What do you think that dreaming is a bad habit? I don’t think so, and I learnt it from a person whose name is Dhiru Bhai Ambani. Moreover, I saw, saying to people that dreaming is a bad habit whether it is day or night dreaming, because they afraid to taking dreams. Often, they think that they don’t have this much of courage and caliber to fulfill their dreams. I think the 90% of people on this earth are always afraid to taking dreams. And only 1% from the rest of 10% has a real desire to fulfilling of their dreams, and Dhiru Bhai Ambani is one of these people. My favorite slogan of Dhiru Bhai Ambani’s “Think big, think fast, and think ahead, ideas are no one’s monopoly”.
Dhirubhai Ambani
Born: December 28, 1932
Died: July 6, 2002
Achievements: Dhiru Bhai Ambani built India's largest private sector company. Created an equity cult in the Indian capital market. Reliance is the first Indian company to feature in Forbes 500 list
Dhirubhai Ambani was the most enterprising Indian entrepreneur. His life journey is reminiscent of the rags to riches story. He is remembered as the one who rewrote Indian corporate history and built a truly global corporate group.
(1) Early life Dhirajlal Hirachand Ambani was born on 28 December 1932, at Chorwad, Junagadh in the state of Gujarat, India, into a Modh family of very moderate means. He was the third son of a school teacher. When he was 16 years old, he moved to Aden, Yemen. Initially Dhirubahi worked as a despatch clerk with A. Besse & Co. Two years later A. Besse & Co. became distributor for Shell products and Dhirubhai was promoted to manage the company’s oil-filling station at the port of Aden. He was married to Kokilaben and had two sons and two daughters.
(2) Life in Aden In the 1950s the Yemini administration realized that their main unit of currency Rial was in disappearing. After investigating the matter it was realized that all Rials were routed to the Port City of Aden. There a young man in twenties was placing unlimited buy orders of Yemini Rials. During those days the Yemini Rial was a pure silver coin and was much in demand at the London Bullion Exchange. Young Dhirubhai would buy Rial, melt it in pure silver and sell it to bullion traders in London. In the later part of his life while talking to reporters it is believed that he said “The margins were small but it was money for jam. After three months, it was stopped. But I made a few lakh of rupees. I don’t believe in not taking opportunities. ”
(3) Reliance Commercial Corporation Ten years later, Dhirubai returned to India and started a business Reliance Commercial Corporation with a capital of Rs. 15000. 00 (US$ 375). The primary business of Reliance Commercial Corporation was import polyester yarn and export spices. The business was setup in partnership with Chambaklal Damani, his second cousin who was also there with him in Aden, Yemen. The first office of Reliance Commercial Corporation was set up at Narsinathan Street at Masjid Bunder. It was a 350 Sq. Ft. room with a telephone, one table and three chairs. Initially they had two assistants to help them in their business. In 1965 Chambaklal Damani and Dhirubhai Ambani ended their partnership and Dhirubhai started on his own. It is believed that both had different tempermants and a different take on business, while Mr. Damani was a cautious trader and did not believe in building Yarn inventories, Dhirubhai was a known risk taker and he considered that buliding inventories with anticipating a price rise and making some profit is good for growth. During this period Dhirubahi and his family used to stay in an one bedroom apatment in Jaihind Estate in Bhuleshwar. In 1968 he moved from the chawl to an upmarket apartment at Altamount Road in South Mumbai. His first car was Premier Padmini, the Indian version of Fiat 1100, later he brought a Mercedez-Benz Car. In 1970s he brought a white Cadillac Car.
(3) Reliance Textiles sensing good opportunity in the business of textiles, Dhirubhai started his first textile mill at Naroda, near Ahmedabad in the year 1966. Textiles were manufactured using polyester fibre yarn. Dhirubhai started the brand “Vimal”, which was named after his elder brother Ramaniklal Ambani’s son Vimal Ambani. Externsive marketing of the brand “Vimal” in the interiors of India made it a household name. Franchise retail outlets were started that used to sell only “Vimal” brand of textiles. In the year 1975 a Technical team from the World Bank visited Reliance Textiles’ Manufacturing unit. This unit has the rare distinction of being certified as “excellent even by developed country standards” in that period.
(4) Initial Public Offering Dhirubhai Ambani is credited with starting the equity cult in India. More than 58,000 investors from various parts of India subscribed to Reliance’s IPO in 1977. Dhirubhai was able to convince people of rural Gujrat that being shareholders of his company will only bring returns to their investment. Reliance Industries holds the distinction that it is the only Public Limited Company whose several Annual General Meetings were held in stadiums. In 1986, The Annual General Meeting of Relaince Industries was held in Cross Maidan, Mumbai, was attended by more than 30,000 shareholders.
