the story of dhirubhai ambani

30
The Story of Dhirubhai Ambani Dhirajlal Hirachand Ambani Perceptions and Proportions Perceiving the market opportunities with a sense of proportion and embarking into appropriate diversification plans go a long way in the growth of a business enterprise. The case study of Reliance Enterprise is presented here. The students of Management Schools may like to draw lessons and find it to be a source of inspiration for the niche strategies adopted by the business tycoon Dhirubhai Ambani from rags to riches. From rags to riches: Dhirubhai Ambani was born on 28 Dec. 1932 as the third son to a school teacher in Gujarat with moderate means. Ambani moved to Aden, Yemen when he was 16 for a livelihood. He started his career as a dispatch clerk before becoming the distributor for Shell Products. He was later promoted as a manager in an oil filling station at the port of Aden. The Yemeni Rial Coin had high content of pure silver in those days. Young Dhirubhai perceived high demand for ‘rial’ in London Stock Exchange and purchased them in bulk and melted the coins in silver and sold it to bullion traders in London. Though it was stopped in 3 months, D.A. made a few lakhs of Rupees in this transaction. D.A. returned to India after 10 years and found Reliance Commercial Company with a capital of Rs.15000/= in Masjid Bunder in Mumbai in a 350 Sq.ft. space with one telephone, one table, three chairs and with

Upload: coolyuvi56

Post on 14-Oct-2014

308 views

Category:

Documents


1 download

TRANSCRIPT

Page 1: The Story of Dhirubhai Ambani

The Story of Dhirubhai Ambani Dhirajlal Hirachand Ambani

Perceptions and Proportions

Perceiving the market opportunities with a sense of proportion and embarking into appropriate diversification plans go a long way in the growth of a business enterprise. The case study of Reliance Enterprise is presented here. The students of Management Schools may like to draw lessons and find it to be a source of inspiration for the niche strategies adopted by the business tycoon Dhirubhai Ambani from rags to riches.

From rags to riches:

Dhirubhai Ambani was born on 28 Dec. 1932 as the third son to a school teacher in Gujarat with moderate means. Ambani moved to Aden, Yemen when he was 16 for a livelihood. He started his career as a dispatch clerk before becoming the distributor for Shell Products. He was later promoted as a manager in an oil filling station at the port of Aden.

The Yemeni Rial Coin had high content of pure silver in those days. Young Dhirubhai perceived high demand for ‘rial’ in London Stock Exchange and purchased them in bulk and melted the coins in silver and sold it to bullion traders in London. Though it was stopped in 3 months, D.A. made a few lakhs of Rupees in this transaction.

D.A. returned to India after 10 years and found Reliance Commercial Company with a capital of Rs.15000/= in Masjid Bunder in Mumbai in a 350 Sq.ft. space with one telephone, one table, three chairs and with a business mission of importing polyester yarn and exporting spices.. He went on to establish Reliance Textiles in 1964 under the brand name “Vimal” and the World Bank applauded the brand as the best Polyester Cloth. Perceiving success, Dhirubhai established Reliance IndustriesLtd in 1970s..

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.

Page 2: The Story of Dhirubhai Ambani

Dhirubhai was able to convince people of rural Gujarat that being shareholders of his company will only bring returns to their investment.

RIL holds the distinction that it is the only Public Limited Company whose several Annual General Meetings were held in stadiums.In 1986, The Annual General Meeting of Reliance Industries was held in Cross Maidan, Mumbai, was attended by more than 30,000 shareholders.

Dhirubhai Ambani's takes control of the Mumbai Stock exchange : In 1982, RIL was coming out with a rights issue of partly convertible debenture and it was rumored that the objective was not to get the then existing stock price to slide by an inch. A group of stock brokers in Calcutta joined together as a Bear Cartel. Taking this as an opportunity they started to short sell RIL scrips. Friends of RIL counteracted this move and the Bulls started buying the scrips on Bombay Stock Exchange.The bulls kept on buying and a price of Rs. 152 per share was maintained till the day of settlement. The Bear Cartel believed that the Bulls would accept settlement under the then prevalent " Badla " system. On the day of settlement the Bear Cartel was taken a back when the Bulls demanded physical delivery of shares.To complete the transaction the much needed cash was provided to the stock brokers who had brought shares of Reliance by none other than Dhirubhai Ambani. In case of non-settlement the Bulls demanded an 'Unbadala' (penalty sum) of Rs.35 per share. With this the demand increased and the shares of Reliance shot above 180 rupees in minutes. The settlement caused enormous uproar in the market and Dhirubhai Ambani was the unquestioned king of the stock markets.

