Will RIL's next big scoop melt market?

Reliance Consumer Products, an arm of Mukesh Ambani's diversifying business conglomerate, will enter the icecream business, with its own brand, Bombay Creamery. Ambani is known to go up against dominant players in industries, such as oil refining, telecom and even colas.

This makes the foray into the icecream business that is led by a dairy farmers' cooperative unusual. Yet, Indian business families have a penchant for building diversified groups.

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The Ambanis have been outliers in this respect with their focus on a few basic industries where they have integrated vertically. Yet, for a group the size of Reliance must see the merits of expansion into unrelated businesses.

Operating across different industries lowers the risk of specific market downturns. Diversified groups can allocate capital freely to new businesses. Shared resources can bring down operating costs across divisions. On the flip side, running multiple businesses can affect decision-making timelines.

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Management bandwidth is spread over a wider canvas and could lead to a loss of focus on core operations. Harnessing separate corporate cultures can reduce business value. Investors tend to value diversified conglomerates less than the sum of their parts. It is often more efficient to diversify an investment portfolio than seek the same results through a conglomerate.

Some degree of corporate diversification can be attributed to India's status as a frontline emerging economy that throws up high growth opportunities across a range of industries. Consumption is an obvious theme in the larger India story and has drawn in some of the biggest business groups.

Corporate interest is climbing in segments as disparate as housing, food, entertainment and fashion. India needs its own champions in lifestyle brands, and its business barons are ready for the challenge. The consumer space can yield considerable market shares to local brands that can go toe-to-toe with global ones that dominate the landscape. Icecream is as good a place as any to build a truly international brand from India.