Late Dhirubhai Ambani was an Indian rags-to-riches business tycoon who founded Reliance Industries Limited, which is the India’s largest private sector conglomerate. Reliance is the first Indian company to feature in Forbes 500 list.
His POWER to think BIG and Entrepreneurial spirit made him a true Billionaire
Few men in history have made as dramatic a contribution to their country’s economic fortunes as did the founder of Reliance, Dhirubhai Ambani. As with all great pioneers, there is more than one unique way of describing the true genius of Dhirubhai: The corporate visionary, the unmatched strategist, the leader of men, the architect of capital markets, and the champion of shareholder interest. But the role of Dhirubhai cherished most was perhaps that of India’s greatest wealth creator. Under Dhirubhai’s extraordinary vision and leadership, Reliance scripted one of the greatest growth stories in corporate history anywhere in the world, and went on to become India’s largest private sector enterprise. The founder died in 2002, but Reliance is moving ahead. Today’s, Reliance Group is one the most diversified business group in the corporate world, it started its operation from textile yarn trading with capital of Indian Rs. 50,000 in 1958, but now it has operation in Petroleum Exploration and Refining, Petrochemicals, Textile, Retailing, Power, Telecommunication, Entertainment, Finance, Health and Infrastructure.
Dhirubhai Ambani was born on December 28, 1932, at Chorwad, Gujarat, India. His father was a school teacher. As he grew up to boyhood, he became even more vigorous, and unmanageable. He possessed enormous enthusiasm and huge energy and was always determined to do what he wanted to do in exactly the way he wanted it done. Dhirubhai was talented and highly intelligent and also as highly impatient. Formal education was not his goal, he realized very early in life. He was essentially an outdoors boy. As he grew up in humble family, he once said that “I’ll make heaps of money one day”. Just to show that that was not an empty boast, he once procured a tin of groundnut oil on credit from a local whole seller and sold the oil in retail sitting on the roadside, earning a profit of a few rupees that he gave to his mother.
Next, he began setting up potato fries stalls at village fairs during weekends when his school was closed. He completed matriculation in 16 years old, he wanted to study for bachelor’s study but his father could not afford.
Life in Aden
He moved to Aden, Yemen to do job and to support his family. He worked there as a gas-station attendant, and as a clerk in A. Besse & Co – a largest transcontinental trading firm which dealt with all sorts of goods ranging from sugar, spices, food grains and textiles to office stationary, tools, machinery and petroleum products. Dhirubhai was first sent to the commodities trading section of the firm.
He acquired business training from A. Besse & Co – a largest trading firm of Yemen. Later, he was transferred to the section that handled petroleum products for the oil giant Shell. “I learnt business at the Besse which was then the best trading firm this side of the Suez,” he used to tell friends in later years. Speculation in manufactured goods and commodities was rife all over the Aden bazaars. Dhirubhai felt tempted to speculate but had no money for that and was still raw for such trading. There he learnt accounting, book keeping, preparing shipping papers and documents, and dealing with banks and insurance companies. At the boarding house where he lived with another twenty-five or so young Gujarati clerks and office boys, he devoted long hours of the night mastering English grammar, essay writing, current affairs and a host of subjects that took his fancy from week to week. He was the first to snatch the English, Gujarati and Hindi daily papers and weeklies as soon as they arrived by the ship every day. After he thought he had learnt the basics of commodities trading, Dhirubhai began speculating in high seas purchase and sales of all sorts of goods.
“Profit we share and all loss will be mine” became his motto. He did not have enough money of his own for such speculative trading. So he borrowed as much as he could from friends and small Aden shopkeepers on terms nobody had ever offered them. “Profit we share and all loss will be mine” became his motto. During lunch break and after office hours he was always in the local bazaar, trading in one thing or the other. There is doubt to say him a freaky entrepreneur. Dhirubhai had done well at the office during his first five years. Now he was sent on promotion to the oil filling station at the newly built harbour. By the late 1950s, Some of Dhirubhai’s friends told him that he should migrate to London where, considering his talents, and guts, he could find better opportunities of growth. Dhirubhai weighed his options. By now he had saved some money and was thinking of setting up some business of his own. Dhirubhai father had died in 1952. He decided to return home, instead of going to London.
