Dhirubhai Ambani

Dhirajlal Hirachand Ambani (Hindi: धीरजलाल हीराचंद अंबानी), also known as Dhirubhai (Hindi: धीरूभाई), 28 December, 1933, - 6 July 2002, was an Indian rags-to-riches business tycoon who founded Reliance Industries in Mumbai with his cousin. Many people consider Ambani's phenomenal rise to be an example of crony capitalism and the result of proximity to the ruling politicians because it was achieved through preferential treatment given to him in a highly repressive business environment (the License Raj stifled Indian business until the early 1990s and only those favored by the politicians were granted licenses leaving them with no competition). Ambani took his company (Reliance) public in 1977, and by 2007 the combined fortune of the family (sons Anil & Mukesh) was 100 billion dollars, making the Ambanis the richest family in the world.

Early life

Dhirubhai Ambani was born on 28 December, 1933, at Chorwad, Junagadh (now the state of Gujarat, India) to Hirachand Gordhanbhai Ambani and Jamnaben in a Modh Bania family of very moderate means. Although he was born in Gujarat, he is of Sindhi descent, which is a socio-ethnic group that belonged to Sindh, a former area of Northwest India that now belongs to Pakistan after the Partition. He was the second son of a school teacher. Dhirubhai Ambani is said to have started his entrepreneurial career by selling "pakora" to pilgrims in Mount Girnar over the weekends. When he was 16 years old, he moved to Aden, Yemen. He worked with A. Besse & Co. for a salary of Rs.300. Two years later, A. Besse & Co. became the distributors for Shell products, and Dhirubhai was promoted to manage the company’s filling station at the port of Aden.

He was married to Kokilaben and had two sons, Mukesh Ambani and Anil Ambani and two daughters, Nina Kothari and Deepti Salgaocar.

Reliance Commercial Corporation

In 1962, Dhirubhai returned to India and started the Reliance Commercial Corporation with a capital of Rs.15,000.00. The primary business of Reliance Commercial Corporation was to import polyester yarn and export spices.

The business was setup in partnership with Champaklal Damani, his second cousin, who used to be with him in Aden, Yemen. The first office of the Reliance Commercial Corporation was set up at the Narsinatha Street in 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 with their business. In 1965, Champaklal Damani and Dhirubhai Ambani ended their partnership and Dhirubhai started on his own. It is believed that both had different temperaments and a different take on how to conduct 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 building inventories, anticipating a price rise, and making profits. . In 1968, he moved to an upmarket apartment at Altamount Road in South Mumbai. Ambani's net worth was estimated at about Rs.10 lakh by late 1970s.

Asia Times quotes: "His people skills were legendary. A former secretary reveals: "He was very helpful. He followed an 'open-door' policy. Employees could walk into his cabin and discuss their problems with him." The chairman had a special way of dealing with different groups of people, be they employees, shareholders, journalists or government officials. Ambani's competitors allege that he bought off officials and had legislation re-written to suit him. They recall his earlier days and how he picked up the art of profiteering from the then-Byzantine system of controls of Indian officialdom. He exported spices, often at a loss, and used replenishment licenses to import rayon. Later, when rayon started to be manufactured in India, he exported rayon, again at a loss, and imported nylon. Ambani was always a step ahead of the competitors. With the imported items being heavily in demand, his profit margins were rarely under 300 percent."Reliance Textiles Sensing a good opportunity in the textile business, Dhirubhai started his first textile mill at Naroda, in 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. Extensive marketing of the brand "Vimal" in the interiors of India made it a household name. Franchise retail outlets were started and they used to sell "only Vimal" brand of textiles. In the year 1975, a Technical team from the World Bank visited the Reliance Textiles' Manufacturing unit. This unit has the rare distinction of being certified as "excellent even by developed country standards" during that period.

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 Gujarat that being shareholders of his company will only bring returns to their investment.

Reliance Industries holds the distinction that it is the only Private Sector Company whose several Annual General Meetings were held in stadiums. In 1986, The Annual General Meeting of Reliance Industries was held in Cross Maidan, Mumbai and was attended by more than 35,000 shareholders and the Reliance family.

Dhirubhai managed to convince a large number of first-time retail investors to participate in the unfolding Reliance story and put their hard-earned money in the Reliance Textile IPO, promising them, in exchange for their trust, substantial returns on their investments.

Ambani's net worth was estimated at about Rs.1 billion by early 1980s.

Dhirubhai's control over stock exchanges

In 1982, Reliance Industries came up against a rights issue regarding partly convertible debentures. It was rumored that company was making all efforts to ensure that their stock prices did not slide an 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, a group of stock brokers till recently referred to as "Friends of Reliance" started to buy the short sold shares of Reliance Industries on the Bombay Stock Exchange.

The Bear Cartel was acting on the belief that the Bulls would be short of cash to complete the transactions 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 aback 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 bought shares of Reliance, by none other than Dhirubhai Ambani. In the case of non-settlement, the Bulls demanded an "Unbadla" (a 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 an enormous uproar in the market and Dhirubhai Ambani was the unquestioned king of the stock markets. He proved to his detractors just how dangerous it was to play with Reliance.

