Equity culture is audacious billionaire's legacy

PUBLISHED : Monday, 08 July, 2002, 12:00am
UPDATED : Monday, 08 July, 2002, 12:00am

The moment Dhirubhai Ambani suffered his second and massive stroke on June 24, it was obvious that only a miracle could save him despite round-the-clock prayers and rituals conducted at his home by Hindu priests who had been flown in especially.

His story is the classic one of a poor boy growing up with his family in a one-roomed flat in Mumbai in the 1960s with no telephone or television, barely getting a school-leaving certificate but dreaming big dreams that culminated in a US$12 billion empire, a mansion in the ritziest part of Mumbai and long-range Gulfstream jets.

Ambani was more than a tycoon. People who met him called him a 'human dynamo'. He was a business giant whose every move over 30 years was watched by millions of Indians awed by his ambition, drive and acumen which in turn created the Reliance conglomerate.

In a 1989 interview, Ambani said: 'Dhirubhai will go one day. But Reliance's employees and shareholders will keep it afloat. Reliance is now a concept in which the Ambanis have become irrelevant.' That may well be true now, if only because his sons Mukesh and Anil have demonstrated their own abilities to run the empire since their father's first stroke 16 years ago.

For decades, though, no one could think of Reliance without thinking of Ambani.

He not only thought big, he thought ahead, which is why Reliance is now pursuing ambitious plans in the information technology and telecommunications sectors.

He told a friend in 1985: 'The two largest businesses of the world today are oil and tourism. In 15 years, the next largest business will be information.'

The son of a village school teacher, Ambani started his career by going to Aden when he was 17 and working as an attendant at a Shell petrol station. On returning to Mumbai with a few thousand rupees in his pocket, he started a trading firm, exporting spices before turning to textiles. In 1977, Reliance Industries issued 2.8 million shares in a landmark public issue.

Ambani kept upping dividends year after year, regardless of a dip in profits.

Most Indians credit him with shaping India's equity culture by attracting millions of investors in a market that had been dominated by financial institutions. Reliance now has more than four million shareholders, the largest number in the world. One in three Indian investors own Reliance shares. In some years, annual shareholders' meetings had to be held in a football stadium.

As a Mumbai broker said: 'A lot of marriages have been arranged on the basis of how many Reliance shares the bride held.'

His friend Udayan Bose, chairman of Lazard, traces the root of his passion for equity to his strong aversion for debt, recalling that even while scanning the balance sheets of multi-national corporations, his constant refrain would be 'how much is the debt?' His fear of debt once made Ambani repay a 50-year loan of US$150 million in three years.

Ambani managed his feats in spite of the restricted 'licence permit raj' that arose from the state socialism Indian practised in those days when a businessman had to get multiple clearances from the government for knocking down a factory wall. Known as a brash buccaneer ('if there is a profit to be made, I am not going to wait for a written invitation'), he attracted criticism that he did not always play fair, exploiting loopholes in the laws and swinging clearances by manipulating politicians.

Ambani worked the system to his advantage but in a focused way, always thinking stringent project deadlines, economies of scale and global benchmarking. Detractors who said Reliance built its success by manipulating the licence permit raj were at a loss to explain how the firm had done even better after liberalisation.

Ambani was 70. He leaves his wife Kokilaben, two sons and two daughters.