Dhirubhai Ambani

Dhirajlal Hirachand Ambani, (Gujarati: ધીરુભાઈ અંબાણી) 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's story as a company has been a 'bitter-sweet' saga in India. While on one hand it remains one the biggest Indian conglomerates but on the other hand it is also a company known to evade taxes and being intransparent. It has presence in 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 handed over his empire to his two sons Anil and Mukesh. His sons have helped Reliance to grow in a more globalized world after 1991. 

Early Life

Dhirubhai Ambani was born on 28 December 1932 at Kukaswada near Chorwad in the then princely states of Junagadh. (now the state of Gujarat, India) to Hirachand Gordhandhas Ambani and Jamnaben in a Gujarati family of modest means. Hirachand Gordhandhas Ambani was a village school teacher with little income. 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. 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. 

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.

Dhirubhai Death

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)

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.

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.