dhiru complete life

8/6/2019 Dhiru Complete Life

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ULTIMATELY, success is all that matters. That was the credo firing the spirit of

Dhirajlal Hirachand Ambani.

Dhirubhais life was, indeed, a thumping success story of a small town boy building

a giant corporation that propelled him into the ranks of the worlds richest men by

the time of his death.

In Dhirubhais view of the world of business, the end justified the means. Not

something that everyone would agree with. But Dhirubhai swore by this dictum and

he proved the point in his own lifetime. He built a $12-billion company from scratch.

He was the prime force in introducing the equity cult in the country.

His biggest achievement, however, is something that cannot be quantified he

infused the spirit of business among an entire generation of Indians who were

inspired by his rags-to-riches story. He was a living motif for how inspiration coupled

with hard work and the can-do spirit can take one to great heights.

Being a Kathiawari, Dhirubhai was endowed with sharp business acumen and a

spirit of adventure. But more than this in-born trait, there were three characteristics

that set Dhirubhai apart in the conservative world of Indian business.

First, his phenomenal risk-taking ability that was far higher than other

contemporary businessmen. He was a born risk-taker and believed in taking on and

managing calculated risks.

When he founded Reliance Commercial Corporation in 1958, the forerunner of

Reliance Industries as we now know it, Dhirubhai had just returned to India from

Aden, Yemen, with his toddler-son, Mukesh, and his wife, Kokilaben, who was

expecting their second child, Anil (born in 1959). It required a man of immense gutsto sink his life-time savings of about $3,000 in the business of trading spices, betel

nuts, cotton and viscose textiles.

In fact, Dhirubhai showed early signs of his risk-taking ability back in Aden when he

was an employee of Besse & Co. Legend has it that the young Dhirubhai once took


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a bet that he could dive off the ship on which he was working in the harbour and

swim to the shore in shark-infested waters. The bet? An ice-cream. He got it.

It is this same risk-taking ability that helped him when he ventured into textile

manufacturing in 1966 within a year of buying out his original partner in the yarn

business, Champaklal Damani. Ditto when he ventured into the backward

integration project of setting up a plant to produce fibre intermediate, purified

terephthalic acid (PTA) in the mid-80s he was taking on established businesses

and businessmen. In fact, much of his fund-raising for the large capital-intensive

projects that his group was involved in the 80s and 90s was underlined by

tremendous risk.

Second was his firm belief that business is nothing but a web of relationships and

obligations. Success depended on the right contacts in the right places andDhirubhai perfected this to a fine art. This was a pre-requisite in the India of controls

and permits where the bureaucrats and politicians sitting in New Delhi determined

the fate of your business down in Kanyakumari. Dhirubhai understood this early and

directed his energies in cultivating the powers that be. His was the Indian version of

American business lobbying.

He believed in proactive moves rather than reacting to Government policy which is

what his contemporaries were doing. This capacity to manage the environment

would be responsible for the dark spots that any chronicler of the Reliance groupsevolution would encounter.

Finally, his ability to see the larger picture and think big. Even in the laid-back 80s,

Dhirubhai could see that he needed to integrate himself across the entire

petrochemical chain to survive and grow. But for this vision, Reliance Textiles (as

Reliance Industries was then known) would have remained just another textile

company and would have vanished along with several others of its ilk in the

liberalised nineties. He not only set up a PTA plant but ventured further backwards

into naphtha cracking to enter the lucrative commodity plastics business.

The conception of the 7.5-million-tonne Hazira petrochemicals complex of Reliance

Industries can only be termed as audacious for its times. It was done in the late

80s/early 90s when India had seen very few projects of such scale and genre. It is a


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tribute to the vision of the man that the Hazira project has been rivalled only by yet

another of his own creations, the 27-million-tonne refinery project at Jamnagar.

If today Reliance Industries strides as a colossus across the petrochemical sector it

is due to just that early vision of Dhirubhai. The ways and means he adopted to

achieve that vision may not be something everybody would agree with but the

dream itself was faultless.

Dhirubhai introduced innovative funding strategies such as the $100-year loan or

the ingeniously designed triple option convertible debentures for the refinery

project. The projects generated tremendous number of jobs, by themselves and in

downstream sectors. The petrochemicals project made the country almost self-

sufficient in plastics and synthetic fibre even as the refinery obviated petroleum

product imports.

Dhirubhais life was as colourful as the turbans and sarees of his native Kathiawar.

In media discussions and talk-shows, in stock market circles and in the industry, the

mention of his name and his creation, the Reliance group, generates tremendous

passion and will continue to do so.

It is sad indeed that Dhirubhai did not live long enough to see Reliances own retailpetrol outlets come up. To operate the pump in one such outlet would have been

the ultimate achievement for the man who began his life managing the Shell

refuelling operation at a military base in far-off Aden 46 years ago.

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Mohandas Gandhi and Dhirubhai Ambani were the two most famous scions of theModh Bania, a Hindu commercial caste based in the arid Saurashtra peninsula of

Indias western Gujarat state. The Mahatma idealized traditional village ways,

passive resistance, and homespun cotton. Ambani, a billionaire industrialist,

preached prosperity to a burgeoning Indian middle-class via a business empire built

on polyester.


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Each changed India. Ambanis public wore his textiles as durable suits and glittery

saris. Indians invested by the millions in his Bombay-listed Reliance Industries, a

sprawling conglomerate with $12.3 billion in annual sales that recently became

Indias first privately owned entrant to the Fortune 500. When Ambani died on July 6

at age 69 after nearly two weeks in a stroke-induced coma, the countrys media

recounted his rags-to-riches life as an Indian morality play.

Dhirubhai Ambani, Indian businessman, was born in Chorwad, Gujarat, on

December 28, 1932. He died in Bombay on July 6, 2002, aged 69. Dhirubhai Ambani

is survived by his wife, two sons and two daughters. His two American-educated

sons have been in day-to-day control of the company since he suffered a stroke in

1986. He suffered a further stroke 12 days ago from which he never recovered.

Dhirubhai Ambani - Entrepreneur who built up the only Indian business to feature inthe Forbes 500 One of Indias most dynamic and flamboyant entrepreneurs,

Dhirubhai Ambani was head of the multibillion-dollar Reliance group of industries

with extensive interests in textiles, petrochemicals, energy and

telecommunications. Combining a keen sense of business with a razor-sharp ability

to negotiate his way through the labyrinth of the Indian political establishment,

Ambani single-handedly built a business empire that in just three decades outgrew

corporate houses such as the Tatas and Birlas which had dominated the countrys

industrial landscape for nearly a century.

