40 YEARS AGO...

AND NOW: DHIRUBHAI AMBANI

CHANGED THE IDIOM OF DOING BUSINESS
He was fond of quotable quotes, one of these being: "If you don't build your dream,
someone else will hire you to help them build theirs". There can be no better example of
someone walking his talk so convincingly. Dhirajlal Hirachand Ambani (better known as
Dhirubhai), son of a school teacher in a remote village in rural Gujarat, chose to build his
own spectacular dream by hiring as well as using some of the country's most shrewd
and influential minds. But make no mistake, however shrewd or well-connected his hires
or partners were, they were just bit players in the blockbuster of a megastar who dared
to dream on a scale unimaginable before in Indian industry.
During his lifetime and after, Ambani aroused extreme responses in others. While
admirers attribute Ambani's success to his financial wizardry, deep home-grown
knowledge of the environment he was operating in, massive innovations in marketing
and technology, and unmatched project execution skills, others say the success
reflected the consummate skills with which he could win friends and influence people to
pick his way through the dense jungle of controls. These skills were critical in knowing
how to bend rules or have them bent for him.

To be fair, Ambani wasn't alone in this; his counterparts in many traditional business families also
played the same game. It was only that all of them were outwitted by a man who simply gatecrashed into their party and didn't let his ego come in the way. Remember his famous statement
in an interview to India Today magazine that he was "willing to salaam anyone" in the
government as the most "important external environment is the Government of India".
As the birth and history of Reliance Trading Corporation (which imported polyester and exported
spices) later renamed Reliance Textiles Corporation before finally being named Reliance
Industries show, both camps were spot on in their estimation of the man who returned from Aden
to begin his tryst with destiny in 1958 with just Rs 50,000. He was 26 then but had already given
enough indications of his money-making abilities while first working as a petrol pump attendant
and then as a clerk in an oil company. No one, of course, could have imagined then that the
former student of Junagadh's Bahadur Kanji High School, who during the sixties lived in a oneroom chawl in Mumbai with his wife and children, would be ranked by Forbes as the world's
138th-richest person, with an estimated net worth of $2.9 billion in 2002, the year he succumbed
to a vascular stroke. This was his second stroke, the first had occurred more than 16 years
earlier, leaving the right side of his body paralysed.
There are many reasons why Ambani left a deep imprint on India's corporate history of the last
40 years, the foremost being his ability to make Reliance the finest investment proposition ever
seen by the Indian investor. At a time when participation in the Indian capital markets was largely
limited to a small but influential elite, Ambani brought first-time retail investors into his then
relatively unknown company by floating an initial public offer of 2.8 million equity shares of Rs 10

each at par. The company was listed on the Bombay and Ahmedabad stock exchanges in
January 1978. The move was considered to be bold and daring but Ambani did manage to
convince 58,000 middle-class investors, mostly from small towns, about his promise of a
substantial return on their investments should they decide to place trust in him. That's a promise
he kept till his last day, in the process creating one of the world's largest shareholder families.
The adulation for him was so great that in 1986 the company's annual shareholder meeting was
attended by as many as 30,000 stockholders, a record in India's corporate history. No hall in
Mumbai (Bombay then) could hold that number, so the meeting had to be finally held in Cross
Maidan.
There was a reason for this hero worship. Ambani made millionaires out of many of the initial
investors in the Reliance stock. In 1976-77, Reliance had an annual turnover of Rs 70 crore. By
the time he passed away, Ambani had converted this fledgling enterprise into a Rs 75,000 crore
colossus - an achievement that earned Reliance a place in the global Fortune 500 list, the first
ever Indian private company to do so. Ambani, who established his first textile mill, turning out
polyester cloth under the Vimal brand name at Naroda near Ahmedabad in 1966, set up a
polyester plant in the 1980s. In the 1990s he turned aggressively toward petrochemicals, oil
refining, telecommunications and financial services.
On the flip side, many say, he had to pay a heavy price in later years for remaining a hero in the
eyes of ordinary shareholders. For, he had to consistently offer them something beyond what
they were already used to receiving and that became some kind of a treadmill from which he
could never get off - the reason for many of the allegations, including share price manipulation,
that he and his group faced constantly.
One of the many Ambani firsts was in the area of high finance that provided a big boost to the
capital market. He brought back convertible debentures after convincing the government of its
legitimacy and issued six series of debentures to raise vast sums of money. Apart from receiving
a fixed rate of interest for a specific period, investors also faced the prospect of a decent capital
appreciation when a part of the debentures was converted into shares. Ambani also turned the
non-convertible debenture into a great financing tool. By announcing that these debentures
would be converted into equity shares at a premium, he received a record subscription of Rs 400
crore from the investing public in a single issue in 1985. There were other financial innovations in
capital-raising. For example, Reliance was the first to raise money through a seven-year
syndicated bullet loan in Europe and it also raised bonds in the US market, half for 20 years and
half for 30 years.
Ambani also reminded everybody that project execution and management skills that compress
construction and erection time were something that would never go out of fashion. Even his first
textile mill at Naroda in Gujarat way back in 1966 was praised by a technical team from the
World Bank as one of the best composite textile mills in India and "excellent even by developed
country standards". He probably holds a world record in setting up a 10,000 tonne polyester yarn
plant in 14 months. This passion for excellence was what enabled Reliance to set up the world's
largest grassroots refinery at the time at Jamnagar ahead of schedule in the face of formidable
challenges, including a massive cyclone that flattened the project site during construction. The
cost was also 30 per cent lower than the prevailing global benchmark for a project of such
magnitude.
However, Ambani never could get over this image of someone who bulldozed his corporate
rivals, managed to always procure the licences he wanted and got the government of the day to

