It has been quite some years that Asia’s richest man Mukesh Ambani has been trying to reduce the reliance on oil for his company.
And this week showed why.
Following a fall in the share price his conglomerate plunging as much as 8.6 per cent, the wealth of top billionaire of Asia was wiped off by about $6.5 billion on Monday, according to the Bloomberg Billionaires index, which tracks the wealthiest people of the world.
After posting of disappointing earnings for the latest completed quarter late Friday, stock price of Reliance Industries dropped in Mumbai. A tough quarter for its giant oil refinery business was mainly responsible for the company’s disappointing earnings.
Earnings for that unit “were much weaker than our estimate,” analysts at Nomura wrote in a research note following the report.
Over the three months through September, there was a 30 per cent year on year drop in the pre-tax profit of the company even though that slump was offset by performance of other businesses of Reliance which included its retail and technology business, noted the analysts.
Reliance is one of India’s most valuable and recognizable companies. With efforts of transforming it into a global tech giant, its chairman and CEO Ambani has been implementing a shift in focus recently for the powerhouse conglomerate which has businesses sin oil, petrochemicals, telecommunications and retail sectors.
Earlier this year, more than $20 billion in just four months for the tech arm of his business, Jio Platforms was raised by Ambani which turned a lot of heads globally. And the executive’s aggressive ambitions were underscored as he managed to secure half of that amount in just one month.
There is pressure on the CEO to offset the huge hit the company is experiencing in oil and other sectors as well as to prove out the technology that his company has developed, said analysts. The novel coronavirus pandemic induced steep decline in travel, transport, industrial and commercial activity this year has resulted in ravaging of the demand for oil globally.
However, Ambani has higher ambition them tech.
The fundraising spree was continued by the billionaire last month with a focus this time on Reliance Retail, the shopping empire of the company. And a clash with US juggernaut Amazon and Reliance has been brewing in recent weeks over a deal that the later had struck with a local retail chain. This tussle highlights the fierce battle the company is waging to strengthen its footing in the Indian retail industry.
Earlier this year, Amabani was identified as one of the world’s 10 wealthiest people and despite the wipe off of his wealth this week, he is still estimated to be worth $71 billion. His personal wealth has grown with the group drawing in massive investments.
So far this year, a 25 per cent uptick in stocks of Reliance Industries has been noted which has boosted the net worth of Ambani by more than 20 per cent or $12.5 billion, according to Bloomberg Billionaires.
(Adapted from CNN.com)`