The situation was completely out of control. Authorities of Bombay Stock exchange intervened in the matter and brought down the "Unbadla" rate to Rs. 2 with a stipulation that the Bear Cartel has to give the delivery of shares within few days. The Bear Cartel brought shares of Reliance from the market at higher price levels and it was also realized that Dhirubhai Ambani himself supplied those shares to the Bear Cartel and earned a healthy profit out of The Bear Cartel's adventure .

After this incident many questions were raised by his detractors and the press. Not many people were able to understand as to how a yarn trader till a few years ago was able to get in so much of cash flow during the crisis. RBI was called upon to investigate into the matter . It was clarified by RBI that the money flow into RIL was due to Rs.220 million investment made by NRIs thru' various Companies like ' crocodile's etc., and that there was nothing unethical nor illegal in the whole matter.

A film inspired by the life of Dhirubhai is set to release in January 2007. The Hindi Film Guru, directed by ManiRathnam and music by Rahman will show the struggle of a man who strives to make his mark in life. The movie stars Abhishek Bachan and AishwaryaRai in leading roles.

Highlights of Dhirubhai's venture :-

* What the Corporate Houses of Tatas, Birlas and Dalmiahs achieved and dominated over a period of a century, Dhirubhai Ambani could achieve within a short period with a razor like sharpness and business acumen.

* Dhirubhai Ambani proved to be a king in his diversification plans into Petro Chemicals, Energy, Power, Information Technology, Telecommunications, Capital Markets, Retails and so on.

Page 3: The Story of Dhirubhai Ambani

* RIL is now India's largest Private Sector with turnover over US$19.976 billion backed by a profit over US$2.03 billion.

* 25% of share holders in India own a RIL Scrip.

* Fortune Global 500 featured RIL in 342nd rank in 2006. Forbes Global featured RIL at 295 spot in 2000.

*Chemtech and Chemical Engg.World gave the" Man of the Century " award in Nov 2000 to Dhirubhai Ambani.

* Dhirubhai won the " Dean's Medal " of Wharton School, University of Pennsylvania in June 1998 for " Outstanding Leadership "

* FICCI conferred the title " Man of 20th century " on D.A.in 2000.

* Times Of India in 2000 voted Dhirubhai Ambani as the greatest creator of wealth in the country.

The man from rags to riches, Dhirubhai Ambani breathed his last on July 6, 2002 but his glow would continue to inspire the whole generations of nations.

Business secrets of Dhirubhai Ambani, Founder of Reliance Industries

Dhirubahi Ambani

Dhirubhai Ambani: The Indian icon

He was a genius, gem of the gems. He had an extra ordinary talent. He was creative. He mastered the secrets of business. He changed the stream of Indian industries. He was the founder of Reliance industries. He was the pioneer. He changed the investment scenario of India and surely the shape of Indian stock market. He was Dhirubhai Ambani.

Dhirubhai Ambani is an Indian icon. He is a man rags to riches. Dhirubhai Ambani was undoubtedly the most talented businessman of his time. He amazed the world with his success stories. He became a celebrity in India and overseas.

What are the secrets of his amazing growth? What made him Dhirubhai Ambani?

Page 4: The Story of Dhirubhai Ambani

Business secrets

He used some secrets throughout his life-time to become a business tycoon. Some of them are as follow:

Secret No. 1: Gather information, whatever it may be. Gather information about Governments be local, state, central or international. Gather information about products, companies, consumers, markets, people, services, politics and any thing, just anything and everything. Do not forget to get information of your competitors. Dhirubhai Ambani had mastered this secret. It was in his practice to gather information about anything and every thing.

He used to gather information, analyzed and processed those. He was also able to find opportunities out of those news and information. He was also quick to disburse those information to his sub-ordinates when and where required.