set duty rates that suited him. His corporate rivalries dragged in some of the country's best
known politicians, corporate heads and media houses. He had to fight the law enforcement
agencies on charges of smuggling in a new polyester filament yarn plant and how companies
registered in the tax haven Isle of Man, with names like Crocodile Investments and Fiasco
Investments, had purchased Reliance shares at one-fifth their market prices. He was for a brief
period out of favour with the powers-that-be, which led to his aborted bid to take over Larsen &
Toubro (Ambani had to step down as L&T chairman) - something that he has often termed his
biggest defeat. His political connections had even given birth to a popular joke which divided the
country's politicians in two groups: R-positive and R-negative.

Dhirubhai Ambani: The Indian Business Icon

Dhirubhai Ambani, the founder of Reliance Industries, was a genius who had extraordinary talent.
He was creative and mastered the secrets of business, a pioneer among businessmen in India.
He wrote his own story and became a hero of his century, changing the shape of Indian
investing.
This Indian business icon had a real rags to riches story and was undoubtedly the most talented
businessman of his time. He amazed the world. Born in Gujarat, he became a celebrity in India
and overseas. Kokila Ben Ambani, his devoted wife, supported him and always remained behind
him in all his achievements.
What were the secrets of his amazing growth? What made him Dhirubhai Ambani? How did he
became an industrial tycoon and a global conglomerate? Why does he have fans in India, the
US, the UK, the EU, Canada, and elsewhere?

1. Gather Information, Whatever It May Be

Gather information about governments, local, state, central and international

Gather information about products, companies, consumers, markets, people, services,

and politics

Do not forget to get information about your competitors

He was able to quickly gather, process, and analyze information and disburse it to his
subordinates when and where required. Through the information, he was able to find new
opportunities.
Prof. M.L. Sisodia, one of my friends and a senior professor of physics and a research scholar,
once told me a story about Dhirubhai Ambani.
Mr. Sisodia had undergone a bypass surgery after a heart attack. A few days after his surgery,
his son was called 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 show his capability to gather information, even though it was
not yet the internet age.

2. Find Opportunity
He always endeavored to analyze whatever information he had. He would convert information
into profit-making opportunities.

According to him, "There is no invitation for making profits." You have to find it

3. Jump From One Orbit to the Next

No matter where you are, just work there. Master that place or situation. Accumulate some
energy and then jump into a higher orbit. Stay there for some time and control it and master it.
Then, jump to another, higher level, the next orbit.
Dhirubhai did this many times during his life.
Caution: Do not jump from one orbit to another without mastering the present orbit. This could be
dangerous. Be patient.

4. Complete Projects On Time

Learn to finish before the scheduled time. He and his sons completed all their projects on time or
even beforehand. It didn't matter how big the projects were or how many hurdles they faced, they
still completed them in a timely manner.
Dhirubhai Ambani and his sons Mukesh and Anil developed some techniques to make sure they
were always on time, monitoring their projects closely.

5. Think Big. Think Global.

He was thinking global even before the current trend of globalization. Most Indian companies
were not doing well in the global scenario at his time and were not acting with global standards.
He made world-class projects and world-class factories. Nobody in India was even thinking about
that at the time.

6. Hire the Best People. Pay Them Well.

Dhirubhai Ambani was able to employ the best, top-ranking people in every field. He was an
excellent employer, never compromising on quality or timeliness. He could only do what he did
with the best people. According to him, human resources are the most important resources.

7. Pay Shareholders Well.

His ambitious projects needed a lot of capital but bankers and financiers failed to trust his
capabilities. They were reluctant and did not agree to fund his projects because they were risky.
So Dhirubhai Ambani went to his shareholders since he recognized them as the best source of
funding and asked them for money. The shareholders jumped at the chance to fund his projects
and he paid them handsomely, rewarding them for their trust.

He realized that shareholders would never be satisfied with dividends that matched the trend at
the time. He knew the value of capital appreciation so he paid bonuses, and issued rights to his
shareholders in addition to regular dividends.
He went beyond the expectations of his investors. He even went to the extent of challenging the
law. Once he converted non-convertible debentures into shares, creating enormous profit even
though it was against the law. He fought against that law and the government was compelled to
change it.
In his time, he had the highest number of shareholders. He boosted the market capitalization of
BSE and brought millions of shareholders under his umbrella, many of them first time investors.