Dilip Shanghvi, the billionaire founder of drugmaker Sun Pharma, ended Reliance Industries promoter Mukesh Ambani’s eight-year run as India’s richest billionaire on Wednesday, according to Forbes. The Bloomberg Billionaires Index, formed in 2012, also ranked Mr Shanghvi ahead of Mr Ambani for the first time ever.
According to real time data on Forbes, 59-year old Mr Shanghvi’s net worth at $21.5 billion is $1.1 billion more than Mr Ambani’s net worth of $20.4 Billion. Mr Shanghvi is a self-made billionaire, while Mr Ambani inherited the business from his father the late Dhirubhai Ambani.
Mr Shanghvi added billions to his net worth in the first two months of this year. According to Bloomberg, his fortune went up by $4.5 billion this year, while Mr Ambani’s net worth increased by just $153 million since the start of 2015.
The rapid growth in Mr Shanghvi’s net worth was on account of the stellar MARKET performance of his company Sun Pharma, India’s biggest drugmaker by market value.
Over the last three months, Sun Pharma shares have gained 22 per cent as against a 7.5 per cent drop in RIL. Mr Ambani’s company has underperformed the BSE Sensex as well.
RIL has underperformed because its business model is commodity driven. Refining and petrochemicals contribute up to 95 per cent to the company’s net sales and 85 per cent to its operating profit. The 50 per cent slump in global CRUDE OIL prices has therefore impacted RIL heavily. The December quarter marked RIL’s first profit drop in nine quarters.
On the other hand, Sun Pharma operates in the global healthcare industry, where Indian companies have a pricing advantage over their global peers. The drugmaker derives nearly 60 per cent of its sales from US.
Sun Pharma, with a MARKET cap of Rs. 2.1 trillion, is much smaller than RIL, which has a MARKET value of Rs. 2.92 trillion. The smaller size, however, is not an impediment for Mr Shanghvi because he owns nearly 61 per cent stake in Sun Pharma as compared to the 45 per cent stake the 57-year old Mr Ambani holds in RIL.
Many of Sun Pharma’s recent bets have proved successful aiding its STOCK performance. In April 2014, Sun Pharma acquired its rival Ranbaxy Labs from Japan’s Daiichi Sankyo for $4 billion last year, making it the world’s fifth-largest maker of generic drugs.
Reliance has also been INVESTING heavily in consumer-facing areas like retail and telecom to expand beyond refining and petrochemicals. RIL’s retail business posted its first annual profit last year, but the company is yet to roll out its telecom services despite large investments.