One of my friends, Prof. M.L. Sisodia, a senior professor of physics and research scholar once told me a story about Dhirubhai Ambani. The story shows his extra ordinary ability in gathering information. Mr. Sisodia had undergone a bye-pass surgery after a heart attack. Just after few days of his surgery his son was called on for an interview with Dhirubhai Ambani.

Dhirubhai wanted him for a senior position in his company. The very first question Dhirubhai Ambani asked him was " How is your father". This instance alone is enough to describes his capability of information gathering. We have to remember that it was not an Internet age.

Secret No. 2: Find an opportunity . He always endeavor to analyze whatever information are gathered. He used to do that to convert information into an opportunity, a profit making opportunity. According to him, " There is no invitation for making profits". You have to find it. He always searched for news and information, a news or information that can earn him profit.

Secret No. 3: Jump from an orbit to the next. No matter where you are. Just work there. Master that place or situation. Accumulate some energy and jump into another orbit, a higher one. Stay there some time. control that orbit. Master it and again jump to another higher level, the next orbit. This is the way to success at faster pace.

Dhirubhai did it many times. He did it life long.

Caution: Do not jump from one orbit to another in hurry before mastering the present orbit. It could be proved dangerous. Do it patiently.

Page 5: The Story of Dhirubhai Ambani

Secret No. 4: Complete projects on time. Thrive to do it before the scheduled time. He and his sons completed all their projects on time, mostly before time. However big the projects were, they completed those timely. No matter how much disturbance or hurdles came in their way.

Dhirubhai Ambani and his sons Mukesh Ambani and Anil Ambani derived some techniques to do so. They kept close eyes on their projects to monitor them effectively.

secret No. 5: Think big. Think global. He thought global much before the globalisation took place.

Most of the Indian companies were not doing well in the global scenario at his time. Most of the Indian companies were not acting with global standards. He made world class projects and world class factories. No body in India could even think about that in his time.

Secret No. 6: Hire the best people. Pay them well.

Dhirubhai Ambani was able to employ the best people, top ranking masters of their respective fields. He was the best pay master of his time. He never compromised in Quality and timeliness. Only those top ranking masters could make it possible. Human resource is the best resource, according to him.

Secret No. 7: Pay share holders well. He paid his share holders the best.

His ambitious projects had hunger for capital. He required huge amount of money at that time to make his dreams true. Bankers and financiers were failed to assume his capabilities. They were reluctant and not agreed to fund those big projects. Funding his projects was risky in their eyes.

Dhirubhai Ambani went to his share holders as he recognized them the best source to funding his ambitious projects.

He went to his shareholders and asked money from them. The shareholders jumped out to fund his projects. He paid handsome to his shareholders in return. What he paid no body could even imagine. Shareholders trusted on Dhirubhai Ambani and they were rewarded for their trust.

He realized the fact that the share holders can not be satisfied with dividends only that was the trend at that time. He knew the value of capital appreciation. He paid bonus, gave rights issues to his share holders in addition to regular dividends. He went beyond the expectations of his investors. Even he went to the extent of challenging the law. Once he converted a non-convertible debentures into shares. Share holders got enormous profit, but it was against the law. He fought against that law and the government was compelled to change it.

Page 6: The Story of Dhirubhai Ambani

Dhirubhai Ambani had highest number of shareholders with him in his time. He boosted market capitalization of BSE. He brought millions of share holders under his umbrella, many of them were first time in the stock market.

The world number one in wealth

Dhirubhai Ambani followed these secret techniques of business through out his lifetime.

He was not much interested in the books or magazines about management. Rather he left those for his sub-ordinates, his managers. He had an appetite, a never ending hunger for news.

He had given some ideas which are the Business Mantras indeed. One who follow these..... are at the doorstep of success.

A recent Bollywood movie "Guru" has depicted his life.

These are some secrets of a pioneer. Starting from a lower level employee of a gas filling station, he became an industrial giant, a global conglomerate. His name was included in the list of Fortune 500. He could manage an yearly revenue of $ 78 billions in his life time. No Indian industrialist could achieve that level up to that time. His ambition was not ended with that. He was dreaming of World No.1. He could not achieve that because of his untimely death.

However, it has been achieved through the Reliance industries that he founded. Dhirubhai Ambani is world No.1 today, though after his death. The assets of Mukesh and Anil ambani ( Both sons of Dhirubhai Ambani, between whom his assets were distributed ) together has crossed Bil Gates of Microsoft corporation.

