METEORIC: The rise of the first generations entrepreneur from a petrol pump attendant in Aden (Yemen) to owning the biggest integrated refinery in the world, a story of bending and breaking the rules right to the top.
By Rajan Narayan
In this second in a three series memoir Rajan Narayan recalls that for a few months he taught Mukesh Ambani conversational English when the latter was in Std 12 and Dhirubhai Ambani just a trader in yarn. He also recalls his cover story in ‘Business India’ on the dramatic rise of the Reliance Group through fair and foul means. He also recalls his first visit to Goa to promote the public issues of Fomento (Cidade-de-Goa) and Vedanta as general manager of advertising company Image Ads
WHEN I was doing my masters in economics at Bombay University in the late 1960s, I was staying in the University Hostel at Churchgate, south Mumbai. I was also working part time for some textile journals to finance the cost of my accommodation and food at the hostel and my university fees. I was approached by the owner of a textile journal and asked if I would give lessons in conversational English to Mukesh Ambani, the richest man in the world!
At that time I had not even heard of Dhirubai Ambani as he was then just an unknown trader in polyester yarn. The money was attractive and I agreed. For almost six months the teenager student Mukesh and me walked down from the University Hostel to Nariman Point conversing in English.
My memories are of a very quiet person who barely spoke. But he did present me with a couple of meters of the first polyester cloth suitable for a shirt piece. Those were the days when the Ambani group was synonymous with only Vimal, the polyester fabric made by them. Little did I know than that a decade later I would be doing a cover story on Dhirubai Ambani and the Reliance Group.
Following differences with R V Pandit of Business Press whose magazine
Imprint’ I was editing, I came to discover that he was very close to the RSS, I accepted the offer of deputy editor in the country’s first business weekly,Business India.’ The owner and publisher Ashok Advani suggested that I do a story on the Reliance Group. In the decade since I had once much earlier on given conversational lessons to Mukesh Ambani, Dhirubau Ambani had come a long way.
Dhirubai had set up the first textile mill in the country for polyester and nylon fabrics. He had moved from a small shop in the Kalbadevi area where the textile trade was located to a huge office in a skyscraper at Nariman Point. Dhirubai was also in the process of setting up his dream project which was a refinery in Patalganga. It was always Dhirubhai’s dream, who started out in his life as a petrol pump attendant in Aden (now Yemen), to someday build a complete refinery in India.The legend goes that the super ambitious Dhirubhai used to carry the blueprint for his refinery in his pocket even when he was a petrol pump attendant!
I called up Dhirubai Ambani and sought an appointment with them. With his formidable memory he remembered that I was the one who had taught his son Mukesh conversational English. He invited me to his office, which if I recall right was on the 10th floor of Mittal Towers at Nariman Point. The reception was full of pretty girls. One of them took me to Dhirubhai’s chamber (as big as my current three-bedroom rented flat in Panaji).
Dhirubai sat on a raised platform which added to his natural height. But the message coming across was that he was the king of his empire. He came down from the platform and slapped me on the back, which was a normal way for him when greeting his friends. We set down on the sofa set at one side of the room. I told him that I was now with `Business India’
and wanted to do a cover story on his remarkable achievements. Dhirubhai’s immediate response was that he did not want to be written about. I turned around and told him that everyone was calling him a wheeler dealer and a manipulator. In a very angry tone he virtually shouted, Who is saying all this? He also provided his own answer, “It must be Nusli Wadia who owns a very old textile company called Bombay Dyeing.”
AT that time Nusli Wadia used to have grand fashion shows organised by his former airhostess wife Maureen Wadia. Both Dhirubhai and Nusli were engaged in the yard trading. And both were bitter enemies competitive enemies.
I decided to go ahead and do the story. Dhirubai co-operated to the extent that he organised a visit for me to his new textile mill in Ahmadabad. It was indeed a remarkable factory which looked more like a 5-star hotel then a textile mill! It had the latest textile machinery which was the first of its kind in the country. I later discovered that the textile import policy had been relaxed for just 23 days to enable him to import the machinery.
Dhirubhai had very close contacts in the then Central government with the Congress in power. Both with Lalit Narayan Mishra who was a minister in the Indira Gandhi government at the Centre and he was also close to Finance Minister TA Pai who was the founder Canara Bank in Mangalore. It was alleged that Dhirubhai Ambani had total control over the then Central government. He could get it to do anything he wanted.
To come back to how Dhirubhai made his fortune, at that time there was a polyester and nylon export scheme. In the Nehru Indira Raj imports of any nylon or polyester product was banned. However, there was a scheme whereby the exporter of handloom items was entitled to a quota to import polyester and nylon yarn. Unlike cotton textiles, nylon and polyester are bye-products of petroleum.
The charge made by the trade was that Dhirubhai used to export cotton rags in return for huge quantities of quota for polyester filament. When his rival Nusli Wadia would import similar yarn mysteriously there would be a strike in the Bombay Port which would prevent the unloading of the cargo of Nusli Wadia!
My article had traced how Dhirubai Ambani had graduated from a trader to a mill owner. A mill owner who was the first to make polyester yarn in the country. The mill owner who decided to integrate backwards and manufacture his own polyester yarn instead of importing it. Dhirubhai did not stop there but set up his own refinery. Dhirubhai was not bothered about the cost of the huge projects that he had undertaken.
He was the first to tap the stock market in a huge way to raise the money for his projects. Dhirubhai was the first to come out with his new financial instruments like the convertible debentures. Debentures are basically the loans extended by the public to a company. In the model offered by Dhirubhai the debentures could be converted into shares after a certain period. The advantage was that when they were converted into shares, the company would not have to pay interest on the original debentures which were loans.