Reliance is the only Indian private company to make the Fortune 500 list of the

worlds largest corporations, and Ambani was listed by Forbes as the 138th richest

person in the world this year.

The son of a petty trader from a remote village in rural Gujarat, Dhirajlal Hirachand

Ambani known as Dhirubhai moved to Aden as a teenager in order to seek his

fortune. He started work as a petrol station attendant before taking up a clerical

position for an oil company that was the sole distributor of Shell products there.

While in Aden, home to many Gujarati expatriates, he realised that a discrepancybetween the rial-sterling exchange rate and the intrinsic value of the silver content

in Adens coinage afforded an excellent opportunity to make money. This arbitrage

generated some $3,000 in seed money for the modest trading enterprise that

Ambani set up when he returned to Bombay in 1958.


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The trading house Reliance Commercial Corporation began by importing polyester

yarn and exporting spices. This was the era of Indias infamous licence-permit raj,

when businessmen with political connections could corner export, import and

manufacturing licences and accumulate huge fortunes.

Sensing an opportunity in the textile industry higher disposable incomes were

leading to Indians buying better, more expensive clothes Ambani sought and

received the necessary clearances to manufacture cloth from polyester fibre. He

opened his first textile mill in Naroda, near Ahmedabad, in 1966 and then

concentrated on quietly building up his business. Vimal, the textile brand he

established, flourished and remains a household name in India today.

Though Reliance was a profitable enough concern, Ambani quickly calculated that

further expansion especially into related sectors would depend on access to acheap source of capital. Rather than turning to the banking system, he decided to

tap Bombays fledgeling stock exchange, pioneering an equity cult that was to

transform the corporate financing system in India. Reliances initial public offering in

1977 saw 58,000 investors buying shares; eventually, the number of Reliance

shareholders was to climb to some three million.

To Indian middle-class salary-earners, Ambani held out the promise of instant

enrichment through the stock market. But he was no fly-by-night operator: Reliance

shares offered genuine value, and those fortunate enough to have had faith in thecompany in the early years eventually became millionaires. Annual general

meetings were held in sports stadiums where Ambani would be treated by

shareholders with adulation and even reverence.

In 1982 Ambani began the process of backward integration, setting up a plant to

manufacture polyester filament yarn. He subsequently diversified into chemicals,

gas, petrochemicals, plastics, power and telecom services.

By the late 1980s the Reliance group was one of Indias most influential and

profitable concerns. However, the phenomenal growth of Reliance owed as much to

Ambanis acumen as to the ease with which he was able to get official rules and

regulations including import tariffs introduced, amended or scrapped in order

to undercut his rivals and push his own business interests. His methods earned him

many bitter enemies in Indias corporate world. Ambani nevertheless forged ahead,


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cultivating friends in virtually every Indian political party and managing the media

in such a way that critical stories about Reliances unconventional business

methods seldom made it into the newspapers.

The final phase of Reliances diversification occurred in the 1990s when the

company turned aggressively towards petrochemicals and telecommunications. But,

like most business people, Ambani had rivals, the most bitter of whom was Nusli

Wadia, of Bombay Dyeing, a patrician entrepreneur whose company was well

established in the textile industry.

Ambani was also anxious to encourage the spread of information technology among

Indias poor. Through Reliance Industries he arranged computer education and

training for thousands of students in schools in Bombay. You are getting an

opportunity. Make the best use of it, he told children in December during one of hislast public speeches. Be daring. Think big. You can be the best. If you believe in

this, you will be the best.

Ambani also saw the Indian Governments privatisation programme as a means of

further growth. Two months before his death, Reliance successfully bid for the giant

public sector Indian Petro-Chemicals.

His two American-educated sons have been in day-to-day control of the company

since he suffered a stroke in 1986. He suffered a further stroke 12 days ago from

which he never recovered.

Dhirubhai H Ambani rose from humble beginnings to become chairman of Indias

largest private sector company. In one of his more candid moments, the otherwise

reticent tycoon summed up the secret of his remarkable success story. Even those

who question his business dealings readily concede that Ambani had a vision and

matchless business acumen

Think big, think fast and think ahead. Born in 1932 to a school teacher father in the

small village of Chorwad in western Gujarat state, Ambani followed this advice all

his life. He dreamt big even as a small boy when he used to sell hot snacks to

pilgrims outside a temple in his native village. And he did not stop dreaming big

even when he went to Aden as a petrol pump attendant at the age of 17 to help


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support his family. It was this desire to make it big in life which prompted his return

to India in 1958. Ambani came to Bombay and started his first company, Reliance

Commercial Corporation, a commodity trading and export house.

The company was set up with an investment of 15,000 rupees (about $375). Forty-

four years later Reliance has grown into a conglomerate with an annual turnover of

$13.2bn. It is the only Indian private sector firm in the Fortune 500 list. In the

process, the company has also acquired one of the worlds largest groups of

shareholders, with over four million investors putting their faith in its stock. In 1966

the Reliance group opened its first textile mill in Naroda in Ahmedabad. The textile

mill won accolades in 1975 from a World Bank technical team, who described it as

excellent by developed country standards.

Two years later the company went public, evoking a tremendous response frominvestors. That made Ambani something of a revered figure among the stock

investors fraternity, who held him in awe from then on. They credit the Reliance

chairman with introducing a stock market culture in the country. In the 25 years

since it went public Reliance has become more than just a textile industry player. It

now has interests in power, telecoms, petrochemicals and life sciences as well.

Under Ambanis guidance it became one of the biggest first-generation success

stories in Asia. Its founder will go down perhaps as the most controversial

industrialist in Indias corporate history.

He was known for assiduously cultivating those in positions of power. Many

observers attribute his phenomenal rise to his close contacts with the Congress

leadership in the 1970s and 1980s. But even those who question his business

dealings - especially in the earlier years of Reliance - readily concede that Ambani

had a vision and matchless business acumen. While he and his family may have

begrudged what they thought was insufficient recognition from his peers and the

press till the 1980s, all that changed in the last decade, during which the Reliance

family really flourished. Asiaweek magazine voted Ambani amongst the 50 most

powerful men in Asia - not once but three times, in 2000, 1998 and 1996.

The federation of Indian chambers of commerce and industry (FICCI) conferred on

him the Indian entrepreneur of the 20th Century award. A poll conducted by The

Times of India in 2000 voted him creator of wealth in the century. And in

December 2000 Ambani was honoured at a civic reception by the municipal

corporation of Bombay. His sons, Mukesh and Anil, both of them groomed in


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business by their father, have turned into great business leaders in their own right.