Returned to India
After 10 years, Dhirubhai was now 26 years, full of youthful vigor and vitality, and filled with high hopes. He returned to India in 1958, and went to various places like Ahmedabad, Baroda, Junagarh, Rajkot and Jamnagar in Gujarat looking for opportunities. But he felt that with the small capital he had all that he could do in these places was to set up a grocery, cloth or a motor parts shop. A shop could give him a steady income but that was not what he was looking for. He was looking for quick growth, for constant excitement of trading, and for the hustle and bustle of a busy bazaar, as in Aden.
His Power to think BIG and strong Vision made him a true Billionaire; Reliance Group had $ 15 billion Turnover, when he died in 2002
He came back to Bombay, founded the Reliance Commercial Corporation with an initial capital of Indian Rs. 15000, settled himself, his wife and son in a two-room chawl and launched himself as a trader. The business was setup in partnership with Chambaklal Damani, his second cousin. All that his office had a table, two chairs, writing pad, a pen, an inkpot, a pitcher for storing drinking water and a few glasses. The office had no phone but he could make and receive calls on the phone of a next-door doctor paying him a small amount for every such call. From the very first day Dhirubhai began making rounds of Bombay’s wholesale spice market and collecting quotations of various items for bulk purchase on immediate down payment terms. From the very first day he began sending letters in Arabic to old contacts in Aden and trading centers of the Gulf Emirates. The letters carried rates at which Dhirubhai offered to supply various commodities like spices, sugar, betel nuts and other similar things.
Orders began trickling in after a few weeks, and were promptly fulfilled. Often goods were shipped even before payments arrived. Dhirubhai kept his margins low, volumes large and quality high. There was a lot of adulteration and mixing of substandard material in bulk shipments. Foreign exporters often complained that goods shipped from India were all so often a much lower quality than promised. Dhirubhai offered to do without payments due him in case his supplies were found below standard. That built a great reputation for him among overseas exporters. He offered to supply anything and everything required from India. He once got ordered of manure mixed topsoil from the gulf, it was really huge order but price offered was high. But nobody before that had ever received or fulfilled such an order. But that was the sort of challenge that always spurred Dhirubhai’s nerves. Ultimately, He shipped this order on given time, and made real big money, which was considered jack pot for him in his beginning.
After a few years, the thrill of trading in commodities began to wear out. Dhirubhai began to feel that trading in commodities would not take him far enough. Just about this time he made friends with some yarn traders in the chawl where he lived. They told him that there was big money to be made in the yarn business. Yarn trade was complicated, highly speculative and dominated by some big firms. Price fluctuations in the yarn market were vast which made the business extremely risky. Besides, yarn trade required a large amount of cash. But, if the risks were high, so were the margins for a man of daring. Dhirubhai liked that. He began frequenting the yarn market where he stood quietly at a corner during business hours and observed how the trade worked. Gradually, he began buying and selling different types of yarn, first in small quantities, then in ever-increasing volumes.
As business grew, so did his need for funds. He resorted to his Aden formula. Many of the small Gujarati building contractors, merchants and brokers were flush with funds. They used to lend their savings and surplus money at a high interest. They never lent a large sum to any single person. Dhirubhai offered them staggering rates of interest. When a deal turned out to be especially great, he topped the sum with some icing as bonus. To some others he offered his Aden terms – “loss is mine, profit I share.”
From there on he had no shortage of funds. Actually, every evening builders and merchants crowded his office with huge bundles of notes to lend. He came to be known as the man with the golden touch. He now began making huge deals in yarn, often booking lots on the high seas. As business grew, he shifted to a larger office. His two brothers, Ramnikbhai and Nattubhai, and some friends from his Aden days, joined him. Several big lenders came to his office and assured him that, far from wanting their money back, they would be happy to lend him more if he needed. Soon after, Dhirubhai was elected a director of the Bombay Yarn Merchants Association.