(5) Dhirubhai’s Control over Stock Exchanges In 1982 Reliance Industries was coming up with a rights issue of partly convertible debentures. It was rumored that the company is making all efforts to ensure that the stock prices did not slide a inch. Sensing an opportunity a bear cartel which was a group of stock brokers from Calcutta started to short sell the shares of Reliance. To counter this group of stock brokers till recently referred as “Friends of Reliance” started to buy the short sold shares of Reliance Industries on Bombay Stock Exchange. The Bear Cartel was acting with a belief that the Bulls will be short of cash to complete the transaction and would be ready for settlement under the “Badla” trading system prevalent in Bombay Stock Exchange during those days. The bulls kept on buying and a price of Rs.152 per share was maintained till the day of settlement. On the day of settlement the Bear Cartel was taken a back when the Bulls demanded a physical delivery of shares. To complete the transaction the much needed cash was provided to the stock brokers who had brought shares of Reliance by none other than Dhirubhai Ambani. In case of non-settlement the Bulls demanded an “Unbadla” (penalty sum) of Rs. 35 per share. With this the demand increased and the shares of Reliance shot above 180 rupees in minutes. The settlement caused enormous uproar in the market and Dhirubhai Ambani was the unquestioned king of the stock markets. He proved to his detractors as to how dangerous it is to play with Reliance. The situation was completely out of control. To get a solution for this situation the Bombay Stock Exchange was closed for three business days. Authorities of Bombay Stock Exchange intervened in the matter and brought down the “Unbadla” rate to Rs. 2 with a stipulation that the Bear Cartel has to give the delivery of shares within few days. The Bear Cartel brought shares of Reliance from the market at higher price levels and it was also realized that Dhirubhai Ambani himself supplied those shares to the Bear Cartel and earned a healthy profit out of The Bear Cartel’s adventure after this incident many questions were raised by his detractors and the press. Not many people were able to understand as to how a yarn trader till a few years ago was able to get in so much of cash flow during the crisis. The answer to this was provided by then finance minster Pranab Mukherjee ] in the parliament. He informed the house that Non-Resident Indian had invested upto Rs. 220 Million in Reliance during 1982-83. These investments were routed through many companies like Crocodile, Lota and Fiasco. These companies were primarily registered in Isle of Man. The interesting factor was all the promoters or owners of these companies had a common surname Shah. An investigation by the Reserve Bank of India in the incident did not find any unethical or illegal acts or transactions committed by Reliance or its promoters.
(6) Diversification Over time his business has diversified into a core specialisation in petrochemicals with additional interests in telecommunications, information technology, energy, power, retail, textiles, infrastructure services, capital markets, and logistics. The company as a whole was described by the BBC as “a business empire with an estimated annual turnover of $12bn, and an 85,000-strong workforce”.
(7) Criticism Despite his almost Midas touch, Ambani has known to have flexible values and an unethical streak running through him. His biographer himself has cited some instances of his unethical behavior when he was just an ordinary employee at a petrol pump in Dubai. He has also been known to have links with the V P Singh government and later the BJP government. He has been accused of having manipulated government policies to suit his own need, and has been known to be a king-maker in government elections. Although most media sources tend to speak out about business-politics nexus, the Ambani house has always enjoyed more protection and shelter from the media storms that sweep across the country.
(8) Unauthorized Biography Hamish McDonald, who was the Delhi bureau chief for the Far Eastern Economic Review for several years, published an unauthorised biography of Ambani in 1998 in which both his achievements and shortcomings were reported, but the Ambanis threatened legal action if the book was published in India.
(9) Death Dhirubhai Ambani was admitted to the Breach Candy Hospital in Mumbai on June 24, 2002 due to a major “brain stroke” suffered by him. This was the second stroke, the first one had occurred in the year February 1986 and had kept his right hand paralyzed. He was in a state of coma for more than week. A battery of highly efficient doctors was unable to save his life. He breathed his last on July 6, 2002, at around 11:50 P. M. (Indian Standard Time). His funeral procession was not only attended by business people, politicians and celebrities but also by thousands of ordinary people. His elder son Mukesh Ambani performed the last rites as per the Hindu traditions. He was cremated at the Chandanwadi Crematorium in Mumbai at around 4:30 PM (Indian Standard Time) on July 7, 2002. He is survived by Kokilaben Ambani, his wife, two sons, Mukesh Ambani and Anil Ambani, and two daughters, Nina Kothari and Deepti Salgaocar. On Dhirubhai Ambani's first death anniversary, the Union Government released a postage stamp in his memory.