Rags to riches is click that is often applied to describe the climb up the ladder of

even modestly successful businessmen. But it could hardly be more appropriately

used than to trace the meteoric rise of Dhirubhani Ambani, Chairman of high flying

Reliance Industries, rated among the top three business groups in India today.

From an initial investment of a mere Rs. 15000 in 1958 to start a trading house,

followed by the setting up of his own tiny manufacturing facility in Gujarat in 1966,

Ambani, Son of a rural school teacher, has managed to build up a synthetic yarn,

textiles and petrochemicals empire that is today the third largest private sector

mega corporation.

For the year ended March 1991, Reliance Industries is understood to have recorded

a sales turnover of Rs. 2,300 crores ( more than US $ 1 billion), making it the thirdlargest private corporation in the country to day. Those who predicted that he was a

conman, a confidence trickster, have had to eat their words. I am the dubble that

burst! chortles Dhirubhai, sarcastically referring to the negative headlines that

greeted his forays into the primary capital market in the early- 1980s.

Success on such a gigantic scale inevitable excites jealousy and enmity; and

Ambani, today 58, has had to deal with his share. Reliances have been the subject

of several exposes in the press. But these have neither fazed the tycoon

extraordinaire, nor halted the inexorable progress of his march forward towards hisgoal of becoming the undisputed No.1 in the country.

To any sort of sniping in the press, Dhirbhai has responded with stoic silence. Rarely

has he reacted to even the most stringent media criticism. In the last couple of

years, though, he has taken a leaf out of industrialist-cum press baron Ramnath

Goenkas book. He has taken the precaution of shoring up his own strength in the

media, not minding the expenditure of huge sums of money, and timing the

launches of his products to a nicety.

Though not as physically hardy as before, Dhirubhai has not let the permanent

handicap of the paralytic stroke blunt the edge of his razor-sharp brain. It is still

from his fourth floor office in Maker tower IV at Nariman point that all major policy

decisions which affect the future of the Reliance group are taken. The routine


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running of the organization is left to Mukesh and Anil, who nevertheless consult him

in all key matters.

There are some opinion-makers, like well-known newspaper editor Vinod Mehta,

who have referred in print to Dhirubhai Ambani as the embodiment of evil;

However, to the Gujarati business community, he has assumed the status of demi-

god. To al aspiring small-time entrepreneurs, he has become a sort of benchmark

they aim at. And so, with each succeeding day, the legend to Dhirubhai Ambani

continues to gather spice.

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THE PASSING away of Dhirubhai Ambani, Chairman of the Reliance group on July 6,

signals the end of an era in Indian corporate history. For the company, however, it

raises some queries regarding the future of the group.

While there is no shortage of plaudits for the genius and financial acumen of

Dhirubhai Ambani, his two sons Mukesh Ambani (45), Vice Chairman and

Managing Director, and Anil Ambani (43), Managing Director of Reliance have

inherited the reins of a Rs. 65,000 crore empire.

The reasons why Dhirubhai Ambani is touted as having the equity cult in the

country are not far to seek. The company entered the capital market in 1977 with

what was then a huge public issue of 28 lakh shares under the name of Reliance

Textile Industries. Thereafter, it has approached the market on several occasions

and the investing public have always responded heartily.

The stage was set in 1985 itself when the companys annual meeting was held inthe Cooperage grounds of Mumbai (a football stadium) and attended by no less

than 12,000 eager investors.

First to tap GDR market


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Reliance was also the first Indian company to successfully tap the Global Depository

Receipt (GDR) market in 1992. It is also the only Indian company to raise 50 and

100 year bonds in the U.S. debt markets. Thus, it successfully raised cheaper funds

overseas with lower borrowing costs to repay higher cost Indian borrowings.

The company also successfully dabbled in the stock market; often creating

controversy and there is no shortage of accusations that it `managed the political

environment and has often been seen to have influenced policy making.

In the years of the `Licence Raj industrial policy declarations made periodically

where public sector enterprises were given preference for licences, example,

availability of raw materials, foreign exchange and quotas a phenomenon that

peaked in the late 1970s and the early 1980s but died out in the 1990s, Ambanis

skills were at their best. A senior industrialist, when asked what differentiatedAmbani from other businessmen, said, Everyone managed to get things done

during that period; only Dhirubhai managed it better.

Phenomenal growth An interesting fact is that the Reliance group has seen its most

phenomenal growth in the last decade and a half; the period when Dhirubhai

Ambani had already suffered his first debilitating paralytic stroke. Recall that when

he suffered the stroke in 1986, the companys assets were a mere Rs. 1,000 crores.

Then, it had three major projects going on stream PTA (purified terephthalic

acid), PSF (polyester staple fibre) and LAB (linear alkyl benzene) all inputs forpolyester in Patalganga. The Hazira mega complex was then only an aspiration.

The secret of the success post-1986 is buffeted by the transition of power from the

father to sons Mr. Mukesh Ambani and Mr. Anil Ambani with a clear cut division of

responsibility between the two under the supervision of Dhirubhai Ambani.

While one face of Reliance is its project implementation skills, the second is the

financial wizardry. The project implementation team is kept away from all the

happenings of the corporate team. The skills of the project team are borne out by

the fact that it was able to implement the mega projects at Patalganga, Hazira and

Jamnagar in record time.


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The financial team has, over the years shifted from raising funds from domestic

equity investors to financial institutions and overseas investors. Today, Reliance

enjoys a high credit rating and has no problem convincing institutional investors.

The project implementation and finance teams are considered worldclass and top of

the line.

Today the Reliance group is the countrys largest enterprise in the private sector

with revenues in excess of Rs. 60,000 crores, assets of Rs. 55,000 crores and a net

profit in excess of Rs. 4,500 crores. Its sphere of activity span petrochemicals up

and down the value chain including synthetic fibres, fibre intermediates, textiles

and oil and gas. More recently, Reliance entered financial services, power,

insurance, telecom, biotechnology and infocom.

Foray into telecom

The recent diversifications are unrelated and that is where Reliance will have to

really pass the acid test. That the group does not lack financial muscle to power its

way into these areas is a given, but each of the new areas is as unrelated to the

other as it is huge. The telecom-infocom foray is a case in point. The Reliance group

has committing to invest more than Rs. 25,000 crores in this sector that is beset

with competition.

Reliance has a 26 per cent stake in Reliance Telecom which provides cellular

services to over 3.50 lakh subscribers over 15 States. The group will also be

investing in building a broadband backbone, to connect 115 cities with 60,000

kilometres of fibre. Reliance Infocom plans to have a national footprint in telecom

with a presence in fixed line, mobile, national and long distance and international

long distance telephony, data, image and value added services. This, however, goes

against the recent international trend of choosing the more remunerative value-

added services over building and renting telecom infrastructure.

