There’s
this story that goes about having a great vision in business. It goes like
this: once up on a time there lived 3 fishes in a pond. One was named “Plan
Ahead”, another was “Think Fast”, and the third was named “Wait and See”. One
day they heard a fisherman say that he was going to cast his net in their pond
the next day. Plan Ahead said, “I’m swimming down the river tonight!” and so he
did. Think Fast said, “I’m sure I’ll come up with a plan.” Wait and See lazily
said, “I just can’t think about it now!” When the fisherman cast his nets, Plan
Ahead was long gone. But “Think Fast” and “Wait and See” were caught! Think
Fast quickly rolled his belly up and pretended to be dead. “Oh, this fish is no
good!” said the fisherman, and threw him safely back into the water. But, Wait
and See ended up in the fish market. That is why they say, “In times of danger,
when the net is cast, plan ahead or plan to think fast!”
The
moral of the story is too obvious yet it states one thing which is rarely put
into practice and that is that it helps to have a vision to plan ahead even
when you know that danger is going to strike ahead. And this was precisely
business magnate Anil Ambani’s line of approach when it came to his array of
businesses especially with that of Reliance Power. Anil Ambani, who is
currently the man in the hot-seat of Reliance Group as the chairperson, seemed
to have this innate sense of vision where he could see a plan ahead in his
mind. When he ventured into the power business, he got it as a part of the
reigns after his father’s demise in 2002 and the very public infighting with
his elder brother Mukesh Ambani. And when he got hold of this stream of
business, he already had mega plans chalked out in his mind. His ambitions were
not to be one of the biggest, but to be the biggest player in the sector.
In
his quest to rise sky-high Anil thinking the world to be his canvas, started
off coloring his imaginations with the plan paints of securing mega power
projects, which he did and got hold of three major ultra-mega power projects
auctioned by the government in 2008 and 2009. These were at Sasan in Madhya
Pradesh, Tilaiya in Jharkhand and Krishnapatnam in Andhra Pradesh. Amongst the
most colossal of these was supposed to be the gas fired power project of Dadri
which was of 7,480 MW.As a matter of fact, it was in 2008 that Reliance Power
raised a record Rs 11,563 crore from an IPO with the stated intention of
setting up 13 gas, coal and hydro power projects of 28,200 megawatt (MW). But
as luck may have it for him, the gas never came. Consider it as a blockade but
gas prices in India are something that are regulated by the Government of India
and Mukesh Ambani said that he could not sell gas at the price agreed to in the
family settlement, $2.34 per million British thermal unit (mBtu) for 17 years,
because government prices were at $4.2 per mBtu. And then a legal battle
followed between the no-longer duo with the Supreme Court giving its verdict
that a family agreement cannot take precedence over the policy of government and
the way gas is priced. Whatever the case may be, the project never took off.
But
that was not the only project that met this fate. The Chitrangi plant project
took the same course. Turns out that the company had planned to source coal
from captive mines allocated to the Sasan UMPP. Tata Power went to the court
against plans for using the surplus coal. In 2014, the Supreme Court ruled that
the coal from the mines that are linked to UMPPs cannot be diverted to other
projects. In the year 2018, Uttar Pradesh Power Corporation (UPPCL) cancelled
the Chitrangi project and seized RPower's bank guarantee of Rs 74 crore.
Now
these were honest miscalculations, his decisions were mostly driven by ambition
and at that time it was the trend to bid for huge projects which were financed
by public sector banks. Since businesses were splurging over acquisitions and
expansions, before the economy faced a slowdown, the decisions to do so, only
looked lucrative then. As a result, numerous projects that Anil had raised debt
for ran into cost and time overruns given the then government’s laid-back
approach. And then, after the economic slowdown, the environment saw a world of
difference in its proceedings. The Public Sector Banks that had collected huge
non-performing assets after extensively bankrolling infrastructure and power projects
were suddenly not willing to fund the sector anymore. Consequently, many
projects turned non-starters owing to land acquisition issues or problems with
fuel linkages for power plants.
However,
Anil held onto this bastion with as much vigor, and his resolve remains
undeterred. Owing to his this vigor, Reliance Power announced its first ever
starting revenue from power generating assets for the year 2010-11. This had
pushed up company's profit by 11 percent to Rs. 760.4 crore then. Then in 2013,
it had commissioned a transmission line in Maharashtra which was 311 kms
connecting key industrial centres of Maharashtra like Pune, Aurangabad and
Beed, but then it sold off the transmission assets to Adani Group in 2016.
Today
it manages power generation, and distribution, electricity transmission in
states of Delhi, Madhya Pradesh, Andhra Pradesh and Karnataka and is officially
the powerhouse for the major states of India lighting them up. BSES in Delhi
alone, distributes power to an area spread over 750 sq. km with a customer
density of 3100 per sq km thus boasting of a customer base of more than 2.4
million.
Anil
Ambani could have been India’s power magnate but a string of miscalculations,
strategic blunders, sibling rivalry and mistimed decisions turned the tide for
him.
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