(10) Film A film inspired by the life of Dhirubhai is set to release in January 2007. The Hindi Film Guru, directed by Mani Ratnam and music by A. R. Rahman will show the struggle of a man who strives to make his mark in life. The movie stars Abhishek Bachchan and Aishwarya Rai in leading roles
(11) Awards and Recognitions November 2000 – Conferred ‘Man of the Century’ award by Chemtech Foundation and Chemical Engineering World in recognition of his outstanding contribution to the growth and development of the chemical industry in India 2000, 1998 and 1996 – Featured among ‘Power 50 – the most powerful people in Asia by Asiaweek magazine. June 1998 – Dean’s Medal by The Wharton School, University of Pennsylvania, for setting an outstanding example of leadership. August 2001 – The Economic Times Award for Corporate Excellence for Lifetime Achievement Dhirubhai Ambani was named the Man of 20th Century by the Federation of Indian Chambers of Commerce and Industry (FICCI). A poll conducted by The Times of India in 2000 voted him “Greatest Creator of Wealth in the Century”.
(12) Famous Quotes from beginning Dhirubhai was seen in high-regard. His success in the petro-chemical business and his story of rags to riches made him a cult figure in the minds of Indian people. As a quality of business leader he was also a motivator. He gave very less of public speeches but the words he has spoken are still remembered for their value.
“Growth has no limit at Reliance. I keep revising my vision. Only when you dream it you can do it. ”
“Think big, think fast, think ahead. Ideas are no one’s monopoly”
“Our dreams have to be bigger. Our ambitions higher, our commitment deeper, and our efforts greater. This is my dream for Reliance and for India. ”
“You do not require an invitation to make profits.”
“If you work with determination and with perfection, success will follow.”
“Pursue your goals even in the face of difficulties, and convert adversities into opportunities.”
“Give the youth a proper environment. Motivate them. Extend them the support they need. Each one of them has infinite source of energy. They will deliver. ”
“Between my past, the present and the future, there is one common factor: Relationship and Trust. This is the foundation of our growth”
“We bet on people.”
“Meeting the deadlines is not good enough, beating the deadlines is my expectation.”
“Don’t give up, courage is my conviction.”
”Think big, think fast, think ahead, ideas are no one’s monopoly”
“Our dreams have to be bigger, our ambitions higher, our commitments dipper, and our efforts greater. This is my dream for Reliance and for India. ”
Growth through Vision:
“Growth has no limit at Reliance. I keep revising my vision.
Only when you can dream it, you can do it. ”
“Between my past, the present and the future, there is one common factor: Relationship and Trust. This is the foundation of our growth. ”
- Dhirubhai H. Ambani
Founder Chairman
The two faces of Dhirubhai Ambani
HE achieved what almost everybody would consider impossible. In a life spanning 69 years, he built from scratch India’s largest privately controlled corporate empire. Dhirajlal Hirachand – better known as Dhirubhai – Ambani would often say that success was his biggest enemy. He was a man who aroused extreme responses in others. Either you loved him or you hated him. There was just no way you could have been indifferent to this amazing entrepreneur who thought big, acted tough, knew how to bend rules or have rules bent for him. He was a visionary as well as a manipulator, a man who communicated with the rich and the poor with equal felicity, who was generous beyond the call of duty with those whom he liked and utterly ruthless with his rivals – a man of many parts, of irreconcilable contrasts and paradoxes galore.
Dhirubhai Ambani expired on Saturday July 6, roughly ten minutes before midnight, at Mumbai’s Breach Candy Hospital where he had been admitted after he suffered a vascular stroke on the evening of June 24. This was his second stroke – the first had occurred more than sixteen years earlier, in February 1986, leaving the right side of his body paralyzed. At his cremation, the well-heeled rubbed shoulders with the ordinary. No Indian businessman ever attracted the kind of crowd that Dhirubhai did on his last journey. After his cremation on the evening of Sunday July 7, his elder son Mukesh reminded those gathered on the occasion that in 1957, when Dhirubhai arrived in Mumbai from Aden in Yemen, he had only Rs 500 in his pocket.
He was not exactly a pauper since Rs 500 meant much more than what the amount means in this day and age. Nevertheless, one could not ask for a more spectacular ‘rags-to-riches’ tale. The second son of a poorly paid school-teacher from Chorwad village in Gujarat, he stopped studying after the tenth standard and decided to join his elder brother, Ramniklal, who was working in Aden at that time. (Not surprisingly, Dhirubhai ensured that his two sons went to premier educational institutions in the US – Mukesh was educated at Stanford University and Anil at the Wharton School of Business. )
The first job Dhirubhai held in Aden was that of an attendant in a gas station. Half a century later, he would become chairman of a company that owned the largest oil refinery in India and the fifth largest refinery in the world, that is, Reliance Petroleum Limited which owns the refinery at Jamnagar that has an annual capacity to refine up to 27 million tonnes of crude oil.
