From the archives: Dhirubhai Ambani, the futurist (2024)

He symbolised a welcome new attitude to wealth, not as inheritance, but something worth earning through hard work

From the archives: Dhirubhai Ambani, the futurist (1)

Dhirubhai Ambani with his sons Mukesh and Anil Ambani (Left)

From the archives: Dhirubhai Ambani, the futurist (3)In April 2002, barely three months before his death, Dhirajlal Hirachand Ambani, known to everyone in the diminutive form, Dhirubhai, rose to speak at Birla Matushree Sabhaghar, near Mumbai’s Marine Lines. Though he was nowhere near hanging up his boots, at 69, Dhirubhai was working mostly from home. He had begun spending the afternoons on the huge floor that he and his wife Kolkila ben had kept for their use at Sea Wind, the villa that the Ambanis had got custom-built at Cuffe Parade not very long ago. At the terrace-lawn adjoining his apartment, he would play with his grandchildren, occasionally throw lavish parties (as he did, curiously, on a Valentine’s Day), and enjoy the eventide light across the Arabian Sea. If he somewhat resembled Don Corleone in the last scene of The Godfather, the similarity was purely a coincidence, and it also drew from the Hindu concept of a life cycle fully traversed. By then, his personal achievement in business had reached its climax, and the controversies that had dogged him were left far below in the valley. Or, sort of.

At Birla Matushree, it was a meeting of Reliance Industries Limited (RIL) shareholders under the orders of the Bombay High Court, to consider its amalgamation with Reliance Petroleum Limited (RPL), which owned the country’s largest grassroots refinery at Jamnagar, and a clutch of oil-and gas fields on both western and eastern sea coasts of India. “The RIL-RPL merger”, said the patriarch who had begun it all 42 years ago, in a voice choked with emotion, “is the largest ever merger to take place in the corporate history of India. This merger will achieve several new distinctions for your company, both on a domestic and international scale”. He remembered Reliance’s “humble beginning” during its first public offering in 1977, raising a meagre Rs 2.82 crore, and recalled that since then sales had grown by “over 400 times”, net profits “by 900 times”, net worth by 1,500 times and total assets by 900 times. He went on to reel off benefits of the merger. But then there was a sudden crack in his trademark baritone, and the old fire returned to his eyes. “Even after the merger, RIL’s sales, profits and assets, will be less than 10 per cent of the respective figures for the largest global energy companies. Therein lies the challenge and the opportunity, as well as the enormous potential for future growth.”


It was truly the patriarch retiring in his autumn, with all but a distant vision of the horizon. By then, the growing heft of his business, and his stature in public life, had cut him off from his critics, but they were never silenced. Instead, the background squawk got embarrassingly noisy after a decade of relative quiet since the V.P. Singh government fell in 1990. It was shattered towards the end of the decade when the accidental involvement of one of Reliance executives with a Delhi land shark having connections with the fugitive gang of Dawood Ibrahim had led to a police raid of the executive’s home and office. But that was sowing the wind; the whirlwind was reaped when search of the executive’s office allegedly led to the discovery of reams of secret government documents, including alleged Cabinet notes. There was talk of Reliance running a “parallel government”. L.K. Advani, home minister of the day, took special interest in transferring the investigation under the Official Secrets Act to the CBI. Then the unthinkable happened, with the raiding parties reaching even RIL’s headquarters at Mumbai’s Nariman Point and, finally, Sea Wind. It is a testimony to Dhirubhai’s proverbial clout that the ensuing cases promptly got glaciated in the ‘deep freeze’ of Indian courts. Even in April, when Dhirubhai was spelling out his dreams before RIL shareholders, his lawyers got court orders overturning the arrest of its impugned executive. Reliance’s almighty power was tellingly summed up in a note by Jaswant Singh, finance minister of the NDA cabinet, in January 2003: “I would never have got into investigating Reliance Group but for the fact that there is today not a single newspaper or magazine, which would publish anything against this group.”

