Dhirubhai Ambani

Dhirubhai Ambani
File:Dhirubhai Ambani.jpg
Born	(1932-12-28)December 28, 1932 Chorwad, Gujarat, India
Died	July 6, 2002(2002-07-06) (aged 69) Mumbai, Maharashtra, India
Nationality	Indian
Occupation(s)	business tycoon; Chairman of Reliance Industries
Spouse	Kokilaben Ambani
Children	Mukesh Ambani Anil Ambani
Website	www.ril.com

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 and Mukesh) was 60 billion dollars, making the Ambani's the second richest family in the world, next to the Walton family. Dhirubhai has been one among the select Forbes billionaires and has also figured in the Sunday Times list of top 50 businessmen in Asia.

Dhirubhai started off as a small time worker with Arab merchants in the 1950s and moved to Mumbai in 1958 to start his own business in spices. After making modest profits, he moved into textiles and opened his mill near Ahmedabad. Dhirubhai founded Reliance Industries in 1958. After that it was a saga of expansions and successes.

Reliance, acknowledged as one of the best-run companies in the world has various sectors like petrochemicals, textiles and is involved in the production of crude oil and gas, to polyester and polymer products. The companies refinery at Jamnagar accounts for over 25% of India's total refining capacity and their plant at Hazira is the biggest chemical complex in India. The company has further diversified into Telecom, Insurance and Internet Businesses, the Power Sector and so on. Now the Reliance group with over 85,000 employees provides almost 5% of the Central Government's total revenue.

In 1986 after a heart attack he has handed over his empire to his two sons Anil and Mukesh. His sons are carrying on the successful tradition of their father.

Early life

Dhirubhai was born on 28 December 1932 at Kukaswada near Chorwad, Junagadh district (now the state of Gujarat, India) to Hirachand Gordhandhas Ambani and Jamnaben in a Modh family of modest means. Hirachand Gordhandhas Ambani was a village school teacher with little earning. But his wife, Jamanaben knew how to stretch every dollar in a long way. Hirachand and Jamanaben had two daughters - Trilochanaben and Jasuben and three sons - Ramnikbhai, Dhirubhai and Natubhai. Dhirubhai was the second son. Dhirubhai was precocious and highly intelligent. He was also highly impatient of the oppressive grinding mill of the school classroom. He chose work which used his physical ability to the maximum rather than cramming school lessons. When Jamnaben once asked Dhirubhai and Ramnikbhai to help his father by earning money. He angrily replied "Why do you keep screaming for money? I will make heaps of money one day". During weekends, he began setting up onion/potato fries stall at village fairs and made extra money which he gave to his mother.

Life in Aden

When he was 16 years old, he moved to Aden, Yemen. He worked with A. Besse & Co. for a salary of Rs.300 (Present Day $6.49). 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 2 sons, Mukesh, Anil and two daughters, Nina Kothari, Deepti Salgaonkar. He also worked in Dubai for some time during his early years.

During those days of him, the Yemini Rial was made of pure silver coins and was in much demand at the London Bullion Exchange. Young Dhirubhai bought the Rials, melted them into pure silver and sold it to the bullion traders in London. During the latter part of his life, while talking to reporters, it is believed that he said “The margins were small but it was money for jam. After three months, it was stopped. But I made a few lakhs. In short, I was a manipulator. A very good manipulator. But I don’t believe in not taking opportunities.

Majin Commercial Corporation

Ten years later, Dhirubhai Ambani returned to India and started "Majin" in partnership with Champaklal Damani, his second cousin, who used to be with him in Aden, Yemen. Majin was to import polyester yarn and export spices to Yemen.[3] 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. During this period, Dhirubhai and his family used to stay in a one bedroom apartment at the Jaihind Estate in Bhuleshwar, Mumbai. 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 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

File:Ril logo.jpg

Logo of Reliance Industries Limited

Dhirubhai Ambani is awarded 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 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 exchange

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 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.

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.

Criticism

He was 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 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 license 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 confidant, 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

Dhirubhai didn't enjoy cordial relations 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. It is also believed that V. P. Singh's move as Defence Minister came as a direct result of him catching Dhirubhai's tax evasion.

Death

File:Dhirubhai-Final Journey.jpg

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 traditions

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 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)

The country has lost iconic proof of what an ordinary Indian fired by the spirit of enterprise and driven by determination can achieve in his own lifetime..

— Atal Bihari Vajpayee, Former Prime Minister of India

The nation had lost one of the doyens of the modern Indian corporate community, a philanthropist and above all a great human being endowed with great compassion and concern for the underprivileged sections of the society...

This new star, which rose on the horizon of the Indian industry three decades ago, remained on the top till the end by virtue of his ability to dream big and translate it into reality through the strength of his tenacity and perseverance

His legacy will remain shrouded in the fact that his practices have brought bribery and corruption to indian business for years to come.

I join the people of Maharashtra in paying my tribute to the memory of Ambani and convey my heartfelt condolences to the bereaved family..

— P C Alexander, Governor of Maharastra

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.

With the blessings of Srinathji, I have today amicably resolved the issues between my two sons, Mukesh and Anil, keeping in mind the proud legacy of my husband, Dhirubhai Ambani.

I am confident that both Mukesh and Anil, will resolutely uphold the values of their father and work towards protecting and enhancing value for over three million shareholders of the Reliance Group, which has been the foundational principle on which my husband built India's largest private sector enterprise.

Mukesh will have the responsibility for Reliance Industries and IPCL while Anil will have responsibility for Reliance Infocomm, Reliance Energy and Reliance Capital.

My husband's foresight and vision and the values he stood for combined with my blessings will guide them to scale new heights..

— Kokilaben 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 Reliance Anil Dhirubhai Ambani Group (Reliance ADA Group). Ambani wished if he could make Mr. Abraham Koshy from Kerala as his CEO. Unfortunate accident and aftermath he joined TCS later in Chennai.

Reliance Institute of Life Sciences, a Dhirubhai Ambani Foundation Initiative, was established to promote higher education in various fields of life sciences and related technologies.

In Fiction

A film said to be inspired by the life of Dhirubhai Ambani was released on 12 January 2007. The Hindi Film Guru, directed by ace filmmaker 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 Bachchan, Mithun Chakraborty, Aishwarya Rai, R. Madhavan and Vidya Balan. In the film, Abhishek Bachchan plays Guru Kant Desai, a character implicitly based on Dhirubhai Ambani. The character is known in the film as "GURUBHAI", similar to the real-life "DHIRUBHAI." Mithun Chakraborty portrays Manikda who bears an uncanny resemblance to the real life Ramanath Goenka and Madhvan portrays S. Gurumurthy, who gained national fame twenty years ago, spearheading virulent attacks against the Reliance group in one of India's bloodiest corporate wars ever.

A book published by Hamish McDonald titled "The Polyester Prince" is also an unauthorised biography of Dhirubhia Ambani, outlining all his political and business conquests. it has been banned in several countries and is also out of print.

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 – Economic Times Awards 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'

External links

• Dhirubhai Ambani from peopleforever.org
• Dhirubhai Ambani from dhirubhai.net
• 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 ?
• Founder Chairman, Reliance