When he died, the Reliance group of companies that Dhirubhai led had a gross annual turnover in the region of Rs 75,000 crore or close to US $ 15 billion. The group’s interests include the manufacture of synthetic fibres, textiles and petrochemical products, oil and gas exploration, petroleum refining, besides telecommunications and financial services. In 1976-77, the Reliance group had an annual turnover of Rs 70 crore. Fifteen years later, this figure had jumped to Rs 3,000 crore. By the turn of the century, this amount had skyrocketed to Rs 60,000 crore. In a period of 25 years, the value of the Reliance group’s assets had jumped from Rs 33 crore to Rs 30,000 crore.
The textile tycoon’s meteoric rise was not without its fair share of controversy. In India and in most countries of the world, there exists a close nexus between business and politics. In the days of the licence control
raj Dhirubhai, more than many of his fellow industrialists, understood and appreciated the importance of ‘managing the environment’, a euphemism for keeping politicians and bureaucrats happy. He made no secret of the fact that he did not have an ego when it came to paying obeisance before government officials – be they of the rank of secretary to the Government of India or a lowly peon.
Long before Dhirubhai entered the scene, Indian politicians were known to curry favour with businessmen – licences and permits would be farmed out in return for handsome donations during election campaigns. The crucial difference in the business-politics nexus lay in the fact that by the time the Reliance group’s fortunes were on the rise, the Indian economy had become much more competitive. Hence, it was insufficient for those in power to merely promote the interests of a particular business group; competitors had to simultaneously be put down. This was precisely what happened to the rivals of the Ambanis.
Who remembers Swan Mills? Or Kapal Mehra of Orkay? Even Nusli Wadia of Bombay Dyeing is a pale shadow of what he would certainly have liked to be. The undivided Goenka family that used to control the
Indian Express chain of newspapers – which carried on a campaign against the Reliance group in 1986-87 – is currently divided into three factions. Whereas the multi-edition newspaper has not entirely lost its feisty character, it is yet to fulfil its late founder Ramnath Goenka’s cherished dream of becoming a market leader in at least one of its many publishing centres.
A popular joke starts with a question: Which is the most powerful political party in India? Answer: the Reliance Party of India. Others divide the country’s politicians into two groups: a very large ‘R-positive’ group and a very small ‘R-negative’ section. It is hardly a secret that Dhirubhai’s support base would easily cut across political lines. Very few politicians have had the gumption to oppose the Ambanis, just as the overwhelming majority of journalists in the country preferred not to be critical of the Reliance group. The Indian media, most of the time, has chosen to lap up whatever has been doled out by the group’s public relations executives. The bureaucracy too has, by and large, favoured the Ambanis, not merely on account of the fact that many
babus have got accustomed to receiving expensive hampers on the occasion of
diwali.
While Dhirubhai did not have too many scruples when it came to currying favour with politicians and bureaucrats, what cannot be denied is the fact that perhaps no businessman in India attracted the kind of adulation he did. He was more than just a legend in his lifetime. He successfully convinced close to four million citizens, most of them belonging to the middle class, to invest their hard-earned savings in Reliance group companies. He was fond of describing Reliance shareholders as ‘family members’ and the group’s annual general meetings acquired the atmosphere of large
melas attended by hordes.
What cannot also be refuted is the fact that the Reliance group believed in rewarding its shareholders handsomely. Much of the credit for the spread of the so-called ‘equity cult’ in India in recent years should rightfully go to Dhirubhai, even if the Reliance group was often accused of manipulating share prices. Two group companies that once carried the cumbersome names of Reliance Poly-Ethylene and Reliance Poly-Propylene – popularly called Ilu and Pilu – went to the extent of blandly stating in the fine print of their public issue prospectus documents that the value of the shares of the companies had been increased though thin and circular trading. On another occasion in January 1998, a functionary of Reliance Petroleum replied to a show-cause notice served on the company by agreeing to shell out a sum of Rs 25 crore to ‘buy peace’ with the income tax authorities.
When, after having spent eight years in Aden, Dhirubhai returned to Mumbai, his lifestyle was akin to that of any ordinary lower middle class Indian. In 1958, the year he started his first small trading venture, his family used to reside in a one room apartment at Jaihind Estate in Bhuleshwar. After trading in a range of products, primarily spices and fabrics, for eight years, Dhirubhai achieved the first of the many goals he had set for himself when he became the owner of a small spinning mill at Naroda, near Ahmedabad. He did not look back.
