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Jeff Bezos Versus Mukesh Ambani: THE BATTLE FOR RETAIL CROWN

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Reliance Industries and its CEO, Mr Mukesh Ambani have been part of headlines in every newspaper or news channels in recent times. Well, how could the month of November be left behind?

The start of this month did not ring-in merrily for Reliance Industries shares. On November 2, the RIL shares fell sharply by 8.6%. A stock that had been giving a stellar performance by posting a rise of around 170% as compared to the lows of ₹875 in March, suddenly registered a steep decline in the share price. Consequently, its market capitalization also plunged. 

With this, there is another drama taking place and Reliance Industries yet again, is at its centre stage. It made to the headlines recently due to the ongoing battle for the retail crown, dramatically called Jeff Bezos vs Ambani. 

It is the clash between Jeff Bezos and Mukesh Ambani for becoming the ultimate master of the e-commerce segment in India. The striking feature is the subtleness of this battle between the world’s richest men ranked at No.1 and No.6.

Yes! A lot is happening in this regard so, continue reading to know the nitty-gritty of this drama. 

Jeff Bezos vs. Ambani Net Worth

Analysts are considering the current situation as a war between the two top ten billionaires in the world- Mukesh Ambani and Jeff Bezos. Mukesh Ambani is the owner of Reliance Industries and his business strategies are well-appreciated worldwide. However, on the other hand, Jeff Bezos is the CEO of Amazon, a company that is known and operated globally. 

Now many of you might be wondering about Jeff Bezos vs Ambani net worth. According to the Forbes list of billionaires in the world, Mukesh Ambani’s real-time net worth is $ 74.2 billion for control over India's retail sector while Jeff Bezos own $190.6 billion. Hence, the answer to your question- ‘Is Jeff Bezos richer than Mukesh Ambani?’ is yes. In fact, Mr Bezos is the richest person in the world. 

Why Reliance Industries Shares Fell? 

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After the stock market opened on November 2 and the share price of Reliance Industries fell around 5.79% to around 1,935.20 on Bombay Stock Exchange,  the hush-hush began among investors, analysts and brokerage firms. The fall in share price affected the company’s market capitalization bringing it down by approximately 1.23 lakh crores. 

The largest company in India as per market capitalization and profitability witnessed this happening after the financials of September quarter were revealed. The petrochemical and refinery arm could not perform up to the mark resulting in disappointing numbers. 

The quarterly results show that the net profit of Reliance Industries has taken a dip of 15% in the second quarter of the current fiscal. This was coupled by a sharp fall in the company’s refining margins to $5.7 per barrel. The damage caused by the COVID-19 and lockdown in the country is not hidden from anyone. All the economic segments had to face a tough time, hence the retail sector was also harmed. As a result, the retail arm of the Reliance Industries also suffered its share of loss. Finally, the revenue of RIL from its operations has fallen by 22.29% in the second quarter

The only positive news came from RIL’s Jio Infocomm that posted an impressive rise of 187% in the net profit and around 42% hike in its revenue. The boost in profit can be attributed to the restrictions of a pandemic that ultimately led to more usage of data. 

But, the entire company cannot just rely on the performance of just a single segment. It’s the cumulative work of all the arms of RIL that decides its fate! 

What Is The Tussle Between Future Group And Amazon? 

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India, a country that has tonnes of consumers to offer forms an attractive choice of most of the businesses involved in the retail segment. Imagine, the dominance in the retail segment in India is so important that it led to two business tycoons battle for the same. 

With increased penetration of the internet, enhanced bandwidth of the internet and e-commerce users are potential factors luring the players of the retail sector. 

RIL and Mukesh Ambani along with inking strategic partnerships are regressively moving ahead with their plan to make their game stronger in the e-commerce industry of India. In this regard, a few months back RIL made a move to acquire the assets of Future Group, a firm burdened with debt. 

But, this deal worth ₹24,713 crores billion is still under process and the completion of the transaction between Future Group and RIL is disturbed by a third party! Who this third party is? It is non-other than Amazon Inc. 

Let me throw a light on a deal that took place between Future Retail and Amazon in 2019. 

So, Amazon acquired 49% of stake in Future Coupon, the promoter arm of Future Retail. Interestingly, Future Coupon also owns around 7.3% in Future Group while simply makes Amazon an owner of approximately 3.58% stake in the Future Retail in turn. Also, when the deal was stuck, Jeff Bezos had put forward a condition as per which Kishore Biyani (the owner of Future Group) could not sell all his assets which in legal terms is called a non-compete clause.  

Cut to 2020, the deal between Future Group and Reliance was announced. As and when this happened, Jeff Bezos jumped right in and accused the Future Group of breaching the non-compete clause present in their contract from last year. Not only this, Jeff Bezos even got a temporary stay on the transaction (between Reliance and Future Group) from Singapore International Arbitration Centre (SIAC). Jeff Bezos did not stop at this, he went on to write a letter to the Indian Stock Exchanges and asked them to dis-approve the deal between Reliance and Future Group. 

When the allegations were made, Future Retail defended its case quoting that any kind of instructions or ruling given by SIAC has no legality in India. Along with this, both Future Group and Reliance have made their decision clear that they will complete the deal without any delay. 

Road Ahead

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Currently, Future Group and Amazon have a few days to decide whether they would like to continue with the legal proceedings at the SIAC. On the other hand, if Future Group does not agree to the interim stay put forward by SIAC then, in that case, Amazon would have to come to Indian courts for stopping the deal between Future Group and Reliance taking this tussle between the 3 retail giants to a bigger level. 

Conclusion

From what it looks like, the main players in this game are Jeff Bezos (or Amazon) and Mukesh Ambani (or Reliance) and Future Group is basically stuck between the fight for dominance. 

RIL even gave Amazon an option to buy around 40% stake in Reliance Retail Ventures Ltd in September but Jeff Bezos hasn’t much reacted to this offer. So, he is either standing against Mukesh Ambani or waiting for Reliance to make this offer even better. 

Now the question arises- Can Mukesh Ambani overtake Jeff Bezos? Well, it’s a little intricate to answer that question even if the things come in favour of Mr Ambani. Also, since Ambani is way behind Jeff Bezos, nothing can be concluded as of now. But what happens next will be interesting to see! 

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author

Shivani