singapore in on July 1, 2008. The station hopes to cater to members of
the Indian Diaspora in Singapore, who make up 8% of the population. The Singapore
launch was a joint venture with MegaCorp, a media giant in Singapore operating 13
radio stations."We see this collaboration as a great opportunity to improve relations
with the country as well as profitable in the sense that it will provide us with a

17 http://www.relianceadagroup.com/ada/reliancemedia.html
18 http://www.relianceadagroup.com/ada/reliancemedia.html
19 http://www.big927fm.com/

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window for international expansion," [Tarun Katal] the Big FM executive explained.20

 Big TV, a satellite television provider started in August 2008, offers 200 channels,
including interactive cooking, cricket, stock, astrology and news. BIG TV comprises
32 cinema halls. BIG on July 17th 2008, clinched a deal to construct a 15-screen
multiplex seating 4,000 and intended to broadcast sporting events and live concerts
in addition to blockbuster English and Hindi films. The complex is set to be built in
Kurla, Mumbai, a fast developing suburb and new business center, known for slum
re-development and valued for its central location and urban planning. The
megaplex will be built at a mere $10 Million and is expected to be ready by 2010.21

 BIG Music and Home Video, created in June 2007, operates in music production and
video rental. BIG Music has produced music for several blockbuster Bollywood films.
Also comprises BIG Talent a platform to manage and market new upcoming artists.

 BIGADDA, a social networking website launched in August 2007. BIGADDA is similar

to, but smaller than, Orkut and Facebook. Half of the more than 3 million-user base
comes from Tier 1 cities like Mumbai and Delhi while the other half comes from Tier
3 cities in India (~500,000 – 5,000,000 people). 85% of users are under 30 years
old. 22

 While several other large divisions exist within BIG, these are the most noteworthy.

20http://www.dnaindia.com/money/report_anil-ambani-group-launches-fm-station-in-
singapore_1173264
21

http://economictimes.indiatimes.com/News/News_By_Industry/Media__Entertainment_/Entertainment
/ADAG__Bharti_gearing_for_massive_on_air_war/articleshow/articleshow/3246843.cms
22

http://economictimes.indiatimes.com/Infotech/BigAddas_userbase_above_3_mn_mark/articleshow/370
1081.cms

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Reliance Power

Launched in 1995, Reliance Power is India’s second largest electricity generation

company by market value. Reliance Power operates 16 power projects across India and
generates 34,000 MW23 annually or 23% of the total power generated in India. Below is a
breakdown of power sources.

Coal
Gas
Hydro

Breakdown of power generation by region:

West
North
N. East
South
East

23 http://www.reliancepower.co.in/html/index.html

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In January of 2008, Reliance Power executed one of the greatest initial public offerings
(IPO) in Indian history and the largest IPO by any Indian Generating Company. The firm sold
$27.8 Billion in shares to the public.24 Reliance Power’s growth story is intrinsically tied to the
Indian Government’s push for rural development. According to the UN’s Human Development
Report, as late as 2007, 400 million Indians still did not have access to electricity. The Indian
government wanted to increase power supply by 50% from 2007 to 2012. The government
plans to invest $200 Billion in generation and distribution from 2007 to 2014.25

Currently, Reliance Power is in the middle a large capital raising campaign. In last July
2009, Reliance Power announced plans to raise over $4 billion between 2009 and 2010. In July
2009 Reliance Power was in negotiations with five leading global power companies to sell a
15% equity stake in the firm. Three of the five companies are Chinese, including CLP Holdings
Limited, one of the largest generation companies and one of the most widely traded stocks on
the Hang Seng stock exchange. The other two companies are French and Canadian.26 Finally,
earnings results in the first quarter FY 2009 (ending June 30th 2009), widely beat expectations
and more than quadrupled earnings results from the same quarter one year ago. Reliance
Power reported a profit of $500 Million in June 2009 against $120 Million for the first quarter
FY 2008.27

Reliance Capital:

Incorporated in 1986, Reliance Capital is one of the three largest private sector financial
services firms by net worth28. It offers services in assets management, insurance, wealth
management, credit cards, loans, private equity and stock brokerage. 29 Reliance Capital
manages total assets worth $5.2 Billion and is one of the world’s 2000 largest companies.30
Specifics for the particular branches of Reliance Capital are listed below:

Reliance Capital Asset Management (RCAM)

It runs the Reliance Mutual Fund (RMF), arguably India’s most successful mutual fund.
A mutual fund takes money from the general public (even in small amounts of less than $100)
and invests it in the stock market with the aim of achieving higher rate of return than interest at
low risk. Mutual funds are subject to market risk however. RFM assets lost more than 10% of
its value between March 2008 and March 2009, however it is still the dominant mutual fund in
India with a market share of 16.4% in a fiercely competitive industry. Net profit, too, was down
close to 20% during the year, reflecting declines in asset prices.31 RFM, seems to have done well
relatively however, managing to be rated the Most Trusted Mutual Fund by AC Nielsen for the
third year in a row. In the same year the national stock exchange dropped 35%.