He decided that unlike most Indian businessmen who borrowed heavily from financial institutions to nurture their entrepreneurial ambitions, he would instead raise money from the public at large to fund his industrial ventures. In 1977, Reliance Industries went public and raised equity capital from tens of thousands of investors, many of them located in small towns. From then onwards, Dhirubhai started extensively promoting his company’s textile brand name, Vimal. The story goes that on one particular day, the Reliance group chairman inaugurated the retail outlets of as many as 100 franchises.
He had by then already succeeded in cultivating politicians. Indira Gandhi returned to power in the 1980 general elections and Dhirubhai shared a platform with the then prime minister of India at a victory rally. He had also become very close to the then finance minister Pranab Mukherjee, not to mention the prime minister’s principal aide R. K. Dhawan. He realised that it was crucial to be friendly with politicians in power, especially at a time when the group had embarked on an ambitious programme to build an industrial complex at Patalganga to manufacture synthetic fibres and intermediates for polyester production.
In 1982, Dhirubhai created waves in the stock markets when he took on a Kolkata-based cartel of bear operators that had sought to hammer down the share price of Reliance Industries. The cartel badly underestimated the Ambani ability to fight back. Not only did Dhirubhai manage to ensure the purchase of close to a million shares that the bear cartel offloaded, he demand physical delivery of shares. The bear cartel was rattled. In the process, the bourses were thrown into a state of turmoil and the Bombay Stock Exchange had to shut down for a couple of days before the crisis was resolved.
The mid-eighties were a period during which the Reliance group got locked in a bitter turf battle with Bombay Dyeing headed by Nusli Wadia. The two corporate groups were producing competing products – Reliance was manufacturing purified terephthalic acid (PTA) and Bombay Dyeing, di-methyl terephthalate (DMT). Wadia lost the battle and reportedly became the source of information for many of the articles against the Ambanis that subsequently appeared in
The Indian Express. In 1985, the Mumbai police accused a general manager in a Reliance group company of conspiring to kill Wadia, a charge that was never established in a court of law. Many years later, a newspaper owned by the Ambanis would accuse Wadia of illegally holding two passports and played up the fact that he was Mohammed Ali Jinnah’s grandson.
1986 was a crucial year for Dhirubhai. He suffered a stroke in February that year. A few months later, the
Express began publishing a series of articles attacking the Reliance group as well as the Indira Gandhi regime for favouring the Ambanis. These articles were coauthored by Arun Shourie who, ironically, as Union Minister for Disinvestment in the Atal Behari Vajpayee government, presided over the sale of 26 per cent of the equity capital of the former public sector company, Indian Petrochemicals Corporation Limited (IPCL), to the Reliance group in May this year. By gaining managerial control over IPCL, the Reliance group would now be able to dominate the Indian market for a wide variety of petrochemical products.
Shourie’s coauthor for the famous series of anti-Reliance articles was Chennai-based chartered accountant S. Gurumurthy who happens to be a leading light of the Swadeshi Jagaran Manch, an outfit that espouses the cause of economic nationalism and is closely affiliated to the Rashtriya Swayamsevak Sangh (RSS), the ideological parent of the ruling Bharatiya Janata Party (BJP). The
Express articles written by Shourie and Gurumurthy meticulously detailed a host of ways in which the government of the day had gone out of its way to assist the Ambanis. One article was on the subject of how the Reliance group imported ‘spare parts’, ‘components’ and ‘balancing equipment’ of textile manufacturing machinery to nearly double its production capacities. The article provocatively claimed the Ambanis had ‘smuggled’ in a plant.
Another story detailed how companies registered in the tax haven, Isle of Man, with ridiculous names like Crocodile Investments, Iota Investments and Fiasco Investments had purchased Reliance shares at one-fifth their market prices. Curiously, most of these firms were controlled by a clutch of nonresident Indians who had the same surname, Shah. Though Pranab Mukherjee had to change a reply he gave in Parliament on the investments made by these firms, an inquiry conducted by the Reserve Bank of India could not find any evidence of wrongdoing. Yet another article detailed how the group had been the beneficiary of a ‘loan mela’ – a number of banks had loaned funds to more than 50 firms that had all purchased debentures issued by Reliance Industries.
Vishwanath Pratap Singh was one of the few politicians who took on the Ambanis. In May 1985, as finance minister in Rajiv Gandhi’s government, he suddenly shifted imports of PTA from the OGL (Open General Licence) category. At that juncture, Reliance needed to import this product to manufacture polyester filament yarn. It was found that the group had ‘persuaded’ a number of banks to open letters of credit that would allow it to import almost one full year’s requirement of PTA on the eve of the issuance of the government notification changing the category under which PTA could be imported. It was hardly a coincidence that soon after V. P. Singh fell out with Rajiv Gandhi, various tax agencies of the Indian government raided the premises of the
Express group.
