MDA – Mukesh Dhirubhai Ambani – the man the world loves to hate.

If you are a shareholder the chances are you love him, if you missed buying his shares, well he did give you a lot of chance to buy. In fact at  Rs. 970 it is still a good buy.

However, if you believe that he is a crook who takes the country for a ride, the bureaucrats are in his pocket, etc. etc. you may be right too. Most industrialists would love to do what he does, but are unable to do so.

Let us accept one thing – he has created shareholder value – despite the fact that in the last few years he has lagged even the index. That could be temporary – or permanent. However EVERY company that is working for shareholder interest has to work for the shareholder. I will judge a company by what it does to my share price. If you had invested Rs. 10,000 in Wipro in 1980 you would be sitting on more than Rs. 500 crores today. That is what Azim Premji did for your wealth. Ditto for many industrialists – Bajaj Auto, Hdfc, Cipla, Eicher,  Hero Honda, Infosys, TCS, Tata Motors, Colgate, HuL, ….the list is endless.

Similarly in the international space companies that have created wealth include Berkshire Hathaway, Coke, McDonalds, PnG, Exxon, Goldman Sachs, Barclays, …of course the list is wrong.

It is very important that as a shareholder you do not consider whether the company is moral, ethical, etc. IT IS NICE TO DEBATE ABOUT THAT, but as an investor your company should create wealth. THAT IS THE ONLY way to judge a company. Not whether the chairman leads a simple life, cleans his own toilet, travels economy – all humbug.

The Economist claims to be a good business magazine with good quality of writing. As a regular reader for a very long time, I too believed that they were. However, their coverage of India and India related events is nothing short of pathetic. They had done many many articles bashing Na Mo. I hope Na Mo treats it similarly when they seek an interview.

The Economist had done an article on Mukesh Ambani – and the article was nothing short of pathetic. Mukesh Dhirubhai Ambani is a good successful businessman who does what is good for his shareholders. If you do not like that, sell your holdings and move on.

Read this http://www.economist.com/news/business/21610238-mukesh-ambani-indias-most-powerful-tycoon-could-make-his-country-better-place-he-would

This article is flawed – about the facts, and about picking up wrong threads, and being selective.

So here is another story telling you why the Economist story is just poor journalism. It is not whether MDA is good or bad…read judiciously

http://www.sswaminathan.com/?p=633

 

 

  1. ironically, the economist and ny times etc and indeed most newsmedia are making tremedous losses and are a sunset industry as far as i understand.or atleast their business models have to drastically change.

    state employed academics and magazine writers have one thing in common: arm chair criticism at no cost.

    shareholder value in monetary terms is one thing,but it is critical to sleep in peace at night knowing that you are not part of a group of thugs. even a mafia boss creates shareholder value!

  2. while trying to understand capitalism,lots of people read Adam smith’s “Wealth of nations”. Actually it is more important to read his other book ” Theory of Moral sentiments”

  3. Dhirubhai Ambani was the one who created most of the shareholder value and not MDA.

    Assuming he did create some(which he didn’t since in ur words, he has lagged the index) does that absolve him of any crimes that he did(if proven). Should he be let go if proved of corruption since he has created shareholder value?? Opposition has every right to blame him of crony capitalism if they think so. MDA has right to answer it or keep his mouth shut(and pays others to speak on his behalf).

    Anyways isn’t corporate governance an important criteria for investments in a particular stock or do u want to ignore that in this case because you are biased because of him helping ur dear Modi become PM. Is that clouding ur judgement?
    Maybe there is a relation in falling ethical standards at reliance group with lagging stock performance.

    Btw, if selling ur holding and going away is a solution then what about Raju of Satyam. Thats the way business is done in india, u buy the share knowing that was at risk. So why punish him now??

    P.S- I have been following this site daily for last 2 years without any comment(mainly because I am lazy), but this post reeked of so much bias, I had to break that tradition. If I hadn’t known abt ur bias towards Modi (frm ur earlier posts), I would have assumed u have been hired by Reliance

  4. Anish

    first of all I have not written anything, I have reproduced 2 articles by 2 people. So your tirade is laughable. But please continue, this blog could do with some humor.

  5. I just read about how the Kokila Hospital in Mumbai was originally meant for the poor, and the A-family turned it into one for the rich.

    That one incident itself made me feel sick.

  6. Subra, I have followed Reliance Industries since 2009 and in last 5 years, company has destroyed shareholders value instead of creating it. May be not a very long period of observation but a good part of MDA’s period in helm.

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