Then there are new areas such as insurance and biotechnology that needed to be

tackled. This is where the mettle of Mr. Mukesh Ambani and Mr. Anil Ambani will be

tested or not.


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Dhirajlal Hirachand Ambani, 1932-2002.

IT did not take the throngs that gathered, the tears that were shed and the tributes

that were paid at Dhirubhai Ambanis funeral to prove that he had established

himself as a legendary leader among industrial capitalists in India. Even when he

lived he had taken on a legendary dimension.

Not surprisingly, fables about him abound, many of which were recalled by the

media when he passed away on July 6. The most-quoted one was the familiar rags-to-riches story, of a determined individual who ostensibly arrived in Bombay (now

Mumbai) from Aden in the late 1950s with Rs.500 in his pocket and went on to build

a Rs.65,000-crore empire. He was also reportedly a man who learnt far more than

others just by plying his trade, with instances of such knowledge varying from his

reported ability to recognise the denier and quality of yarn by the sound of its twang

when held to his ear to the capability to choose the best in technology in any sector

he chose to invest in. Other tales were less complimentary, such as the one that he

was a person who, though himself never a politician, could make and break both

politicians and governments across the country to boot. There are stories of

ruthlessness, when it came to bending the rules and winning the game, that made

him the success that he was.

PAUL NORONHA

Fables such as these, built often on a modicum of truth and sometimes from thin

air, were testimony to the success of Dhirajlal Hirachand Ambani. Needless to say,

as is true of all winners, in Dhirubhais case too, individual qualities - an acute mind,

a sense of the other, a degree of cunning, an element of ruthlessness and a large

dose of gumption that is required to make the dash to victory - would have

contributed to the end result in no small measure. But by focussing on the man and

his entrepreneurial adventure, they denude his life of social context and divert

attention from the specific way in which the road to success of Dhirubhai and his

Reliance group was related to Indias post-Independence industrial history.

Dhirubhai was, after all, as much a product of his times as he was one who

recognised and exploited the opportunities those times offered. That strategy needs


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to be and will be studied and analysed. But the occasion demands that a beginning

is made.

When Ambani began business, a few business houses whose names and history

captured the progress of industrial capitalism in India monopolised Indian industry.

With their organisational features, their diversified structure, their dominance of

virtually every sphere of manufacturing and their control over finance, they were

able to manoeuvre the regulatory system, especially the licensing system, in their

favour. Their track record, their financial strength, and their ability to attract

credible foreign partners and to access information from within the secretive portals

of the state, ensured that they were in a position to garner more than a fair share of

licences. They used these licences for new investments in areas that were

expanding and were profitable. But they merely held on to them as a means to

prevent the entry by others into areas which they already dominated and where the

profitability of new investment was not in keeping with the high returns they hadcome to expect in Indias protected market.

This meant that the licensing system, meant to ensure that actual investments were

in keeping with planned inter-sectoral allocations, and expected to curb monopoly

and prevent excessive regional concentration, failed to realise these very goals.

Rather, it served as a barrier to entry that protected the traditional bases of

monopoly power of the business groups that had historically dominated Indias

industrial scene. Combined with tariff and non-tariff protection against competition

from imports, this barrier to entry ensured that these groups continued to flourisheven though they spread their investments thin, invested in uneconomic plants

even in areas where there were substantial economies to be gained from increases

in scale, and saddled themselves and the economy with high costs of production

relative to that in the world economy. For newcomers like Dhirubhai Ambani,

therefore, accumulation had to occur in areas outside the traditional spheres of

operation of established oligopoly. He chose the synthetic fibre trade, which carried

synthetic yarn from the few producers of the commodity to the vast number of

composite mills and burgeoning powerloom producers that were its users. It was an

area where the margins, resulting from extremely high protection, were adequate

to provide a decent return to the trader as well.

To many, the subsequent investment of the surpluses accumulated in trading in

textile production and the synthetic fibre industry, beginning with the first plant

established in 1966, was a natural transition. But there were many prerequisites

that had to be met for that transition to be made. First, Dhirubhai needed to break

through the barriers to entry that the licensing regime had put in place. Second, he


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needed to have at his disposal an adequate amount of own capital to ensure that he

could obtain the necessary credit to make up the capital required for investment in

a capital-intensive area. Third, after entry, he needed to survive the competition he

would face from the established players with deep pockets operating in the field.

Further, if initial success had to be built upon to generate the business colossus that

Reliance is, this strategy had to be replicated in more areas than one without beingmarooned by wrong decisions and damaging investments.

In his effort, Dhirubhai and his team were helped by circumstances. His trading

operations combined with thrift, one presumes, allowed him to muster the capital

needed for his first foray into manufacturing. While this was being done, the

licensing regime was itself losing its credibility, having failed to achieve its

objectives of ensuring an optimal allocation of investment, of curbing monopoly and

of reducing regional concentration. This made the licensing system completely ad

hoc and arbitrary, enabling new entrants to manoeuvre the system in their favour. Itwas here that Dhirubhai exercised his acumen to win favour with, manipulate and

benefit from the power of the bureaucracy and the political class. This ability, which

allegedly was used to garner more than a few initial benefits, won him not only the

licences he wanted but also a degree of notoriety.

Finally, Ambanis success in breaking into and coming to dominate the synthetic

fibre industry was related to his ability to exploit the weakness stemming from the

uneconomic scales which the business groups had established in the synthetics

area during the years of external and internal protection. Partly in order to protectthe domestic raw cotton producer and partly because of a perception that

synthetics are a luxury because they involve a drain of foreign exchange, polyester

staple fibre (PSF) and filament yarn (PFY) were heavily protected areas. In January

1985, for example, the customs inclusive price of PSF (1.5 D) and PFY (76 D) were

at Rs.38.59 and Rs.114.56 per kg, more than double the cost, insurance and freight

(c.i.f.) prices of Rs.16.91 and Rs.44.25 respectively. It was that protection which

allowed firms to manage with relatively small installed capacities of around 8,000-

10,000 tonnes in the case of PSF and even less in the case of PFY as compared with

international capacities exceeding 1,00,000-1,50,000 tonnes for PSF and 60,000-

1,00,000 for PFY. At that time Reliance entered the industry with official capacities

of 45,000 tonnes in the case of PSF and 25,125 tonnes in the case of PFY. This

would have allowed it to operate at much lower costs and earn relatively high

returns and surpluses at the prevailing domestic prices. According to a World Bank

study of the synthetic fibre sector, the price per kg of PSF manufactured from

dimethyl terephthalate (DMT) falls from $6.36 per kg to $4.76 per kg as capacity

increases from 6,000 tonnes per annum (tpa) to 30,000 tpa. That is, the fact that

Reliance chose to enter a sector where the benefits of scale are large would have


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both helped it outcompete existing players as well as enhance its surpluses and

therefore its ability to expand into new areas substantially.

