The Persuasive Young Bania – Part II

At 17, he left India to join his oldest brother in Yemen, where he worked as a petrol station attendant in Aden. Initially, Dhirubhai worked as a dispatch clerk with A. Besse & Co. Two years later A. Besse & Co. became the distributors for Shell products and Dhirubhai was promoted to manage the company’s oil-filling station at the port of Aden. He also worked in Dubai for some time during his early years.

Very few people are aware of Dhirubhai’s first business. It was not in commercial capital Mumbai, but was started in Aden. In 1950s, the Yemini administration realized that their main unit of currency, the Rial, was disappearing fast. Upon launching an investigation, they realized that a lot of Rials were being routed to the Port City of Aden. It was found that a young man in his twenties was placing unlimited buy orders for Yemini Rials.

During those days, 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. That’s called benefiting through Arbitrage in modern economics. 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.”

Eight years later, late in 1958, he returned to India with a wife, first child and "a few lakhs rupees." He used that tiny sum to enter business exporting spices and nuts, but in the '60s entered the textile business. He bought plants and outfitted them with the latest spinning and weaving machines. His family used to reside in a one room apartment at Jaihind Estate in Bhuleshwar.

He decided that unlike most Indian businessmen who borrowed heavily from financial institutions to nurture their entrepreneurial ambitions, he would instead raise money from the public at large to fund his industrial ventures. In 1977, Reliance Industries went public and raised equity capital from tens of thousands of investors, many of them located in small towns. From then onwards, Dhirubhai started extensively promoting his company’s textile brand name, Vimal. The story goes that on one particular day, the Reliance group chairman inaugurated the retail outlets of as many as 100 franchises.

He had by then already succeeded in cultivating politicians. Indira Gandhi returned to power in the 1980 general elections and Dhirubhai shared a platform with the then prime minister of India at a victory rally. He had also become very close to the then finance minister Pranab Mukherjee, not to mention the prime minister’s principal aide R.K. Dhawan. He realised that it was crucial to be friendly with politicians in power, especially at a time when the group had embarked on an ambitious programme to build an industrial complex at Patalganga to manufacture synthetic fibres and intermediates for polyester production.

1986 was a crucial year for Dhirubhai. He suffered a stroke in February that year. A few months later, the Express began publishing a series of articles attacking the Reliance group as well as the Indira Gandhi regime for favouring the Ambanis. But, it was Dhirubhai who knew to fight back. The undivided Goenka family that used to control the Indian Express chain of newspapers – which carried on a campaign against the Reliance group in 1986-87 – is currently divided into three factions. Whereas the multi-edition newspaper has not entirely lost its feisty character, it is yet to fulfil its late founder Ramnath Goenka’s cherished dream of becoming a market leader in at least one of its many publishing centres.

Who remembers Swan Mills? Or Kapal Mehra of Orkay? Even Nusli Wadia of Bombay Dyeing is a pale shadow of what he would certainly have liked to be.

In 1976-77, the Reliance group had an annual turnover of Rs 70 crore. Fifteen years later, this figure had jumped to Rs 3,000 crore. By the turn of the century, this amount had skyrocketed to Rs 60,000 crore. In a period of 25 years, the value of the Reliance group’s assets had jumped from Rs 33 crore to Rs 30,000 crore

When he died, the Reliance group of companies that Dhirubhai led had a gross annual turnover in the region of Rs 75,000 crore or close to US $ 15 billion. The group’s interests include the manufacture of synthetic fibres, textiles and petrochemical products, oil and gas exploration, petroleum refining, besides telecommunications and financial services.

The Ambanis often scored because they stuck to their knitting or focused sharply on their areas of ‘core competence’. Dhirubhai’s sons, Mukesh (45) and Anil (43) are keen on effectively implementing their plans of diversifying into the ‘new economy’, into new areas like telecommunications, life sciences and insurance. Only time will tell whether, Mukesh and Anil prove to be worthy successors to their father. But one thing seems certain: they will try their level best not to be as controversial as Dhirubhai was.