But that is a mere footnote to Dhirubhai’s long history of engagement with the Indian capital market, marked by spectacular dogfights with the press and Parliament. Reliance’s market capitalisation was big but not gigantic, being Rs 9.96 billion in 1990 against Bombay Stock Exchange’s overall m-cap of Rs 510 billion. But, throughout the 1980s and even 1990s, Reliance was the life of BSE. It happened due to Dhirubhai’s deep personal ties with his shareholders, some of whom being his schoolmates from coastal Gujarat who subsequently became NRIs in the UK and the Gulf. But his public offerings always promised rewards in a variety of ways, not all of which were straight and narrow. He offered debentures that would after a while get converted to shares, or some papers that would become one part debenture, another party equity, and a third part carrying a warrant that would one day become three shares. Laws of the capital market are quite clear: a share is an equity in which its holder accepts that much risk in the firm’s business whereas a debenture is pure loan that earns interest, period. It is obvious that the faint at heart would not venture into trading in equity. But what if you entice him with the promise that, if he liked, he could sell his debenture before its conversion?

In the early 1980s, Dhirubhai enjoyed the most conducive political atmosphere in his career—with a ‘friendly’ finance minister in Pranab Mukherjee. In the 1980s, Mukherjee kicked off a new policy of NRI investments in which, unlike in the past, the investor could repatriate his profits. It led to a sudden torrent of NRI investments in just one company, as it appeared. On May 10, 1983, Mukherjee told Parliament that 11 overseas Indians had purchased shares and debentures worth Rs 225 million in two companies. But it transpired that all the investments were made in Reliance. Mukherjee said all the companies were registered in the UK, but finally amended his version as he admitted that their registration was in fact in Isle of Man, a British protectorate with different tax laws. Some of these companies carried unorthodox names, like ‘Crocodile’ and ‘Fiasco”. India Today reported: “Someone in the (Isle of Man) companies was remarkably well-informed on investment conditions in India, however, on August 20, 1982, the RBI had lifted a Rs 1,00,000 ceiling in share investments in any one company by non-resident Indians. Three days later, three of the Isle of Man companies applied to the central bank to invest Rs 20 million each in Reliance. Four other companies applied together on September 24. Six other companies made their purchases on the same day, October 15”. Whose money was it? There was no proof it was Dhirubhai’s own money making a roundtrip. So, the matter ended there. But the NRI purchase of Reliance shares added fuel to set the market on fire. Reliance could issue four series of convertible debentures, raising what was then a head-turning amount of Rs 10 billion. Its share was the buzz not only in social circles but in merciless pre-nuptial negotiations on bride price. The esteemed editor of a large newspaper borrowed cash from a Gulf-based ‘rogue’ bank to buy Reliance papers from the promoter’s quota. Between 1980 and 1985, the number of Indians owning shares quadrupled, from 1 million to 4 million. And it happened long before introduction of demutualised stock exchange with screen-based trading. The local paparazzi named the early craze for Reliance shares as the harbinger of the “equity cult”, and Dhirubhai its icon.


Dhirubhai was an ambitious lad of a poor family who had sailed off at age 17 to Aden, a free port till the mid-’50s, and had derived, partly from there and partly from his genetic make-up, the ‘dragon spirit’ so uncharacteristic of the Indian trading community. Still, he was a product of India’s early socialist era as it is doubtful if he could create his textile-to oil-exploration empire without an indulgent government that would readily play favourites. But he craved to run in a level playing field as is evident in his urge to diversify, post-1991 reforms, into tele-communications and distribution and generation of electricity. Even exploration of oil and natural gas had to contend with foreign players many times the size of Reliance in asset value.


Be it Dhirubhai or John D. Rockefeller, every entrepreneur with dragon spirit, (as different from Keynes’ ‘animal spirit’ in which the drive to take risk is tempered with trust) has to reach a deadlock with the state at some stage. Rockefeller, being born a hundred years before Dhirubhai, in a new nation where socialism had no space, had a much longer run for his Standard Oil until it hit the final barricade of anti-trust laws. But being a big fish in India’s small pond, Dhirubhai, or his children, are circ*mscribed not so much by public protest but by the limited size of their market.


But, despite the limitations of geography, Dhirubhai was able to put into the psyche of his people a new and welcoming attitude to wealth, not as inheritance but as something worth earning. Though he did not study beyond school, the world was his oyster. In my first meeting withhim in 1985, he asked me, “Do you know which is the largest business in the world?” “Oil”, I said with hesitation. “And the second?” As I kept fumbling, he said, “It is travel and tourism; but I am sure information will be No.1 in another 15 years, and I’m trying to put a foot in the door there.” He didn’t succeed in it but he hit the mark about information technology to be the leader by the year 2000.

SUMIT MITRA is a journalist, formerly with India Today

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Published By:

Vishakha Sharma

Published On:

Dec 27, 2021

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From the archives: Dhirubhai Ambani, the futurist (2024)
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