To find a solution to this situation, the Bombay Stock Exchange was closed for three business days. Authorities from the Bombay Stock Exchange intervened in the matter and brought down the "Unbadla" rate to Rs. 2 with a stipulation that the Bear Cartel had to deliver the shares within the next few days. The Bear Cartel bought shares of Reliance from the market at higher price levels and it was also learnt 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 such a huge amount of cash flow during a crisis period. The answer to this was provided by the then finance minister, Pranab Mukherjee in the parliament. He informed the house that a Non-Resident Indian had invested up to Rs. 22 Crore 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 that 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.

Diversification

Over time, Dhirubhai diversified his business with the core specialisation being in petrochemicals and 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".

Criticism

Despite his almost Midas Touch, Ambani has been known to have flexible values and an unethical streak running through him. His biographer himself has cited some instances of his unethical behavior and illegal acts such as defacing public currency when he was just an ordinary employee at a petrol pump in Dubai. He has been accused of having manipulated government policies to suit his own needs, 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.

Tussle with Nusli Wadia

Nusli Wadia of Bombay Dyeing was, at one point in time, the biggest competitor of Dhirubhai and Reliance Industries. Both Nusli Wadia and Dhirubhai were known for their influence in the political circles and their ability to get the most difficult licenses approved during the times of pre-liberalized economy.

During the Janata Party rule between 1977 - 1979, Nusli Wadia obtained the permission to build a 60,000 tonnes per annum Di-methyl terephthalate (DMT) plant. Before the letter of intent was converted into a licence, many hurdles came in the way. Finally, in 1981, Nusli Wadia was granted the license for the plant. This incident acted as a catalyst between the two parties and the competition took an ugly turn.

The Indian Express Articles

At one point in time, Ramnath Goenka was a friend of Dhirubhai Ambani. Ramnath Goenka was also considered to be close to Nusli Wadia. On many occasions, Ramnath Goenka tried to intervene between the two warring factions and bring an end to the enmity. Goenka and Ambani became rivals mainly because Ambani's corrupt business practices and his illegal actions that led to Goenka not getting a fair share in the company. Later on, Ramnath Goenka chose to support Nusli Wadia. At one point of time, Ramnath Goenka is believed to have said "Nusli is an Englishman. He cannot handle Ambani. I am a bania. I know how to finish him"....

As days passed by, The Indian Express, a broadsheet daily published by him, carried a series of articles against Reliance Industries and Dhirubhai in which they claimed that Dhirubhai was using unfair trade practices to maximise the profits. Ramnath Goenka did not use his staff at the Indian Express to investigate the case but assigned his close confidante, advisor and chartered accountant S. Gurumurthy for this task. Apart from S. Gurumurthy, another journalist Maneck Davar who was not on the rolls of Indian Express started contributing stories. Jamnadas Moorjani, a businessman opposed to the Ambanis was also a part of this campaign.

Both Ambani and Goenka were equally criticized and admired by sections of the society. People criticized Goenka that he was using a national newspaper for the cause of a personal enmity. Critics believed that there were many other businessman in the country who were using more unfair and unethical practices but Goenka chose to target only Ambani and not the others. Critics also admired Goenka for his ability to run these articles without any help from his regular staff. Dhirubhai Ambani was also getting more recognition and admiration, in the meantime. A section of the public started to appreciate Dhirubhai's business sense and his ability to tame the system according to his wishes.

The end to this tussle came only after Dhirubhai Ambani suffered a stroke. While Dhirubhai Ambani was recovering in San Diego, his sons Mukesh Ambani and Anil Ambani managed the affairs. The Indian Express had turned the guns against Reliance and was directly blaming the government for not doing enough to penalize Reliance Industries. The battle between Wadia - Goenka and the Ambanis took a new direction and became a national crisis. Gurumurthy and another journalist, Mulgaokar consorted with President Giani Zail Singh and ghost-wrote a hostile letter to the Prime Minister on his behalf. The Indian Express published a draft of the President’s letter as a scoop, not realizing that Zail Singh had made changes to the letter before sending it to Rajiv Gandhi. Ambani had won the battle at this point. Now, while the tussle was directly between the Prime Minister Rajiv Gandhi and Ramnath Goenka, Ambani made a quiet exit. The government then raided the Express guest house in Delhi’s Sunder Nagar and found the original draft with corrections in Mulgaokar’s handwriting. By 1988-89, Rajiv’s government retaliated with a series of prosecutions against the Indian Express. Even then, Goenka retained his iconic stature because, to many people, he seemed to be replaying his heroic defiance during the Emergency regime.