Page 7: The Story of Dhirubhai Ambani

Reliance Commercial CorporationIn 1962, Dhirubhai returned to India and started Reliance.Reliance 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 350 sq ft (33 m2). 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 believed in 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 1977. Textiles were

Page 8: The Story of Dhirubhai Ambani

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 (IPO)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 large number of small investors from rural Gujarat that being shareholders of his company would be profitable.

Reliance Industries was the first private sector company whose 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 invest in Reliance.

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 operative in the Bombay Stock Exchange. 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

Page 9: The Story of Dhirubhai Ambani

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(BSE) 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.

DiversificationsOver 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".

CriticismHe has been accused of acting unethically, 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

Page 10: The Story of Dhirubhai Ambani

Ambani house has always enjoyed more protection and shelter from the media storms that sweep across the country.

DeathDhirubhai 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 died 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.

Page 11: The Story of Dhirubhai Ambani

 

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)

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'.

Guru Inspired by Dhirubhai AmbaniA film alleged to be inspired by the life of Dhirubhai Ambani was released on 12 January 2007. The Hindi Film Guru (2007 film), 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."

Page 12: The Story of Dhirubhai Ambani

i have read one instance where bse was closed for 2-3 days...it dates back to time when we had badla system on exchange..the story goes like this:

In March 1982, the Reliance scrip was the target of a bear raid organised by a Calcutta based industrialist. They picked the wrong target.

While the share was being hammered down by the bears, Dhirubhai organised a rescue operation, with friendly brokers buying up every share being sold. Then, knowing fully well that the brokers did not have possession of the shares they had sold, he demanded delivery. The bear cartel was thrown into a panic and desperately started buying Reliance shares. When cartel members asked for time to deliver the shares, Dhirubhai asked his friends to refuse. The upshot — the Bombay Stock Exchange had to be shut for three days. But the bears had been taught a lesson — do not meddle in Reliance shares.

It wasn’t long, however, before Dhirubhai’s enemies raised a simple question —where did he, till recently a yarn trader and only a budding industrialist, get hold of the money needed to stop the bears in their tracks?

The answer was delivered by the then finance minister, Pranab Mukherjee, who announced in Parliament that non-resident Indians had invested over Rs 22 crore in Reliance during 1982-83. These investments had also been made by companies with names like Crocodile, Iota and Fiasco.

Investigations by journalists revealed that these companies had been registered in the Isle of Man, the tax haven, by several people sporting the surname Shah. Who did these companies belong to? Questions were raised and fingers pointed, but a Reserve bank of India (RBI) enquiry could not find any wrongdoing by Reliance.

Page 13: The Story of Dhirubhai Ambani

He also did one thing that only a post-Nehru entrepreneur could conceive of; sharing his wealth with individual investors who bankrolled his dreams on the strength of Reliance dividends. That was the modern virtue Ambani had that others did not. In doing so, Ambani made a huge base of small investors partake of his profits. In that respect he was a Robinhood to Indian investors, he may not be the most moral or even legitimate businessman, but he was generous to his hordes. And in the best democratic traditions, every Indian had a choice to to join his hordes.

Reliance’s 3.5 million strong shareholding community is a whopping two percent of India’s middle class that the world’s businesses’ are salivating about, and the largest pool of shareholders in one company anywhere in the world. The updated database of these shareholders is enough to unnerve any retailer from taking on Reliance.

And yet, this is a company that decided to troop into India’s notoriously miniscule group of income tax payers as late as the year 2000. In all its years of growing Reliance never felt the moral obligation to pay Income Tax to the country’s impoverished exchequer. It was one more aspect of Ambani’s heroic-even-in-notoriety in your face attitude that made Reliance possible.

Ambani may have broken all the laws of the land, manipulated all its politicians, and priced each and every influential man in power to reach where he did. But much like Maradona’s hand of God goal, eventually Indians will remember him and his company as the eventual winner, and Reliance shareholder will revere him as their deliverer.

A retried senior police official from Bombay was visiting here several years back. He seemed to be a very wise person, full of understanding of the world, and a person who was able to retain his equilibrium despite a lifetime spent in dealing with the underworld. He would sometimes talk about his experiences, and tell very interesting stories.