In the initial years the process of expansion reflected Reliances decision to

integrate vertically and concentrate on petrochemicals and downstream products.

Throughout this period there were a number of features that characterised the

strategy of the group: (i) continuous vertical integration (a) from synthetic textiles

into the manufacture of polyester fibre and filament yarn, (b) from yarn and fibres

to intermediates like purified terephthalic acid and mono-ethylene glycol; and (c)

further upstream into basic building blocks like paraxylene; (ii) consolidation of

internal capabilities generated in this process through related horizontal

diversification into petrochemical end-products such as detergent intermediates, for

example, linear alkyl benzene (LAB), or thermoplastics like high density

polyethylene (HDPE), low density polyethylene (LDPE), polyvinyl chloride (PVC),

polystyrene (PS), polypropylene (PP) and styrene butadiene rubber (SBR - syntheticrubber) and their intermediates and basic building blocks; and (iii) efforts to

complete this process of integration through investment in an NGL/naphtha cracker

and in oil extraction itself.

THIS strategy of committing all its investments in large capacities in closely related

areas was indeed risky. But, in practice, adopting that risky strategy not only helped

Reliance make major inroads into the industrial sector, but also provided it with

handsome dividends. The point to note is that the strategy was not in the first

instance one of becoming globally competitive. Rather, it was one of making inroadsinto the bases of traditional oligopoly. Even if this implied that Reliance had to set

up world-class facilities, the latter were not used to support an export thrust.

Reliance focussed on the domestic market where revenue opportunities were not

lacking, and margins were much higher, permitting the generation of huge

investible surpluses. In adopting this strategy, Ambanis Reliance group acquired

through outright purchase the best-practice technologies in the field. With world-

scale plants, Reliance proved doubly competitive: not only was it able to displace

both domestic producers and international suppliers from the market at prevailing

customs duty rates, but in fact it could remain competitive even when duty rates

were reduced. The strategy of going it alone, while investing in world-scale plants

based on outright purchase of technology, obviously raised domestic financing

requirements substantially.

It was here that Ambani exploited the other opportunity that the changing times

offered. This was the possibility of mobilising money from households through the

stock market. Indias stockmarkets were until the 1970s dominated by the financial


16/41

institutions and a few large players, with trading activity being minimal and limited

to a few shares. The first instance of equity serving as an option for investment of

household savings arose when foreign companies, pressured by the Foreign

Exchange Regulation Act (FERA), decided to dilute their equity through sale in small

lots. With respected foreign corporates making an offer of equity with a credible

promise of regular dividend payments, individual small investors made their firstforay into the stock market. Seeing the opportunity this offered, Reliance under

Ambani decided to enhance its equity strength to undertake new investments by

tapping stock markets. Reliance made its first public issue in 1977, when it offered

a chunk of Rs.10 shares to investors. The shares opened at Rs.23 reflecting the

premium that Reliance was in a position to command. In the years to come,

Reliance was to exploit the market through many routes to finance its breakneck

expansion, garnering in the process huge premiums on the shares of existing

companies. By the end of 1992, out of a total capitalisation of Rs.34,255 crores,

share premium reserves and surpluses alone accounted for Rs.7,640 crores. Besides

this, Reliance was to use the convertible debenture route and the American

Depository Receipt (ADR) and Global Depository Receipt (GDR) issues to much

benefit.

With large surpluses coming from its petrochemical operations and share premium

reserves and additional equity and debt coming from the markets, Reliance was in a

position to finance the rapid growth which took it to its current position as one

among the leading business groups in India. Late in that process Reliance too

decided to take the route of becoming a diversified conglomerate, entering

unrelated areas like telecommunications, power and financial services.

It is indeed true that the growth and success of Reliance reflect the vision and the

entrepreneurial skills of its founder. But they also epitomise the internal process of

restructuring that Indian industry had begun to go through as the earlier system of

regulation lost its credibility and was being gradually diluted. If Reliance had shown

the way to others in that environment, India would perhaps have produced more

globally competitive indigenous business groups. Unfortunately, before that process

could gain momentum and be given a chance, the government opted for its current

strategy of reform in which international rather than new or restructured Indian

firms are coming to dominate the industrial sector.

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17/41

The two faces of Dhirubhai Ambani

PARANJOY GUHA THAKURTA

HE achieved what almost everybody would consider impossible. In a life spanning

69 years, he built from scratch Indias 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 andparadoxes galore.

Dhirubhai Ambani expired on Saturday July 6, roughly ten minutes before midnight,

at Mumbais 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 paralysed. 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 elderson 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 educationalinstitutions 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


18/41

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

groups 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 groups assets had jumped

from Rs 33 crore to Rs 30,000 crore.

The textile tycoons 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 groups 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


19/41

feisty character, it is yet to fulfil its late founder Ramnath Goenkas 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 countrys politicians

into two groups: a very large R-positive group and a very small R-negative

section. It is hardly a secret that Dhirubhais 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 groups 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 groups 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 Petroleumreplied 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


20/41

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 companys 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 ministers

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


21/41

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

Jinnahs 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 todominate the Indian market for a wide variety of petrochemical products.

Shouries 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 articlewas 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 Indianswho 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.


22/41

Vishwanath Pratap Singh was one of the few politicians who took on the Ambanis. In

May 1985, as finance minister in Rajiv Gandhis 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. Itwas found that the group had persuaded a number of banks to open letters of

credit that would allow it to import almost one full years 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 inDecember 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

Indias 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 Reliancegroup 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 seniorexecutives 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


23/41

duplicate shares. Some of these transactions pertained to Dhirubhais 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 Dhirubhais 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 aminor 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

Dhirubhais 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 McDonaldsunflattering 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 worlds 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 Indias gross domestic product (GDP), five percent of the countrys exports, 10 per cent of the Indian governments 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


24/41

the following sentence: it was (Dhirubhais) common touch combined with his

uncommon vision that was the secret of his success.

Dhirubhais 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 companys 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.

Dhirubhais managerial skills were undoubtedly exceptional and he would reposehis 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 months 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 groups foray into power

generation too has so far not yielded significant results. Dhirubhais 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 fibre 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.

