Why I am Logging out of All Reliance Businesses- by Binu S Thomas (www.moneylife.in).
An Open Letter to Mukesh Ambani, CMD, Reliance Industries
Binu S Thomas
25
November 2020 122
Dear Mukeshbhai,
Thirty-five years ago, back in 1985 as a 23-year-old reporter freelancing for an international weekly news magazine, I had the privilege of sitting down with your late father Dhirubhai Ambani for a one-on-one interview. Dressed in immaculate white safari suit and seated on a pristine white sofa in his office in Maker Chambers IV, at Nariman Point in Mumbai, the business legend held forth on a number of issues. Both you and your brother Anil, who handled media relations then and facilitated the powwow, were present in the room, listening intently as your dad spoke.
The high point of the interview came when I asked Dhirubhai why Reliance, despite whopping profits, was not paying a single rupee as corporate income-tax year-after-year. That query irked him and he, quite literally, pulled his recent stroke-impaired frame to the edge of the sofa to drive home the point that Reliance was the highest tax payer in the country. More customs, excise, sales tax, octroi, he declared, than any other private company. As he saw it, the income-tax Reliance was not paying on account of reinvesting its profits to expand the business was both lawful and did not detract from its massive contribution to the national exchequer.
I have no doubt that, over the decades, Reliance has contributed lakhs of crores to the nation’s finances. Probably more than any other private company in India’s history. And that is a commendable achievement, one that I applaud.
But that was not enough to stop me from recently porting out of my Jio mobile connection. It will also not be enough, sadly, to make me rescind my decision to avoid consuming other products or services from Reliance entities, going forward. I will no longer be buying an electrical appliance from Reliance Digital, or grocery items from Reliance Retail or Jiomart or fuelling up at a Reliance Petroleum outlet. I will try my damn best to avoid tuning into any of 71 television channels Reliance controls through Network 18 and accounting, as you claimed in your 2019 Reliance AGM statement, for 800 million viewers or some 95% of the television viewing audience in the country. My Jio Wi-Fi connection, which expires next month, will not be renewed. You see I am simply logging out of all Reliance businesses.
Any right-thinking citizen, I believe, has to measure a large corporate not just by the usual yardsticks of the value-for-money it gives customers, the employment it provides to lakhs of people, the contribution to the national purse or the social responsibilities it discharges to the community at large. Large businesses, such as Reliance, have a special duty to ensure their market practices are fair and promote long-term consumer and, more importantly, national well-being.
In recent years, I have been distressed to note the competition-killing 'winner-at-all-costs' approach Reliance has been pursuing. When Jio launched, it announced free voice calls for life making it impossible for the competition, including your brother’s Reliance Communications, which had to incur exorbitant spectrum charges in the early years of the telecom revolution, to survive.
The Competition Commission of India (CCI) dismissed Bharti Airtel’s 2017 complaint against Jio saying free calls were fine since Jio did not have a dominant position in the industry (conveniently forgetting the predatory pricing was designed to precisely gain dominance which it since has). Soon after CCI initiated an investigation into Airtel and other telcos for allegedly trying to block Jio’s entry!
Banks that had lent to your competitor telcos were forced to incur massive losses on their loans. This since competitors resorting to predatory pricing was not anticipated by either lenders or borrowers who, rightly, expected the CCI to step in if such an eventuality were to arise. Since most of the affected banks were nationalised ones, the hit ultimately has to be borne by the taxpayer.
Meanwhile, you got to use a collapsed Reliance Communications’ spectrum for cheap. Then in October 2019, after much of the competition, including international heavyweight Vodafone, had been pretty much decimated, Reliance Jio announced it would now start charging consumers for voice calls. So much for life-time promises!
More recently, the passage of three controversial farm bills in parliament without discussion or debate have been conveniently timed to aid Reliance’s massive push into retail. The Farmers Produce Trade and Commerce Bill helps large private players like Reliance bypass the existing APMC structure and deal directly with farmers.
Not a bad idea, theoretically speaking, for farmers except that, in practice mega players like Reliance will effectively set the price they get and, over time, narrow their options for getting better prices elsewhere.
Two other bills, one dealing with promotion of contract farming and another removing stocking limits on many essential items of daily use like cereals, pulses, oils and onions, will also benefit large players like Reliance more than anyone else.
The entry of Reliance into any business over the years has been almost always accompanied by a sharp reduction in the competition in that business, often facilitated by exceptionally quick and uncannily favourable policy changes.
Back in your father’s heyday, the story, whether apocryphal or not, was of a seat being permanently booked for Reliance in business class of the Indian Airlines Airbus A300s that used to fly between Delhi and Mumbai, then Bombay. There was only one domestic airline at that time and only limited number of flights unlike today. A call from a friendly Indian Airlines station manager signalling which minister was booked to fly often resulted in the political worthy finding, abracadabra, a senior Reliance executive seated next to him for the nearly 90 minutes flight. No wrong committed even if true. It is well known that innovative policy influencing has long been practised at Reliance.
The recent decision of a Singapore arbitrator to temporarily stay, based on a petition filed by Amazon, the mega deal of Reliance acquiring India’s largest retail group Future Retail, has mysteriously led to a series of articles against foreign ecommerce players and the big daddy of them all, Amazon, in Reliance-controlled media outlets. “How foreign ecommerce giants pose a threat to Aatmanirbhar Bharat”, “Amazon deliberately mischaracterised Future Retail suit to confuse court: Harish Salve” and “Amazon-Future deal: Tail wagging dog” are some recent headlines in Reliance-controlled and Network 18-owned media property moneycontrol.com, which tell their own story.
And now, in the midst of the legal battle with Amazon, has come the news that CCI had in quick time approved the Rs24,713 crore Reliance-Future Retail deal. This overriding an objection filed by the American e-commerce giant to the CCI giving its approval. No concerns apparently of how this super concentration of business power in organised retail will affect the long-term interests of the Indian consumer. That said, I would welcome any step the CCI may take against the growing concentration of retail power by Amazon too.
Mukeshbhai, I am sure, my one-man decision to avoid all Reliance products and services, in protest at the growing monopolistic nature of your business practices, will not give you any sleepless nights.
But I do hope and pray
that you will, as a smart business tycoon, realise—perhaps in your quietest
moments—that the long-term interests of your businesses are tied not just to
how big and powerful they become but the price the people of this still
largely poor and developing country have to pay for your vaulting business
ambitions.
With Kind Regards
Binu S
Thomas
(The
author is a former Indochina Correspondent and Kuala Lumpur Bureau Chief of
Time Inc’s erstwhile Asiaweek magazine.)
No comments:
Post a Comment