24 http://www.bloomberg.com/apps/news?pid=20601091&sid=aKNhjpoMWGj8&refer=india
25 http://www.bloomberg.com/apps/news?pid=20601091&sid=aKNhjpoMWGj8&refer=india
26 http://investing.businessweek.com/research/stocks/private/snapshot.asp?privcapId=36011856
27 http://investing.businessweek.com/research/stocks/private/snapshot.asp?privcapId=36011856
28 http://www.reliancecapital.co.in/about_bo.html
29 http://investing.businessweek.com/research/stocks/snapshot/snapshot_article.asp?ric=RLCP.NS
30 http://www.reliancecapital.co.in/about_bo.html
31 http://www.reliancecapital.co.in/pdf/RCL-Audited_results_media_release_31-3-2009.pdf

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Reliance Insurance (Life and General)

It has outperformed market competitors in the last fiscal year. New business premiums
(a measure of new insurance policies being sold) across all Indian life insurance companies
decreased 6% while Reliance Life’s new business premiums were up 28%. Their market share
rose from 8.1 to 10.3% of the industry. Reliance Life claims to be one of the top four life
insurance companies in India.32 Reliance General Insurance claims to be one of the top three
general insurers in India’s private sector (by monthly business premiums). FY 2009 saw
Reliance General cut its loss by two-thirds, making a loss of $11 million compared to $36
million in FY 2008.

Reliance Consumer Finance

Its loan book decreased 5% (to $1.7 Billion) in value from December 2008 to March
2009 (an annualized drop of over 20%). Profits however were up 152% from $7.5 million to
$20 million.

Reliance Money

It offers stock brokerage services; revenues grew by 48% in FY 2009 to $77 million.
Reliance Money’s average daily volume on the Indian stock exchanges represented 2.7% of the
total stock exchange volume (the brokerage field is extremely competitive with everything
from large banks to single-person enterprises competing). There were, however, signs on
problems as Daily News and Analysis (DNA, a four year-old newspaper) speculated that “Sudip
Bandyopadhyay, the face of Reliance Money is on his way out.”33

Reliance Capital has announced that its targets for 2012 are:34

1. 50 million customers. (currently 17 million customers)

2. 75,000 employees
3. A profit after tax of Rs. 5,000 crore ($ 1 Billion) for that financial year. (currently $221
Million)
4. A valuation of Rs. 100,000 crore ($20 Billion) for the company and its subsidiary
businesses. (currently 4.8 Billion)35

Reliance Health

Reliance Health is one of the newest subsidiaries under the ADA group. It focuses on
managed care administration, healthcare delivery and integrated health, health informatics and

32 http://www.reliancecapital.co.in/pdf/RCL-Audited_results_media_release_31-3-2009.pdf
33 http://www.dnaindia.com/money/report_hiccups-at-reliance-money-chief-to-exit-in-sept_1274382
34 http://www.reliancecapital.co.in/about_vision.html
35 http://www.reliancecapital.co.in/pdf/RCL-Audited_results_media_release_31-3-2009.pdf

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process outsourcing, and consumer health.36 On their official website, Reliance Health states its
goals as: “Providing cutting edge and affordable healthcare solutions, Reliance Health aims at
revolutionizing healthcare by enabling a healthcare environment that is both affordable and
accessible through partnerships with government and private businesses.”

Healthcare caught Anil Ambani’s attention because there were high margins to be made
in distributing medicines and providing health care and health care management systems. The
initial investment of $1.4 Billion was set aside for multiple retail medical stores, hospitals in
major cities, and medi-cities (healthcare facility providing many affordable basic services) in
Tier 2 cities.37 The first operation facility is the Kokilaben Dhirubhai Ambani Hospital, located
in the suburbs of Mumbai. The facility houses 730 beds, and became operational in early 2009.
The hospital aims be one of country’s premier healthcare initiatives in the private sector. It
aims to pay special attention to the qualitative aspects of health care, “even as it pursues the
goal of leadership in knowledge and excellence in the choice personnel and of technology.” 38
Kokilaben Hospital’s website estimates that $25 billion in investment will healthcare in India
over the next six years. It estimates that $20 billion of that will come from the private sector.
The hospital cites two problems which they seek to avoid: “the first relates to a pervasive lack
of transparency in patient communication billing and pricing, the second to the almost
universal disregard of questions concerning patient privacy, confidentiality and choice.”39

Reliance Communications

Reliance Communications (RCOM) operates the second largest telecommunications

network in India, offering phone and broadband internet services. The company was
incorporated in 2004 and made $4 billion in revenue last year. It employs 33,000 employees
with Anil Ambani controlling a 67% stake in the company. The firm gained immense popularity
after it launched the Rs. 501 mobile phone ($11) in 2003. The offer on July 1 offered multimedia
phones with a mandatory connection. The public was entranced by the idea of buying a new
phone for Rs. 500, and Reliance Communications set a world record by acquiring 1 million
customers in a span of ten days. Mobile phones were made available to the masses across the
country. In May 2009 Reliance Communication served 77 million subscribers or 1 in 14 Indians
40 and is aiming to achieve 100 million subscribers by the end of the year. RCOM also aims to

increase its rural customer base by 50% within a year. In April 2008 Anil Ambani said he plans
to spend up to $6.5 billion to increase phone coverage and develop a second network to
challenge Bharti Airtel Ltd. In March 2008, India added a record 10.2 million subscribers,
surpassing the U.S. as the world's largest mobile-phone market after China.41 India plans to
have 500 million mobile phone subscribers by the end of 2010. While the number of
subscribers sky-rockets, the revenue per user is plummeting, from Rs. 430 per user ($9) in
April 2007 to Rs. 317 ($6.5) in April 200842. This is fantastic news for the Indian consumer, and
as long as subscribers grow at a blistering pace, the telecommunications firms are content.