Things got difficult for the Ambanis after V. P. Singh became prime minister in December 1989. In 1990, government-owned financial institutions like the Life Insurance Corporation and the General Insurance Corporation stonewalled attempts by the Reliance group to acquire managerial control over Larsen and Toubro, one of India’s largest construction and engineering companies. Sensing defeat, the Ambanis resigned from the board of the company after incurring large losses. Dhirubhai, who had become L&T chairman in April 1989, had to quit his post to make way for D. N. Ghosh, former chairman of the State Bank of India.
Once again, in an ironical twist of fate, more than eleven years later, the Reliance group suddenly sold its stake in L&T to Grasim Industries headed by Kumaramangalam Birla. This transaction too attracted adverse attention. Questions were raised about how the Reliance group had increased its stake in L&T a short while before the sale to Grasim had taken place. The watchdog of the stock markets, the Securities and Exchange Board of India (SEBI) instituted an inquiry into the transactions following allegations of price manipulation and insider trading. Reliance had to later cough up a token fine imposed by SEBI.
These are hardly the only controversies involving the Reliance group. Two senior executives of the Reliance group, including one who was known to be close to Dhirubhai, have been accused of violating the Official Secrets Act after a Cabinet note was found in their office during a police raid. One of these executives reportedly had links with a mafia don. Earlier, there had been a major uproar in the stock exchanges over alleged cases of ‘switching’ of shares and the issue of duplicate shares. Some of these transactions pertained to Dhirubhai’s personal physiotherapist.
More recently, last year, Raashid Alvi, a Member of Parliament belonging to the Bahujan Samaj Party, levelled a large number of allegations against the Reliance group. He distributed a voluminous bunch of photocopied documents to journalists that included the letter in which a Reliance group company had sought to ‘buy peace’ with the income tax department. The MP accused the Reliance group companies of manipulating their balance sheets and annual statements of account.
A week after Dhirubhai’s death, the Department of Company Affairs (DCA) confirmed that there was basis to some of the allegations raised by Alvi and that there were certain discrepancies in the balance sheet issued by Reliance Petroleum seven years ago. A group spokesperson sought to dismiss the discrepancy as a minor printing error that had been inadvertently committed. The DCA subsequently confirmed that different Reliance group companies had transferred interest income to one another in a questionable manner.
The plethora of scandals and controversies surrounding the Reliance group left Dhirubhai’s supporters completely unmoved. His supporters – and there was no dearth of them – would argue that there was no businessman in India whose track record was lily-white. Had the textile tycoon himself not acknowledged once to
Time magazine that he was no Mother Teresa, they would ask. Even Hamish McDonald’s unflattering portrayal of Dhirubhai in his book
The Polyester Prince – published in Australia by Allen and Unwin and not available in India – acknowledges his remarkable entrepreneurial talent that made him one of the few Indians on the
Forbes list of the world’s wealthy and placed Reliance among the leading 500 companies in the developing world compiled by
Fortune magazine.
Senior journalist T. V. R. Shenoy, in a tribute to Dhirubhai entitled ‘A Superman named Ambani’ posted on the rediff. com website, points out that the Reliance group accounts for three per cent of India’s gross domestic product (GDP), five per cent of the country’s exports, 10 per cent of the Indian government’s indirect tax revenues (excise and customs duties), 15 per cent of the weight of the sensitive index of the Bombay Stock Exchange and 30 per cent of the total profits of all private companies in the country put together. Another journalist, Manas Chakravarty, concluded his not-so-adulatory article in the
Business Standard with the following sentence: ‘…it was (Dhirubhai’s) common touch combined with his uncommon vision that was the secret of his success. ’
Dhirubhai’s supporters like to recall instances of his ‘common touch’ and his ability to interact with individuals from different walks of life. In 1983, he had hosted a lunch for 12,000 of his company’s workers on the occasion of the marriage of his younger daughter Dipti. The departed Reliance group patriarch would often wonder aloud that if he could achieve what he did in a lifetime, why could a thousand Dhirubhais not flourish. He was sure that there were at least one thousand individuals like him in the country who would dare to dream big. And if all these entrepreneurs could achieve their ambitions, India would become an economic superpower one day, he would remark.
Dhirubhai’s managerial skills were undoubtedly exceptional and he would repose his faith in professionals, many of whom had earlier worked in much-maligned public sector organisations. Whether it was the building of the petroleum refinery at Jamnagar in three years at a capital cost that was 30 per cent lower than comparable projects, or the restarting of the Patalganga plant in one month’s time after sudden floods had occurred in July 1989, the Reliance management team displayed their competence on many occasions.
