Magazine

What's Right about Reliance


"India's Reliance" (Cover Story, Asian Edition, June 25) recognizes some of our "assets," but also comments on several "deficits," as perceived by you. We have the following comments to offer:

You say Reliance Industries Ltd. operates behind tariffs as high as 41% on some of its products. The reality is that the weighted average import tariff on our products is 17%.

You state that it is not clear that [Reliance] knows how to compete against the world's best companies. Reliance is India's largest manufacturing exporter. We export a wide range of products to more than 100 countries, including the U.S., Japan, and European nations. Surely this demonstrates our ability to compete in sophisticated international markets.

You state that Indian governments have altered regulations in industries that Reliance has subsequently dominated. Could it be that Reliance is one of the few companies that has shown the vision and capability to embrace the process of reforms and globalization, while much of Indian industry has failed to respond to the challenge?

As for your comment that we are "unschooled in customer service," we point to the success of our cellular-telephone business. In a short span of time, we have created a modern cellular network, covering 106 cities and towns, and more than 212,000 subscribers in a most challenging environment.

Your observation that the "family makes all the decisions" is far-fetched. Reliance employs among the largest number of professionals in the entire country, provides the highest degrees of empowerment, and strongly believes in delegation of authority.

You mention that our share price has softened recently. The softening of the stock price is part of the general decline in stock prices in international and domestic markets. To be fair, you should have mentioned that.

Your statement that we postponed our plans for listing on the New York Stock Exchange is erroneous. We have at no stage indicated any firm timing for that listing.

You have chosen to give wide coverage to a malicious campaign of disinformation, launched at the behest of our corporate rivals. The reference to events of nearly 10 years past demonstrates the desperation of these vested interests and their frustration at the failure of their continuous efforts to tarnish the reputation of the Reliance group.

It is also unfortunate that you have attributed certain quotes to Anil Ambani, our managing director, without his consent. Ambani had met your correspondents to provide background. Regrettably, even Ambani's designation has incorrectly been stated as joint managing director, whereas he is actually managing director. Likewise, you have attributed a quote to another member of our management team, Amitabh Jhunjhunwala (whose designation has also been incorrectly stated), though he had sent a fax that no comments were to be attributed to him.

We trust you'll publish this response to enable your readers to judge all relevant facts and material.

Yogesh Dasai

Corporate Communications

Reliance Industries Ltd.

Bombay

This is one of the best stories I have ever read on Reliance. And I say so because in my view, as far as candid journalism about Reliance is concerned, it's dead. What you hear and see of them is an eyewash. The instances quoted in the article must have been very difficult to find, but then good journalism is all about writing the ugly truth.

Congratulations for a great piece.

Damini Sood

Bombay

Millions of Indians are grateful to the Ambani family for making them richer, thanks to the appreciation in value of the stocks of Reliance Industries and Reliance Petroleum. If the Indian government had spent $5 billion to promote the stock exchange culture among the masses of this country, it would not have achieved the gains that Chairman Dhirubhai H. Ambani has achieved: The reason has been his belief in giving investors a fair return.

S.K. Sethi

New Delhi

Reliance Group is probably India's only important Old Economy company with clear blueprints to be a major player in the New Economy, while the others flounder. The huge digital infrastructure that Reliance is building in India will probably pave the way for India to emerge as one of the top five digital economies in the world.

M. Suku

Bombay The commentary "Brussels needs to crack the whip on energy" (European Business, June 25) contained factual errors and unfounded assertions at the expense of Enel. The article maintains that Enel imposes tariffs. The truth is that electricity tariffs in Italy have been set by an independent authority since 1997. According to your article, Enel was forced to sell 15% of its generating capacity by the antitrust authority. The power company sales were mandated by a 1999 government decree that sets the agenda for Italy's liberalization.

As for only 35% of customers being able to buy their energy from suppliers other than Enel, that isn't a fixed situation, as the article implies. You don't move from a monopoly to an open market at the snap of a finger; the opening of the market will be gradual. Once Enel concludes its mandated capacity sales--by 2003, according to the decree, but probably sooner, thanks to our own efforts--the parameters for participation in the free market will be relaxed significantly.

Regarding the statement that Enel relies on old, inefficient power plants: Our present level of efficiency is equal to, if not slightly higher than, the European average and higher than the level in the U.S. And we have embarked on an aggressive efficiency program. By converting plants to combined cycle gas generation, rebalancing fuel mixes, and improving operating practices, generation costs will be cut by 20% by 2005. At that point, Enel will be approaching the industry's best practices.

Finally, the notion that the government is protecting Enel from competition to facilitate a second share offering is absurd and, in fact, isn't explained.

Franco Tato

Chief Executive

Enel

Rome "Another victim of the Intifada" (The Middle East, June 25) describes thoroughly the implications of the disagreement between the Israelis and the Palestinians. However, the title seems to accuse the Palestinians of all the wrongdoing. The fact that Ehud Barak and Ariel Sharon did not respect the peace treaties and did not freeze Jewish settlement on the West Bank are, in my opinion, the root of the problem. All the economic downsides you are writing about are the result of, let's say, the disagreement between both sides.

Karim Zine

Tunis


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