36 http://investing.businessweek.com/research/stocks/private/snapshot.asp?privcapId=32606248
37 http://www.labnol.org/india/corporate/healthcare-the-next-big-bet-for-reliance-adag/104/
38 http://www.kdah.in/kdah/html/about_us/aboutus.html
39 http://www.kdah.in/kdah/html/about_us/about_hospital.html
40 http://wirelessfederation.com/news/category/reliance-communication/
41 http://www.bloomberg.com/apps/news?pid=20601091&refer=india&sid=aIKqgyZbsjOg
42 http://www.bloomberg.com/apps/news?pid=20601091&refer=india&sid=aIKqgyZbsjOg

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RCOM’s revenues decreased by 15% from Q1 FY 2009 to Q1 FY 2010 (FY = April 1st –
March 31st). However, their profit grew slightly to $400 million. RCOM is rumored to be
chasing a deal to acquire Zain’s African operation (Zain is a multi-national telecommunications
giant). Reliance is competing with Bharti Airtel (another Indian telecommunications giant) and
with Vivendi, a French telecommunications multinational. This deal is being pursued in a wake
of a nearly successful negotiation with MTN which was vetoed by Mukesh Ambani, Anil’s elder
brother. MTN, a large South African mobile-phone operator, was to allow RCOM to buy a 35%
stake in the company. The deal was by far the biggest foreign investment attempted by either
brother. Together it would have formed the largest global telecommunications network,
surpassing AT&T, with 115 million customers in 23 countries and estimated annual revenues of
$14.4 billion. 43

According to The Economist:

“Anil is close to an ally of the coalition government, the Samajwadi Party, which has
lobbied for policies harmful to RIL, including a ban on exports of petroleum products. Some
speculate that the purpose of Mukesh’s recent and much-publicised visit to the prime minister,
Manmohan Singh, was to resist these proposals. All this has made a poor advertisement for
India’s corporate climate. According to a seasoned associate of the Ambani family: “If anyone
wants to do business in India, he now has to ask himself: ‘Will this affect Anil? Or Mukesh? And
will they get after me?’”44

Recommended additional reading on Reliance Communication:

http://www.scribd.com/doc/17689496/Reliance-Communication-with-competitor

43 http://www.economist.com/businessfinance/displayStory.cfm?story_id=11793156
44 http://www.economist.com/businessfinance/displayStory.cfm?story_id=11793156

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Positions
Board members come from each of the Reliance ADA group subsidiaries to join this
strategic super-board meeting.

Reliance Capital

Amitabh Jhunjhunwala: Vice-Chairman

Rajendra Chatela: Independent Director, affiliated with financial regulatory boards in

India

Shri C.P. Jain: Board Member, former Chairman and Managing Director of NTPC Ltd.
(National Thermal Power Corporation).

Madhusudan Kela: head of equity investments for Reliance Mutual Fund, arguably the
best performing fund on the market.

Reliance Power

Shri S. L. Rao, Board Member, also Chairman, Board of Governors of the Institute for Social
and Economic Change

Shri J. L. Bajaj: Board Member, also Chairman of Uttar Pradesh Electricity Regulatory
Commission (UPERC). Uttar Pradesh is India’s largest state by population.

Mr. K.H. Mankad: Whole-time Director and CEO of the Company, Previously director of
finance for Reliance Power (REL – reliance energy limited).

Reliance BIG Entertainment

Amit Khanna: Chairman, over 25 years of experience in entertainment industry.

Rajesh Sawhney: President of BIG, previously COO of Times Internet Limited.

Prasoon Joshi: Board Member, famous Bollywood lyricist.

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 Columbia Model United Nations in New York
cOcO CMUNNY IV

Reliance Health

(Tina Ambani takes an Active Role in Reliance Health)

Vikram Chatwal: Head of Reliance Health Services.

Dr. Ram Narian: Head of medical services at Kokilaben hospital under Reliance Health.

Reliance Communications

Professor J. Ramachandran: Board Member, also professor at Indian Institute of

Management, Bangalore, a premier business school in India.

Shri S.P. Talwar: Board Member, former Deputy Governor of Reserve Bank of India. He is
also former Chairman-cum-Managing Director of Bank of Baroda. He has vast experience in
financial services sector in the country.

Shri Deepak Shourie: Board Member, more than 37 years' exposure with an emphasis on
media, consumer goods, and corporate affairs.

Shri A.K. Purwar: Board Member, Chairman of State Bank of India. India’s largest bank,
government owned.

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