By this time, Dhirubhai had earned a name for himself in the Mumbai yarn market and at different handloom and powerloom centres of the country. But, recognition to him as the lion of yarn traders came when in the early sixties he introduced a new viscose-based yarn called chamki (shiny). Chamki had a distinct shine well suited for saris and dress materials. While most mill-owners were yet to see the wonder that Chamki could do Dhirubhai was quick to see its attractive features for saris and dresses. He took the next flight to Japan and booked a big huge lot of chamki filament for import. By the time his first chamki shipment arrived, the first few mills that had made saris and dress materials from the wonder filament were overwhelmed by the craze customers were showing for the new-look fabric. Dhirubhai’s first chamki lot sold like the recognizable hot cakes at a big premium. Over the next few months Dhirubhai had the chamki market in his grip. As the demand for chamki soared, so did Dhirubhai’s profit. That was where the first big flush of capital for the future Reliance Textiles came from.
Another big flush came from a government scheme in the mid-sixties for import of nylon yarn, then much in demand, against export of rayon fabrics. Nylon was not yet being produced in India and, as a craze for nylon fabrics, was growing in the country. Again Dhirubhai was the first to make use of it in a big way. He took to export of rayon fabrics in right earnest. Dhirubhai made the best use of his Aden connections. As in spices, so in rayon fabrics too he was quick in delivering orders. Dhirubhai felt that the nylon for rayon scheme might not last for long. He was making big money selling nylon yarn but he felt that he could make a lot more money if, instead of selling the yarn to mills, he himself converted the yarn into the material. The nylon craze was fast spreading from big cities to small towns and villages thanks to Mumbai films. So, he began playing with the idea of establishing his own independent manufacturing unit. He had built enough capital during trading in yarn to be able to launch him into the new orbit of manufacturing. That was his first major step towards what would later come to be hailed as his farsighted strategy of “backward integration.”
During the seven years between 1958 and 1965, Reliance Commercial Corporation (RCC) kept growing as more and more of Dhirubhai’s friends and colleagues from Aden joined him. In 1965 Chambaklal Damani and Dhirubhai Ambani ended their partnership and Dhirubhai started on his own. It is believed that both had different tempermants and a different take on 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 with anticipating a price rise and making some profit is good for growth. Later, Dhirubhai ran his team more likes the head of a joint Hindu family than as a chief executive. He was friendly, flexible and forgiving in his conduct with his staff, showed understanding of human weaknesses and shortcomings. He had by now moved into a better and bigger apartment at 7, Altamount Road in South Bombay.
Journey into Textile
In 1966, Dhirubhai decided to start a textile unit of his own. He decided to set a brand new mill of his own. Not just a new one, but the best and the latest available technology. Later he said, in all my life I’ve never compromised on the principle. Eventually, he decided to build his factory at Naroda, which is a small town of Ahmedabad and was an emerging Industrial Estate. Reliance moved to plot, measuring 5,000 square yards. Today Reliance facilities at Naroda are spread over 125 acres there. The Naroda project started with just six people. Dhirubhai was the troubleshooter of the team, its leadership, planning, project management, operations, and coordination, all in one. A textile engineer joined him, who had studied in Germany and who had erected a similar factory in Colombo before Dhirubhai invited him on the team. Ambani wanted to make the best quality nylon material in the largest possible quantities by the quickest and most efficient way possible in the world, and he wanted to start at the earliest. “Nylon material is in great demand in India and elsewhere”. He can earn a big profit from the government scheme. The scheme is there now but it may not remain there for long. That is why he wants the factory so quickly.
Initially, he started with setting up a warp knitting unit. He selected German made machines to bring into India. Then, just after the machines had been ordered from Germany there was a bolt from the blue. In mid of 1966, the rupee was devalued by 36.5 per cent. The government also wound up major export promotion schemes, including tax credits, direct subsidies and import entitlement schemes like the nylon for rayon one. Devaluation steeply raised the project cost. Scrapping of import entitlement schemes upset the nylon for rayon plan. There were suggestions for calling a halt to the project. “No,” called Dhirubhai, “We are going ahead with the project as planned.”