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25/41

THE MAN WHO WOULD BE PRINCE: Dhirubhai will go one day. But Reliances

employees and shareholders will keep it afloat. Reliance is now a concept in which

the Ambanis have become irrelevant, said Dhirajlal Hirachand Ambani, arguably

Indias greatest entrepreneur ever, years before his death on July 6, 2002.

His words have proved prophetic, as the Reliance juggernaut keeps rolling ontowards excellence.

Dhirubhai rose from humble beginnings to found Indias largest industrial empire

and, in the process, became one of the worlds richest men. He transformed the

way big business operates and thinks in India.

His death marked the end of a golden era in Indian entrepreneurship, but his values

continue to guide the Reliance group, now run by his two sons, Mukesh and Anil.

HE CHANGED THE INDIAN STOCK MARKETS: Dhirubhai was praised for his key role

in shaping Indias stock market culture by attracting hordes of retail investors to a

market dominated by state-run financial institutions.

The history of the Indian market, there are two distinct eras Before Dhirubhai

and After Dhirubhai. In the first, people invested in gold or land; the stock

exchange was an arena reserved for the rich.

But that changed forever when Reliance went public in 1977. Dhirubhai created a

new class of Indians middle-class investors. Buying into the Ambani legend was

one of the wisest decisions they ever made.

THE AMBANI MAGIC: Reliance Industries was listed in 1977 in one of the largest

public stock offerings of its time and its annual shareholders meetings were so well

attended they had to be held in a football stadium.

And Dhirubhai held his shareholders spellbound, paying high dividends and bonuses

at a time when equities were seen as a low-return, risky investment.


26/41

This made Dhirubhai Ambani a hero to shareholders. Original investors in the 1977

initial public offering have earned a compounded annual rate of return of 43 per

cent.

THE MASTER STRATEGIST: Dhirubhais is not just the usual rags-to-riches story. He

will be remembered as the one who rewrote Indian corporate history and built a

truly global corporate group.

He was not a conformist, but those who chose to back Dhirbubhais style of doing

business came up trumps. For, the Dhirubhai school of management firmly

believed that the only thing which mattered at the end were results and the

benefits which accrued directly to the shareholders. And that is what he passed on

to his two sons Mukesh (right), the current chairman of the group, and Anil, the

vice chairman.

His biggest success was his ability to carry people with him. From brilliant

technocrats to financial whiz kids and high flier managers to small time dealers and

messenger boys.

Assisted by his sons, Dhirubhai, unlike some of the other corporates of India, never

had to face any internal revolt.

EVER THE FAMILY MAN: The Reliance patriarch, although busy all through the day

building Indias largest private conglomerate and interacting with the crme de la

crme of the worlds political, entrepreneurial and social superstars, always had

time for his family.

He loved to play with his grandchildren, passing on qualities to them that would

mould their future.

On June 16, 1998, Dhirubhai Ambani became first Indian ever to be awarded theWharton School Deans Medal.

A galaxy of politicians and entrepreneurs attended the ceremony. Seen in the

picture are former defence minister of India Mulayam Singh yadav (from the left),

former Indian prime minister H D Deve Gowda, Dhirubhais wife Kokilaben,

Dhirubhai himself, and Thomas Gerrity, Dean of the Wharton School, University of

Pennsylvania, United States.


27/41

Dhirubhai was conferred the Economic Times Award for Corporate Excellence for

Lifetime Achievement in August 2001.

Seen in the picture are Bollywood superstar Amitabh Bachchan (extreme left),

Finance Minister Yashwant Sinha (third from left), Dhirubhai himself, and Dr

Verghese Kurien, Chairman of the Gujarat Cooperative Milk Marketing Federation.

He was conferred the lifetime achievement award by India HRD Congress in

February 2002. He was thrice rated Indias Most Admired CEO in the Business

Barons-Taylor Nelson Sofres-Mode survey in June 2001, 2000 and 1999.

Dhirubhai was picked by Asiaweek magazine as one of the 50 most powerful peoplein Asia.

If power is measured in face time with the leader of the free world, then Ambani

has it in spades, said the magazine.

When he visited India, former US President Bill Clinton spent 45 minutes with the

Polyester Prince. That was the measure of the power of the man.

Dhirubhai and his sons, Mukesh (left) and Anil (right), strike a happy pose with the

charismatic Bill Clinton.

THE PAST AND THE FUTURE: The question about the future of Reliance group in the

post-Dhirubhai Ambani era haunted millions of small investors, after the legend

passed away.

But Dhirubhai had moulded his sons well. Mukesh and Anil learnt the lesson from

their father in the art of market management, coupled with the enhancement of

shareholders value that had helped the patriarch build an investor cult and inthe process build a formidable business empire.

The Mukesh-Anil duo is carrying on Dhirubhais legacy, even as the Reliance group

continues to attain new heights.


28/41

ONE YEAR AGO: It will be one year on July 6, 2003 since the Reliance patriarch

passed away. But his group continues to reach dizzy heights under the stewardship

of his sons.

On July 6, President A P J Abdul Kalam will deliver the first Dhirubhai Amabni

Memorial Lecture, instituted in the memory of the late chairman of Reliance Group

of Industries, in Mumbai.

A host of distinguished businessmen, speakers and politicians will greet the

function.

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Dhirubhai Ambani and the stories that need telling

Why arent there more accurate biographies about Indian leaders? Or rather, why

are Indian biographies usually worshipful eulogies of their subjects? The answer

probably lies in the fate of Hamish McDonalds book on Dhirubhai Ambani titled The

Polyester Prince.

Usually biographies in India are commissioned works sanitised and censored. As

McDonald says No one (the subject of the biographies) drank, cursed, cheated or

philandered. Their workers were part of the family. Almost everyone lived an

abstemious vegetarian life, accumulating wealth only to give it away to temples,

hospitals and schools.

That is indeed true. Forget about biographies, Indian journalists are normally very

reticent about being critical unless their subject is caught in a scam or a scandal.Independent biographies do not pay because publishers claim that the market is too

small to cover research, marketing and publicity costs.

Newspaper groups too are uninterested in helping their journalists in doing detailed

reportage into books. Hamish McDonalds experience with his book on Dhirubhai


29/41

Ambani one of Indias most controversial industrialists is a good example of

what would happen to authors who dare to be frank and independent.