Part of police work involves keeping an ear to the ground. You get to hear all kinds of stories, many of them rumors - magnified, distorted and spiced up. Only some of them are taken up for further investigation. Here is one story that he recalled having heard about Mr. Ambani, and how his fortunes shot up shortly after Mrs. G’s untimely demise.

Page 14: The Story of Dhirubhai Ambani

Rajeev Gandhi had just been made the PM, and was trying to pick up threads of the awesome responsibility thrust upon him. Mr. Ambani arranged for a one minute meeting after paying some fifty thousand to the powers who arranged such things.

The new PM was busy going through a lot of paperwork when the visitor was ushered in, and did not even look up.

“Madam had entrusted me with two hundred crores. At our convenience, please let me know what you want me to do with it.” the visitor reportedly told the busy Prime Minister. He then left a business card, said his good byes. As he started to leave, he was suddenly stopped, and asked to wait. The meeting is reported to have lasted much longer than the planned minute.

Was the story true or false, who knows?

It was during Mr. Gandhi’s reign that the Reliance industry’s fortunes rose to great heights, it is said.

Rs 15,000 to Rs 75,000 Crore - Dhirubhai Ambani

Dhirajlal Hirachand Ambani , also known as Dhirubhai ,28 December 1932, - 6 July 2002, was an Indian rags-to-riches business tycoon who founded Reliance Industries in Mumbai with his cousin. 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

Page 15: The Story of Dhirubhai Ambani

Dhirubhai Ambani was born on 28 December 1932 at Chorwad, Junagadh (now the state of Gujarat, India) to Hirachand Gordhanbhai Ambani and Jamnaben[1] in a Modh Bania family of very moderate means. 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.[2] 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 Salgaonkar.

Reliance Commercial Corporation

In 1962, Dhirubhai returned to India and started the Reliance Commercial Corporation with a capital of Rs.15,000. 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 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,

Page 16: The Story of Dhirubhai Ambani

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 1977. Textiles were manufactured using polyester fibre yarn.[5] 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

Logo of Reliance Industries LimitedDhirubhai 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.

Page 17: The Story of Dhirubhai Ambani

Dhirubhai Ambani

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

Page 18: The Story of Dhirubhai Ambani

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 (BSE) 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[10] as "a business empire with an estimated annual turnover of $12bn, and an 85,000-strong workforce".

Death Final Journey:

Dhirubhai Ambani's funeral saw thousands of people attending. Mukesh Ambani and Anil Ambani can be seen carrying their father's body as per Hindu traditionsDhirubhai 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 was unable to save his life. He breathed his last on July 6, 2002, at around 11:50 P.M. (Indian Standard Time).

Page 19: The Story of Dhirubhai Ambani

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)

Dhirubhai Ambani

Born: December 28, 1932Died: July 6, 2002Achievements: Dhiru Bhai Ambani built India's largest private sector company. Created an equity cult in the Indian capital market. Reliance is the first Indian company to feature in Forbes 500 list

Dhirubhai Ambani was the most enterprising Indian entrepreneur. His life journey is reminiscent of the rags to riches story. He is remembered as the one who rewrote Indian corporate history and built a truly global corporate group.

Page 20: The Story of Dhirubhai Ambani

Dhirubhai Ambani alias Dhirajlal Hirachand Ambani was born on December 28, 1932, at Chorwad, Gujarat, into a Modh family. His father was a school teacher. Dhirubhai Ambani started his entrepreneurial career by selling "bhajias" to pilgrims in Mount Girnar over the weekends.

After doing his matriculation at the age of 16, Dhirubhai moved to Aden, Yemen. He worked there as a gas-station attendant, and as a clerk in an oil company. He returned to India in 1958 with Rs 50,000 and set up a textile trading company.

Assisted by his two sons, Mukesh and Anil, Dhiru Bhai Ambani built India's largest private sector company, Reliance India Limited, from a scratch. Over time his business has diversified into a core specialisation in petrochemicals with additional interests in telecommunications, information technology, energy, power, retail, textiles, infrastructure services, capital markets, and logistics.

