A Billionaire’s Bet on India’s Rising Middle Class Is Paying Off

Mukesh Ambani’s debt-fueled bet on the rise of the Indian consumer is starting to pay off

A Billionaire’s Bet on India’s Rising Middle Class Is Paying Off
Mukesh Ambani, billionaire and chairman and managing director of Reliance Industries Ltd., speaks during a panel session at the World Economic Forum (WEF) in Davos, Switzerland (Photographer: Simon Dawson/Bloomberg)  

(Bloomberg) --

Billionaire Mukesh Ambani’s debt-fueled bet on the rise of the Indian consumer is starting to pay off, with his retail and telecommunications businesses contributing an increasing share of revenue and profit to his $87 billion empire.

The two divisions accounted for a combined 23 percent of revenue for the year ended March, up from 17 percent in the previous year, according to data compiled by Bloomberg. That growth has come at the expense of the conglomerate’s energy-related arms, which have been the bedrock of Ambani’s business for more than a decade. Their revenue share dropped to 77 percent from 83 percent, the data show.

A Billionaire’s Bet on India’s Rising Middle Class Is Paying Off

Asia’s richest man has ambitions to take on Inc. and Walmart Inc. in India, where the power of the middle class is growing along with demand for e-commerce. Ambani launched the telecommunications business in 2016, spending $36 billion to roll out a 4G wireless network across India and luring millions of subscribers with free or cut-price data services. He’s now building on that business to create an online shopping platform, just as the U.S. giants come up against constraints on foreign e-commerce activity in India.

A Billionaire’s Bet on India’s Rising Middle Class Is Paying Off

Ambani has set big expectations for Reliance’s consumer divisions, saying they will contribute almost as much to the conglomerate’s earnings as energy-related arms by the end of 2028.

The push into e-commerce shows how the billionaire is trying to put his mark on an empire that he largely inherited. Ambani, whose father Dhirubhai founded Reliance in 1959, agreed to split the businesses with his brother Anil three years after their father died without leaving a will. Mukesh got control of the flagship oil refining and petrochemicals arms.

Anil got Reliance’s newer services businesses in the split, including telecommunications. His brother’s entry into the industry and resulting price war has hit many rivals -- including Anil’s Reliance Communications Ltd. -- undercutting market leaders Vodafone Idea Ltd. and Bharti Airtel Ltd. in a price war. Reliance Jio Infocomm Ltd., Mukesh’s telecom unit, saw profit in the year quadruple to 29.6 billion rupees ($427 million), the company said Thursday.

But he’s racked up borrowing to finance that push, with Reliance Industries’ net debt climbing to 1.93 trillion rupees in the year ended March, or about 2.3 times ebitda, according to data compiled by Bloomberg. That compares with the 2.69 times average for companies on the S&P BSE Sensex index as of Dec. 31.

In his quest to build a competitive e-commerce platform, Mukesh Ambani, 62, has been acquiring or purchasing stakes in businesses from Radisys Corp. to Vakt Holdings Ltd. in a series of deals worth $2.5 billion over the past two years. Reliance, Amazon and Walmart’s Bangalore-based Flipkart Online Services Pvt. are seeking to carve up an online shopping market that Morgan Stanley estimates will grow to $200 billion by 2028, from about $30 billion last year.

Ambani may be looking to raise more cash to fund his expansion plans, which include a proposal to add capacity to Reliance Industries’ oil refining operations. He’s considering selling 25 percent of the conglomerate’s refinery business to investors including state-owned Saudi Arabian Oil Co. and Abu Dhabi National Oil Co. in a deal that could fetch at least $10 billion, people familiar with the discussions told Bloomberg earlier this week.

--With assistance from Bhuma Shrivastava and Dave McCombs.

To contact the reporter on this story: P R Sanjai in Mumbai at

To contact the editors responsible for this story: Sam Nagarajan at, Candice Zachariahs

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