Published in 1998, the book is still not available in Indian bookshops because the

Ambanis have threatened legal action for anything they perceive as defamatory in

the book. This ban of sorts has, in fact, increased the curiosity value of the book. A

small but steady stream of books continues to be brought into India from friends or

relatives living abroad. Those who know of its existence want to buy/borrow or

photocopy it. In fact, the book probably made it to print only because the publishers

Allen & Unwin are Australian and decided to take a chance selling the book

outside India.

Why should Reliance work overtime to block the book? After all, the author, a senior

journalist, was the Delhi bureau chief for the Far Eastern Economic Review forseveral years, and had written a responsible and painstakingly researched account

that respects Ambanis undoubted genius but is candid about his ethics and

methods. Also, I know about Hamishs persistent efforts to get the Ambanis to co-

operate with its writing. He sent birthday greetings to the Ambanis and even tried

to soften Kokilaben Ambani (Dhirubhais wife) by presenting her with a copy of a

rare art book, which he thought would interest her. There was neither a reply nor

acknowledgement.

Sources close to the Ambanis bluntly say the first book about Dhirubhai will be apretty, airbrushed hagiography in the style of those published by all major industry

houses.

The Polyester Prince is an accurate portrait of one of the most colourful,

controversial and brilliant of Indian businessmen, who converted into an art; the

bending and twisting of the stifling license-permit system to his advantage. It traces

his humble beginnings at Chorwad in Gujarat to being in the Forbes list of the

worlds richest men.

As McDonald says in the book, Everything about the Ambanis, in fact, was a good

magazine story. If Anil Ambanis stormy courtship of Tina Munim, whom Hamish

describes as a girl with a past has all the ingredients of a Bollywood potboiler, then

the saga of Dhirubhais rise to being among the most powerful men in India is

significantly more dramatic and awesome. There is the fight-to-the-finish battle with


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Ramnath Goenka the fiery and fearless proprietor of the Indian Express; then the

war with industrialist Nusli Wadia of Bombay Dyeing; the much publicised

allegations against some Ambani staffers over a plot to murder Wadia; Reliances

travails during the V P Singh government, which almost brought the business house

to its knees, and sundry other controversies over licensed capacities, export

manipulation and share switching. It also narrates how Reliance created the equitycult which got the general public investing in equity and investors reciprocal

adulation for the man for over a decade.

McDonald uses his skill as a journalist to paint an accurate picture and to bring in

the unsavory aspects of Reliances dealing with business rivals without attracting

charges of defamation. The book candidly traces Dhirubhais uncanny knack of

tweaking and capturing political and bureaucratic power Ambanis equation with

Indira Gandhi and her family and their powerful minions, as well as the suitcases of

cash which Indian business houses used to engineer changes in tariffs and dutiesfor specific products. At the same time, McDonald finally portrays Dhirubhai as a

visionary with unconventional ways of fulfilling his mega plans.

India needs more books like The Polyester Prince to create a real record of business

leaders and the corporate sector warts and all. Personally, I believe that a market

for such work already exists, but it would require publishers to do some hard selling.

While working on my own book, a biography of A D Shroff a financial genius whostraddled several banking, finance and insurance institutions, until his death in

1965, I realised how much was lost in presenting a sanitised picture. My book too

was a commissioned job by the Forum of Free Enterprise, but probably because

of ADs fiercely forthright personality, it allowed me a little more freedom to discuss

his shortcomings. But a lot was kept out, and again the book was restricted to his

brilliant career and not his equally colourful personal life.

The same goes for J R D Tata. I read all of R M Lalas works on JRD and they are

indeed detailed and fascinating works. But while researching the A D Shroff book Ihad an opportunity to sift through records of his interaction with JRD and Sir Homi

Mody and others. Their correspondence brings alive the impish humor, caustic

sarcasm, occasional pettiness, temper tantrums and other little shenanigans.


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To me, for the first time in 16 years, JRD changed from a revered business leader

into an extremely human and lovable personality. In fact a person with such a

towering personality that he was able to attract brilliant people around him and

allow them to grow without any sense of threat or insecurity.

I would personally like to see genuine biographies of several Indian businesspersons

who are clearly fascinating subjects. Nusli Wadia of Bombay Dyeing, Homi Mody,

Darbari Seth and Ajit Kerkar are others from the Tata empire whose lives need to be

documented. Similarly there are stories to be told about organisations and

institutions. Unfortunately, without a little awakening on the part of publishers all

these will probably remain untold.

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Dhirubhai Ambani was no ordinary leader. He was a man who gave management a

whole new ism.

There is a new ism that Ive been meaning to add to the vast world of words for

quite a while now. Because, without exaggeration, its a word for which no synonym

can do full justice: Dhirubhaism.

Inspired by the truly phenomenal Dhirubhai H Ambani, it denotes a characteristic,

tendency or syndrome as demonstrated by its inspirer. Dhirubhai, on his part, had

he been around, would have laughed heartily and declared, Small men like me

dont inspire big words!

There you have it - now that is a classic Dhirubhaism, the tendency to disregard

ones own invaluable contribution to society as significant.

Im sure everyone who knew Dhirubhai well will have his or her own little anecdote

that illustrates his unique personality. He was a person whose heart and head both

worked at peak efficiency levels, all the time. And that resulted in a truly unique and

remarkable work philosophy, which is what I would like to define as Dhirubhaism.


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Let me explain this new ism with a few examples from my own experiences of

working with him.

Dhirubhaism No 1: Roll up your sleeves and help. You and your team share the

same DNA. Reliance, during Vimals heady days had organized a fashion show at

the Convention Hall, at Ashoka Hotel in New Delhi.

As usual, every seat in the hall was taken, and there were an equal number of

impatient guests outside, waiting to be seated. I was of course completely besieged,

trying to handle the ensuing confusion, chaos and protests, when to my amazement

and relief, I saw Dhirubhai at the door trying to pacify the guests.

Dhirubhai at that time was already a name to reckon with and a VIP himself, but

that did not stop him from rolling up his sleeves and diving in to rescue a situation

that had gone out of control. Most bosses in his place would have driven up in their

swank cars at the last moment and given the manager a piece of their minds. Not

Dhirubhai.

When things went wrong, he was the first person to sense that the circumstances

would have been beyond his teams control, rather than it being a slip on their part,as he trusted their capabilities implicitly. His first instinct was always to join his men

in putting out the fire and not crucifying them for it. Sounds too good a boss to be

true, doesnt he? But then, that was Dhirubhai.

Dhirubhaism No 2: Be a safety net for your team. There used to be a time when our

agency Mudra was the target of some extremely vicious propaganda by our peers,

when on an almost daily basis my business ethics were put on trial. I, on my part,

putting on a brave front, never raised this subject during any of my meetings with

Dhirubhai.