Dhirubhai and V.P.Singh

It was widely known that Dhirubhai didn't enjoy a cordial relation with Vishwanath Pratap Singh, who succeeded Rajiv Gandhi as the Prime Minister of India. In May 1985, V. P. Singh suddenly stopped the import of Purified Terephthalic Acid from the Open General License category. As a raw material this was very important to manufacture polyester filament yarn. This made it very difficult for Reliance to carry on operations. Reliance was able to secure, from various financial institutions, 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. In 1990, the government-owned financial institutions like the Life Insurance Corporation of India and the General Insurance Corporation stonewalled attempts by the Reliance group to acquire managerial control over Larsen & Toubro. Sensing defeat, the Ambanis resigned from the board of the company. Dhirubhai, who had become L&T's chairman in April 1989, had to quit his post to make way for D. N. Ghosh, former chairman of the State Bank of India.

Death

Dhirubhai Ambani was admitted to the Breach Candy Hospital in Mumbai on June 24, 2002 after he suffered a major stroke. This was his second stroke, the first one had occurred in February 1986 and had kept his right hand paralyzed. He was in a state of coma for more than a week. A battery of doctors were 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 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 Salgaonkar.

Dhirubhai Ambani started his long journey in Bombay from the Mulji-Jetha Textile Market, where he started as a small-trader. As a mark of respect to this great businessman, The Mumbai Textile Merchants' decided to keep the market closed on July 8 2002. At the time of Dhirubhai's death, Reliance Group had a gross turnover of Rs. 75,000 Crore or USD $ 15 Billion. In 1976-77, the Reliance group had an annual turnover of Rs 70 crore and it is to be remembered that Dhirubhai had started the business with just Rs.15,000(US$350)

Reliance after Dhirubhai

In November 2004, Mukesh Ambani in an interview, admitted to having differences with his brother Anil over 'ownership issues.' He also said that the differences "are in the private domain." He was of the opinion that this will not have any bearing on the functioning of the company saying Reliance is one of the strongest professionally-managed companies. Considering the importance of Reliance Industries to the Indian Economy, this issue got an extensive coverage in the media.

Kundapur Vaman Kamath, the Managing Director of ICICI Bank was seen in media, a close friend of the Ambani family who helped to settle the issue. The brothers had entrusted their mother, Kokilaben Ambani, to resolve the issue. On June 18 2005, Kokilaben Ambani announced the settlement through a press release.

The Reliance empire was split between the Ambani brothers, Mukesh Ambani getting RIL and IPCL & his younger sibling Anil Ambani heading Reliance Capital, Reliance Energy and Reliance Infocomm. The entity headed by Mukesh Ambani is referred to as the Reliance Industries Limited whereas Anil's Group has been renamed Anil Dhirubhai Ambani Group (ADAG)

Film

A film alleged to be inspired by the life of Dhirubhai Ambani was released on 12th January 2007. The Hindi Film Guru, with direction by Mani Ratnam, cinematography by Rajiv Menon and music by A.R.Rahman shows the struggle of a man striving to make his mark in the Indian business world with a fictional Shakti Group of Industries. The film stars Abhishek Bacchan, Mithun Chakraborty, Aishwarya Rai, Madhavan and Vidya Balan. In the film, Abhishek Bachchan plays Guru Kant Desai,a character implicitly based on Dhirubhai Ambani. Mithun Chakraborty portrays Manikda who bears an uncanny resemblance to the real life Ramanath Goenka and Madhvan portrays S. Gurumurthy, who twenty years ago, gained national fame, spearheading virulent attacks against the Reliance group in one of India's bloodiest corporate wars ever. The film also portrays the strength of Dhirubhai Ambani with the help of the character of Guru Kant Desai. "GURUBHAI" the name given to Abhishek Bachchan is also similar to the original name "DHIRUBHAI."

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. Dhirubhai Ambani has the rare distinction of being the first Indian to get Wharton School Dean's Medal
• 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 Centuries". He is the true son of India'

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 few public speeches but the words he spoke are still remembered for their value.

• "" With the force of 3million investors RIL will reap the title "World's Biggest Company"
• "I am deaf to the word "no"."
• "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."
• "We cannot change our Rulers, but we can change the way they Rule Us."
• ''"Dhirubhai will go one day. But Reliance's employees and shareholders will keep it afloat. Reliance is now a concept in which the Ambanis have become irrelevant."

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.

Reference and notes

External links

• Dhirubhai Ambani
• Dhirubhai Ambani Institute of Information and Communication Technology
• "The Polyester Prince: Hamish McDonald
• "Remembering the Prince of Polyester," Time Magazine, 15 July 2002
• Dhirubhai Ambani in Memoriam, Rediff.com
• Dhirubhai Ambani addressing at the ChemTech Foundation - PharmaBiz.com - Thursday, January 23, 2003
• Dhirubhai gave management a whole new 'ism' A.G. Krishnamurthy on Rediff.com
• Great lessons from Dhrirubhai Ambani A.G. Krishnamurthy on Rediff.com
• Mukesh Ambani Son of Late Sh. Dhirubhai Ambani.
• How did Dhirubhai Ambani learn to think BIG ?

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