Dhirubhai Ambani is credited with shaping India's equity culture, attracting millions of retail investors in a market till then dominated by financial institutions. Dhirubhai revolutionised capital markets. From nothing, he generated billions of rupees in wealth for those who put their trust in his companies. His efforts helped create an 'equity cult' in the Indian capital market. With innovative instruments like the convertible debenture, Reliance quickly became a favorite of the stock market in the 1980s.

In 1992, Reliance became the first Indian company to raise money in global markets, its high credit-taking in international markets limited only by India's sovereign rating. Reliance also became the first Indian company to feature in Forbes 500 list.

Dhirubhai Ambani was named the Indian Entrepreneur of the 20th Century by the Federation of Indian Chambers of Commerce and Industry (FICCI). A poll conducted by The Times of India in 2000 voted him "greatest creator of wealth in the century".

Dhirubhai Ambani died on July 6, 2002, at Mumbai.

Dhirubhai AmbaniPaperback Cover page of The Polyester Prince. The rise of Dhirubhai Ambani. Author:

Page 21: The Story of Dhirubhai Ambani

Hamish McDonald, Publisher: Allen & Unwin Pty., Limited (Australia), ISBN 1-86448-468-3

CriticismDespite his almost Midas Touch, Ambani has been known to have flexible values and anunethical streak running through him. His biographer himself has cited some instances of hisunethical behavior when he was just an ordinary employee at a petrol pump in Dubai. He hasbeen accused of having manipulated government policies to suit his own needs, and has beenknown to be a king-maker in government elections. Although most media sources tend to speakout about business-politics nexus, the Ambani house has always enjoyed more protection andshelter from the media storms that sweep across the country.

Dhirubhai Ambani On Dhirubhai Ambani's first birthday after his death, The Government of India released apostage stamp in his memory. Denomination Rs 5. The fuction was presided over by thethen Minister for Communications and Information Technology, Pramod Mahajan andmembers of Ambani's Family including Kokilaben Ambani (Dhirubhai's Wife), MukeshAmbani and Anil Ambani (Dhirubhai's sons)

Mukesh Ambani

Born: April 19, 1957Achievement: Chairman and Managing Director of Reliance Industries Limited, India's

Page 22: The Story of Dhirubhai Ambani

largest private sector company; Chosen as ET Business Leader of the Year 2006; Ranked 42nd among the World's Most Respected Business Leaders and second among the four Indian CEOs featured in a survey conducted by PricewaterhouseCoopers and published in Financial Times, London, November 2004.

Mukesh Ambani is the face of new emerging India. He is the Chairman and Managing Director of Reliance Industries Limited, India's largest private sector company.

Mukesh Ambani was born on April 19, 1957 in Mumbai. His father Dhirubhai Ambani was then a small businessman who later on rose to become one of the legends of Indian industry. Mukesh Ambani did his Bachelors in Chemical Engineering from University of Bombay and Masters in Business Administration from Stanford University, USA.

Mukesh Ambani joined Reliance in 1981 and was the brain behind Reliance's backward integration from textiles into polyester fibres and further into petrochemicals. During the process of backward integration, Mukesh Ambani led the creation of 51 new, world-class manufacturing facilities involving diverse technologies that raised Reliance's manufacturing capacities manifold.

World's largest grassroots petroleum refinery at Jamnagar is the brainchild of Mukesh Ambani. He was also the incharge of Dhirubhai's dream project Reliance Infocomm. But after the split in the Reliance Empire, Reliance Infocomm went to his brother Anil Ambani. Mukesh Ambani is now planning to enter retail sector in a big way. He has plans to establish big retail stores all over the country. Recently, he also entered into an agreement with Haryana Government to establish a Special Economic Zone (SEZ) with an investment running into thousands of crores.

Mukesh Ambani has many achievements and honours to his name. Mukesh Ambani was chosen as the ET Business leader of the Year 2006. He was ranked 42nd among the World's Most Respected Business Leaders and second among the four Indian CEOs featured in a survey conducted by PricewaterhouseCoopers and published in Financial Times, London, November 2004. He was conferred the World Communication Award for the Most Influential Person in Telecommunications in 2004 by Total Telecom, October, 2004. Mukesh Ambani was also conferred the Asia Society Leadership Award by the Asia Society, Washington D.C., USA,