But one day, during a particularly nasty spell, he gently asked me if I needed any

help in combating it. That did it. That was all the help that I needed. Overwhelmed

by his concern and compassion, I told him I could cope, but the knowledge that he


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knew and cared for what I was going through, and that he was there for me if I ever

needed him, worked wonders for my confidence.

I went back a much taller man fully armed to face whatever came my way. By

letting us know that he was always aware of the trials we underwent and that he

was by our side through it all, he gave us the courage we never knew we had.

Dhirubhaism No 3: The silent benefactor. This was another of his remarkable traits.

When he helped someone, he never ever breathed a word about it to anyone else.

There have been none among us who havent known his kindness, yet he never

went around broadcasting it.

He never used charity as a platform to gain publicity. Sometimes, he would even go

to the extent of not letting the recipient know who the donor was. Such was the

extent of his generosity. Expect the unexpected just might have been coined for

him.

Dhirubhaism No 4: Dream big but dream with your eyes open. His phenomenal

achievement showed India that limitations were only in the mind. And that nothing

was truly unattainable for those who dreamed big.

Whenever I tried to point out to him that a task seemed too big to be accomplished,

he would reply: No is no answer! Not only did he dream big, he taught all of us to

do so too. His one-line brief to me when we began Mudra was: Make Vimals

advertising the benchmark for fashion advertising in the country.

At that time, we were just a tiny, fledgling agency, tucked away in Ahmedabad,

struggling to put a team in place. When we presented the seemingly

insurmountable to him, his favourite response was always: Its difficult but notimpossible! And he was right. We did go on to achieve the impossible.

Both in its size and scope Vimals fashion shows were unprecedented in the country.

Grand showroom openings, stunning experiments in print and poster work all


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combined to give the brand a truly benchmark image. But way back in 1980, no one

would have believed it could have ever been possible. Except Dhirubhai.

But though he dreamed big, he was able to clearly distinguish between perception

and reality and his favourite phrase dream with your eyes open underlined this.

He never let preset norms govern his vision, yet he worked night and day

familiarizing himself with every little nitty-gritty that constituted his dreams

constantly sifting the wheat from the chaff. This is how, as he put it, even though he

dreamed, none of his dreams turned into nightmares. And this is what gave him the

courage to move from one orbit to the next despite tremendous odds.

Dhirubhai was indeed a man of many parts, as is evident. I am sure there are many

people who display some of the traits mentioned above, in their working styles as

well, but Dhirubhai was one of those rare people who demonstrated all of them, all

the time.

And thats what made him such a phenomenal team builder and achiever. Yes, we

all need Dhirubhaisms in our lives to remind us that if it was possible for one

person to be all this and more, we too can. And like him, go on to achieve the

impossible too.

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Dhirubhai Ambani leaves behind a strong legacy of thinking big and doing the

impossible.

DHIRUBHAI Ambani, the entrepreneur who emerged as the tallest industrial leader

in India in the last two decades, transformed the industrial landscape just as

Jamshed Tata and G. D. Birla did in their times. Starting his career in Aden earning

just $6 a month, he raised the Reliance Group from the scratch to a $13-billion

empire and a Fortune-500 company.


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responsibility. A global scale is also a sine qua non for creating a successful

business.

Localisation of products or services to satisfy different tastes of customers in

different markets will be one of the key assets to win the battle in the marketplace.

In such circumstances, any ambitious Indian businessman will have to find a niche

and confine himself to just one or two lines of businesses to create a globally

competitive outfit. South Koreas Chaebols, which have been shedding businesses,

are no longer successful in the global market. Multi-business groups, such as ABB,

Tyco, Fiat, Daewoo have all been in the news for the wrong reasons. They are

having problems of one type or another.

Only GE remains at the top, as it has a philosophy of picking up and retaining

businesses, which are either No 1 or 2 in their industry.

Depending on the ground realities, the changing landscape of business and

opportunities in the domestic and international markets, a visionary like Dhirubhai

will choose the right kind of business to enter, where he will develop a competitive

advantage. Emulating personal qualities of Dhirubhai will also require developing a

vision and a roadmap for creating a high-profile industry. He should be able to make

a sound judgement of the approaching revolution and develop all the right

strategies for growth.

Any examples to follow? Worth emulating are Finnish Nokia and South Koreas

Samsung Electronics, which have become world-class in the last decade, capturing

markets around the world. Not all that long ago, Nokia manufactured diapers and

rubber boots. But Jorma Ollila, the CEO, turned around the company and found a

niche in electronics, manufacturing mobile handsets, with a global market share of

around 40 per cent now.

Similarly, Samsung Electronics, which manufactured 12 inches Black & White TV

sets under Sanyo label in the 1970s, is aggressively riding the technology wave and

specialising in electronics business, which today constitutes 25 per cent of the

turnover and 65 per cent of the profits of the Samsung group. Its objective is to

become like Sony in the international market.


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We are living in the age of Toyotas, Hondas, Microsofts and Canons, all focussed in

their single lines of businesses and doing well, even in the downturn.

The real tribute to Dhirubhai would be paid, if India produces many entrepreneurs

like him, who energise the manufacturing industry in India by setting personal

examples and creating world-class businesses, worthy of Fortune 500 listing.

Anybody listening?

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On Dhirubhai H Ambani again, unabashedly so, and for a very good reason.

I guess it must have struck many readers by now that I idolised Dhirubhai. They are

right. I do. Every column I write on Dhirubhaism invites an outpouring of mail, some

even requesting me to mail them the previous column on Dhirubhaism.

And I am glad that I have an opportunity to share what Ive learned from Dhirubhai

with you.

He was a one-in-a-million human being, and I was blessed to have had him as my

boss. He taught me many things that have transformed an ordinary executive that I

was, to be the founder chairman of an agency that grew from nothing to one of

Indias largest.

I would have never achieved that without him. It would be a shame if I then let hisextraordinary teachings gather dust. And judging by the response I receive, it looks

like there are some really eager learners out there. So here goes.

Dhirubhaism: Leave the professional alone!


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Much as people would like to believe, most owners (even managers and clients),

though eager to hire the best professionals in the field, do so and then use them as

extensions of their own personality. Every time I come across this, which is much

too often, I am reminded of how Dhirubhais management techniques used to be(and still remain) so refreshingly different.

For instance, way back in the late 1970s when we decided to open an agency of our

own, he asked me to name it. I carried a short list of three names, two Westernised

and one Indian. It was a very different world back then. Everything Anglicised was

considered upmarket.

There were hardly any agencies with Indian names barring my own ex-agency Shilpia

dhiru complete life

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