The Ambanis often scored because they stuck to their knitting or focused sharply on their areas of ‘core competence’. The group flopped when they entered new areas, be these the print medium or financial services. The group’s foray into power generation too has so far not yielded significant results. Dhirubhai’s sons, Mukesh (45) and Anil (43) are keen on effectively implementing their plans of diversifying into the ‘new economy’, into new areas like telecommunications, life sciences and insurance. The Reliance group intends proving telecom services in many parts of the country and is currently building an optic fiber based broadband internet network connecting 115 cities. Only time will tell whether Mukesh, and Anil prove to be worthy successors to their father. But one thing seems certain: they will try their level best not to be as controversial as Dhirubhai was.
"Dhirubhai Ambani's life is a rags-to-riches story, from Bombay's crowded pavements and bazaars to the city's extravagantly wealthy social circles where business tycoons, stockmarket speculators, smugglers, politicians and Hindi film stars mingle, make money, make and break marriages and carry out prolonged feuds-sometimes violent, often histrionic. "--BOOK JACKET. "Until the arrival of Ambani, India's big business scene was dominated by a few industrial houses from British times. In just 26 years since its foundation, Ambani's Reliance group has risen to rival these houses. By 1995 the group had 2.6 million investors." -- BOOK JACKET. Along with the dramatic expansion of the Reliance Group have come intricate political connections, a whole raft of corruption charges and a rollercoaster of booms and crashes for Ambani and his company. This study shows how capitalism emerges by fair means and fouls in the new industrial countries of the Third World, and is one of very few studies of Asian or Third World tycoons." -- BOOK JACKET.
The story of Reliance's shares:
The Times of India reported on 5th May that [[Reliance]] Mutual Fund has kept its position as India largest fund house with assets crossing INR 48,000 crores. Reliance has the distinction of being the first Indian company to be named among the five hundred listed in Forbes. Â How did all this come about? Let us dig into the rags to riches story of Reliance. The one name associated with it from its foundations is Dhirubhai Ambani.
What is Reliance? The Reliance Group is India largest business house with total revenues being more than $22.6 billion. This is equal to 3.5% of India GDP. Reliance contributes to 10% of India total indirect tax and 6% of her total exports. Reliance network of exports spread out to more than one hundred countries across the globe. Â
What are the activities of Reliance? It is involved in oil exploration and production, gas refining and marketing, petrochemicals, textiles, financial services, insurance, power, telecommunications and infocom initiatives. Â
The names of Reliance and Dhirubhai Ambani go hand in hand. He was born on 28th December 1932, in Chorwad, Gujarat. He belonged to the Hindu Modh Bania community. Dhirubhai built India largest private sector empire, Reliance, and created an equity cult. His father was a schoolteacher. Dhirubhai started off by selling fried snacks to pilgrims in Mount Girnar during weekends. After school he became a dispatch clerk at A. Besse & Company. The latter became distributors of Shell and Dhirubhai was sent to manage an oil filling station at Aden. For sometime he also worked in Dubai. In 1958 he returned to India with INR 50,000/- in his pocket. With this he set up a textile trading company.
This was the first chapter of the story of Reliance. Aptly helped by his wife and two sons Dhirubhai diversified his interests to petrochemicals, telecommunications and information, technology, energy, power, finance, capital markets and logistics. Reliance gave new dimensions to India equity culture. Till then the market had been dominated by financial institutions but with Reliance coming into the picture thousands of retail investors jumped into the fray by putting their trust in the name of Reliance. With innovative instruments like convertible debentures from the 1980 Reliance became a hot favorite in the Stock Market. Reliance was the pioneer Indian company to raise funds in the international markets. Only India sovereign rating restricted its high credit taking in international markets.
The Federation of Indian Chambers of Commerce and Industry named Dhirubhai Ambani of Reliance the Indian Entrepreneur of the 20th century. The Times of India conducted a poll in which he was acclaimed to be the greatest creator of wealth in the 20th century. Â
Thus we see that Reliance Industries Ltd was the brainchild and product of the labors of Indian business tycoon, Dhirubhai Ambani alias Dhirajlal Hirachand Ambani.
The story of Reliance makes fascinating reading. During the 1950 the administrators of Yemen discovered that a lot of their currency, the Rial, was disappearing through Aden because of a young man placing unlimited buy orders for Rials. The Rials, at that time, were made of pure silver and was greatly in demand in the London Bullion Exchange. Dhirubhai bought and melted the Rials and sold it to the London bullion traders. Within three months his work came to a halt but by that time he had made few lacs.