Work continued at a hectic pace at Naroda. Machines arrived and installed. As Dhirubhai had wished and planned, production started on the four knitting machines on the target date of last quarter of 1966. Naroda factory began producing fine quality fabric. The fabric was fine and the prices offered were attractive. Yet nobody in the wholesale markets of Ahmedabad and Mumbai was ready to touch Reliance cloth. The wholesalers stonewalled Reliance at the instance of established big mill owners. He tried to convince wholesalers, but all in vain. However, Dhirubhai was not one to give up a fight once started. He went directly to retailers. In the next few days Dhirubhai’s staff fanned out all over the big cities, piling bales of Reliance fabric at the retailers’ counters without asking for any receipt or advance payment, no, not even seeking a promise of payment in future. He went to Mumbai himself, and loaded bales in his car. He said to them, I want you to grow with me, though at the moment I have nothing big to offer you. My brothers, some friends and I have just set up a factory at Naroda. We make this knitted fabric there. The wholesalers are boycotting our material for fear of the big mill owners. I offer this material to you. I don’t want any money. You sell it. If you make money by selling our material, then give me. His convincing and selling powers were outstanding. No cloth merchant had ever in his life seen a young man get out of a car with a pile of bales of cloth on his shoulders and introduce himself like that. It shows his real enthusiasm and entrepreneurial spirit. Eventually, slowly and steadily Reliance material began moving in the market without any promotion. In the meantime he named the Reliance fabric “Vimal”. Slowly the “Only Vimal” slogan began to emerge. It is Retail Chain store now a day.
As Reliance prospered, Dhirubhai kept ploughing profits back into Naroda, adding new machines and new in house facilities year after. Dhirubhai, his two brothers and their nephew, Rasikbhai Meswani, who had joined them during their yarn days, formed the core team. They worked hard like hell, talked like army generals in the midst of a battlefield, never bothered about creature comforts, and took quick decisions. He said to his team going to Germany for training, “You must keep repeating to yourself that one day we have to be bigger than Tata and Birla. But we can be bigger than them only if we master our machines. Just don’t limit yourself to handling the machines. Go with an open mind. Keep your eyes open. Demand to see everything, look into everything, and learn everything. People will not tell you all by themselves. You will need to ask them, needle them, and pester them. Unki jaan kha jaao (be after their life). What you learn will depend on what questions you ask. Don’t be with them just the scheduled six hours of the day. Stay there in the mill 24 hours. If necessary, sleep there. Most important: Make friends while you are there. We need to have friends everywhere, if we have to grow big. It was his talk like this that made us mad for success, mad to be the best, to be number one. It proved him as tremendous leader and motivator.
Your browser may not support display of this image.Reliance grew at a fast pace. Within four or five years of starting production, the number of warp knitting machines rose to about 20 in addition to a dozen warping machines. By 1972-73, the number of weaving looms rose to 154 even as ever new knitting machines. That year started an in-house design center, the best-equipped and the largest in India. In 1975, a World Bank team visited 24 leading textile mills in India. The team estimated the Reliance mill to be the best in the country. “Judged in relation to developed country standards,” said the team in its report to the Bank.
Naroda now became the grandest composite mill in the country where spinning, texturising, dyeing, heat setting, designing, printing, knitting, weaving, that is, everything for converting raw yarn into finished bales of fabric ready for the retail shops was done at one site. And, Reliance was now making not only saris and suiting but also all sorts of highest quality material ranging from camel wool suits to world class furnishing fabrics.
Ambani took his company (Reliance) public in 1977. 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 Gujrat that being shareholders of his company will only bring returns to their investment.
Your browser may not support display of this image.Yet again, in 1980 the mill was expanded, renewed and renovated with the first synthetic polyester (POY) machines in India, and large spinning processing plant. Then, between 1984 and 1996, the entire face of the Naroda mill changed with installation of 280 totally computerized water jet looms, 72 looms, 24 Jacquard looms, 48 Dornier looms, and numerous other buffing, raising, piling machines were installed. Naroda also had the first, most modern effluent treatment plant of the country as also a captive mw power plant. Ambani’s net worth was estimated at about Indian Rs.1 billion by early 1980s. 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. Ambani became high priest of an “equity cult” that finally drew the enormous savings of India’s middle classes into productive, risky investment. Paying high dividends and bonuses at a time when equities were seen as a low-return, risky investment made Ambani a hero to shareholders. Ambani had a strong belief in the group’s shareholders and went to them each time to fund his plans. It continued to be a textile company until the early eighties. Reliance later started seizing opportunities thrown up by a combination of the growing Indian economy and the opening up of the regulation-driven sectors of the economy. Beginning with the early eighties, Reliance pursued a policy of backward integration from textiles as well as diversification. An interesting fact is that the Reliance group has seen its most phenomenal growth. It installed PTA (purified terephthalic acid) plant, which is key raw material for Polyester.