In the 60 Dhirubhai returned to India and started Reliance Commercial Corporation with a humble capital. The business was related to the import of polyester yarn and export of spices. Â
The first address of Reliance was in Narsinathan Street in Masjid Bunder “ a small 350 sq ft joint with a telephone, table and three chairs and only two assistants. The family too managed in a one room flat. Â
The fortunes of Reliance soon began to change. In 1966 the first textile mill was set up at Naroda using polyester fibre. He branded his products Vimal and thanks to intensive marketing, Vimal became a household name. Financial retail outlets were set up where only Vimal brands were sold. Â In 1975 a visiting World Bank team certified it to be excellent even by the standards of the developed world. Â
The next step of Reliance was to enter the equity world. An equity cult came to be created. Nearly 60,000 investors from all parts of India placed their trust in Reliance IPO in 1977. Rural India and first time investors learnt to place its trust and money in the name of Reliance.
In 1982 Reliance Industries came up against a rights issue about partly convertible debentures. It was rumored that Reliance was making all efforts to see that their stock prices did not fall by even an inch. Ready to strike, a Bear cartel consisting of a group of stockbrokers from Calcutta began to short sell Reliance shares. Another group, friendly towards Reliance began to buy the short sold shares on the Bombay Exchange. The Bears were confident that the Bulls would soon run out of cash and be prepared for an understanding under the ˜badla™-trading scheme prevalent in the Bombay Stock during that time. But the tables came to be turned in favor of Reliance. Dhirubhai himself provided the required cash when the Bulls demanded a physical delivery of shares. The net result was that Reliance shares shot up from INR 152/- to 180/- within a few minutes. The market was in uproar with Dhirubhai as the uncrowned king. The Bombay Stock Exchange came to be closed for three full days. Authorities intervened and brought down the unbadla rate to 2/- with a ruling that the Bear cartel would have to deliver the shares within the next few days. The Bears bought Reliance shares from the market at higher price levels and most probably Dhirubhai himself supplied these shares and earned a healthy profit from the great adventure. Â
Questions naturally arose around Reliance. How could a yarn trader within a few years cough up such huge amounts of cash during a crisis? Parliament began to face queries. The Finance Minister gave the information that a non-resident Indian had invested nearly 220/- million INR in Reliance from 1982/83. These had been channelized through many companies “all registered in the Isle of Man. The peculiarity was that all the owners had the common surname or Shah. However, Reserve Bank investigations did not find anything wrong done by Reliance and its friends.
Keeping its core in petrochemicals “Reliance soon diversified its activities to telecommunications, information technology, energy, power, retail, textiles, infrastructure services, capital markets and logistics. BBC described it as ˜a business empire with an estimated annual turnover of $12bn, and an 85,000- strong workforce™. Reliance has the distinction of being the only public limited company whose many annual general meetings had to be held in stadiums with more than 350,000 shareholders in attendance.
Success creates jealousy. Reliance had to suffer its share. Nusli Wadia of Bombay Dyeing group was once the biggest competitor of Reliance. Wadia was known for his clout in political circles during the time when the economy had not been liberalized. Competition took an ugly turn when during the seventies Wadia got a permission from the then Janata Party ruled government to build a DMT (Dimethyl Terephthalate) plant. Then Ramnath Goenka of Indian Express turned his pen against Reliance. It seemed that Goenka was using a national newspaper for his own personal vendetta. But despite everything people did not lose faith in Reliance. Reliance ran into rough weather also with the V. P. Singh government. The license for importing Purified Terephthalic Acid was cancelled. This was essential as a raw material for manufacturing polyester yarn.
The first stroke had paralyzed Dhirubhai but the second stroke spelt out the death sentence for him. He died in 2nd July 2002 leaving behind at the helm of Reliance his two sons Mukesh and Anil, wife and two daughters. His funeral was attended not only by big business and politicians but also by thousands of ordinary folks. He is an example of what a common person can do to help himself as well as the economy of his country.
At the time of his death the Reliance group had a gross turn over of INR 75,000 crores from 70 crores in 1976/77. In 20003 Government of India issued a postal stamp (denomination 5/- INR) in Dhirubhai honor.
Reliance began to flow through two channels after the death of Dhirubhai. Differences broke out between his two sons over ownership issues as well as private matters. It was expressed that this would have no impact on the functioning of the company “ it being a company managed aggressively by professionals. This is of great importance to the Indian economy as a whole. The wife of Dhirubhai, Kokilaben mediated for her sons.
Mukesh was awarded Reliance Industries and IPCL and this group came to be known, as Reliance Industries Ltd. Anil became head of Infocomm, Reliance Energy and Reliance Capital known as the Anil Dhirubhai Ambani Group (ADAG). The pages of the book called Reliance thus continue to be written as it meanders through Time.