Your browser may not support display of this image.Backward vertical integration has been the cornerstone of the evolution and growth of Reliance.
Reliance 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 is regarded as Polyester Prince.
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. Starting with textiles in the late seventies, Reliance pursued a strategy of backward vertical integration – in polyester, fiber intermediates, plastics, petrochemicals, petroleum refining and oil and gas exploration and production – to be fully integrated along the materials and energy value chain.
The company also successfully dabbled in the stock market; often creating controversy and there is no shortage of accusations that it `managed’ the political environment and has often been seen to have influenced policy making. A senior industrialist, when asked what differentiated Ambani from other businessmen, said, “Everyone managed to get things done during that period; only Dhirubhai managed it better.”
The secret of the success post-1986 is buffeted by the transition of power from the father to sons Mr. Mukesh Ambani and Mr. Anil Ambani with a clear cut division of responsibility between the two under the supervision of Dhirubhai Ambani. While one face of Reliance is its project implementation skills, the second is the financial wizardry. The project implementation team is kept away from all the happenings of the corporate team. The skills of the project team are borne out by the fact that it was able to implement the mega projects at Patalganga, Hazira and Jamnagar in record time. The financial team has, over the years shifted from raising funds from domestic equity investors to financial institutions and overseas investors. Today, Reliance enjoys a high credit rating and has no problem convincing institutional investors. The project implementation and finance teams are considered world-class and top of the line.
Dhirubhai Ambani started his long journey in Bombay from the Mulji-Jetha Textile Market, where he started as a small-trader. At the time of Dhirubhai’s death on July 6, 2002, at Mumbai, Reliance Group had a gross turnover of USD $ 15 Billion. In 1976-77, the Reliance group had an annual turnover of IRs 70 crore and it is to be remembered that Dhirubhai had started the business with just IRs.15, 000.
A film supposed to be inspired by the life of Dhirubhai Ambani was released in January 2007. The Hindi Film Guru shows the struggle of a man striving to make his mark in the Indian Corporate World with a fictional Shakti Group of Industries. The film stars Abhishek Bacchan, Aishwarya Rai, and Vidya Balan. In the film, Abhishek Bachchan plays GuruBhai, a character implicitly based on Dhirubhai Ambani. From beginning Dhirubhai was seen in high-regard. His success in the Polyester, Petrochemicals 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.
Today’s Reliance Group
The Reliance Empire was splited up between the Ambani brothers after the death of Dhirubhai Ambani. Mukesh Ambani got 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.In September 2008, Reliance Industries was the only Indian firm featured in the Forbes’s list of “world’s 100 most respected companies”.
His sons Mukesh Ambani and Anil Ambani have $ 43 billion and $ 42 billion respectively according to Forbes Top 10 Billionaires in the World 2008, accumulated wealth of both make them World’s Richest Indian, and stand up to World’s Richest Man – Warren Buffett, which have $ 62 billion
Reliance, acknowledged as one of the best-run companies in the world has various sectors like petrochemicals, textiles and is involved in the exploration and production of crude oil and gas, to polyester and polymer products. Reliance came in Petrochemicals and Refinery Business in 1999. The company’s 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. 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. Now the Reliance group with over 85,000 employees provides almost 5% of the Central Government’s total revenue.
Reliance enjoys global leadership in its businesses, being the largest polyester yarn and fiber producer in the world and among the top five to ten producers in the world in major petrochemical products. The Group exports products in excess of US$ 20 billion to 108 countries in the world including Pakistan.
* Our dreams have to be bigger. Our ambitions higher. Our commitment deeper. And our efforts greater. But dreams with your open eyes
* Growth has no limit at Reliance. I keep revising my vision. Only when you dream it you can do it
* Between my past, the present and the future, there is one common factor: Relationship and Trust. This is the foundation of our growth
* We cannot change our Rulers, but we can change the way they Rule us
* If you work with determination and with perfection, success will follow
Awards and Recognitions
* 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
* The Economic Times Award for Corporate Excellence for Lifetime Achievement
* Featured among ‘Power 50 – the most powerful people in Asia by Asia week magazine
* Dean’s Medal by The Wharton School, University of Pennsylvania, for setting an outstanding example of leadership
* ‘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