When the `Business India’ issue with Dhirubhai on the cover came out Dhirubhai managed to get a copy from the printing press even before it hit the stands. Since my story had revealed in detail how Dhirubhai had manipulated the government into changing policy and extending favours to him, he was not in favour of the publication reaching the newsstands. To be fair it must be admitted that in the days of the permit license raj it was impossible to do business if you were straight forward.
BIRLAS, TATAS DOMINATED
MOREVER the industrial scene was dominated by the Birlas and Tatas and it is difficult for newcomers to enter the big league. Dhirubhai was a first generation entrepreneur unlike the Birlas and the Tatas who had much greater influence at the Center. But Dhirubhai’s logic was that everyone had a price. That there was nobody who could not be bribed.
I remember Dhirubhai offering me 10,000 shares of Reliance, the value of which now would be close to Rs50 crore. I indignantly refused! Which was perhaps a stupid thing to do. Considering that even the then top most editor-in-chief in the country, Girilal Jain of the
Times of India’ was reported to have accepted the offer of a larger number of shares.
The story went that since Girilal Jain boasted that after the Prime Minister Indira Gandhi he was the most important person in the country. Jain claimed that he did not have the money to purchase the shares! So Dhirubhai arranged a loan for which he stood guaranteed. To cut a long story short Dhirubai wanted us to scrap the wholeBusiness India’ issue in which my story had appeared and he even said he would write off the entire cost of the issue.
To his credit my publisher Ashok Advani refused the offer. Dhirubhai then went to the political fixer of Mumbai and main fund raiser for the Congress party, Rajni Patel. There was a conference involving me, my publisher and Rajni Patel. I had to dilute the story a bit but the substance of how Dhirubhai made his fortune came through.
Soon after the story came out I met him at a dinner which he was holding when he released his mega convertible debenture offer. Everyone who attended the press conference got a bottle of Scotch and of course a gift of polyester fabric suit length. Scotch was flowing freely at the press conference-cum-dinner at the Taj Mahal Hotel. I was drinking orange juice. Dhirubhai walked up to me and told me, “My scotch is genuine and not nakli!” Dhirubhai did not hold any grudges against me and even invited me to the wedding of his daughter Dipti with Dattaraj Salagaocar later on. The reception was held at the biggest football stadium which is Cooperage stadium in Mumbai. Live life king-size was Dhirubhai’s motto.
During my two-year tenure at
Business India’ I met and did stories on the top business houses in the country. I was present when T Thomas stepped down from the chairmanship of Hindustan Lever and his successor Ashok Shekar Ganguly took over. I could immediately see the change in the body language of Ganguly, who was a technocrat and earlier in-charge of the Hindustan Lever Research Centre. This is the centre where “Fair n Lovely,” the extremely popular face cream, was developed. The name changed due to objections from feminists who that men were also interested in fairness creams!
I was inadvertently responsible for the sacking of the managing director of Associated Cement Company (ACC), S Krishnamurthy. The chairman of the company who was from Tamil Nadu thought that I would not say anything against him because I was a fellow jaatwala! He was totally indiscrete on record and complained to me about having to work with “senile Parsis.” Which was true because the production manager was in his 80s and the marketing manager was even older. Unfortunately for Krishnamurthy the then chairman of the ACC and Tata Company was Nani Palkiwala. Soon after the issue came out P Krishnamurthy was sacked.
Despite being responsible for some of the best business stories the publisher Ashok Advani did not live up to his promise of making me the editor when the then editor Dilip Thakur quit. I was deputy editor withBusiness India.’ Ashok who had studied in Oxford in the UK had a weakness for people from foreign universities.
SO I jumped to the other side of the fence and accepted the invitation of my old friend C D Ramchandran to join his advertising agency called Image Ads. My primary responsibility as general manager was to promote public issues. Which in simple words mean raising finance for new companies or additional finance for existing companies from the public. Image ads was considered a leader in promoting public issues.
And that was my link to Goa and the first time I visited Goa. Image Ads bagged the contract for promoting the public issue of Fomento Resorts which ran the Cidade de Goa (now managed by the Taj Group) and the maiden issue of the then Italian company Sesa Goa (now taken over by the UK-based Vedanta). Our host at Fomento was Ivo Cardoso, finance manager co-ordinating with Avdhoot Timblo who was promoting Cidade de Goa.
I had bought a party of senior financial journalists to Goa for covering the promotion of both the public issues of Fomento and Sesa Goa. We stayed at the Mandovi Hotel and after the Sesa Goa press conference it was suggested late at night that we should go to the Taj Holiday Village at Candolim. So a group of us went out to the Taj Holiday Village and finished whatever liquor was left after the press conference.
While returning to Panjim late at night at 3am, Ivo Cardoso who was on the wheel, dashed into the compound wall of a bungalow in Candolim. Ivo, who was the only Goan amongst us, lost consciousness. All of us were badly injured. Worst still the SUV that we had taken to the Taj Holiday Village would not work. We had to pay the owner of the house for the damage done to his wall in the incident. Then we all walked back to the Taj Holiday Village to get a taxi to return to Panaji.
On reaching the Mandovi Hotel Dr Ganesh Bhatkuley, who still practises at the age of 80 years, attended to our injuries. The next morning we flew back to Mumbai shaken up but still enchanted by our Goa visit. Indeed, Avdhoot Timblo has always boasted that it was he who subsequently bought me to Goa!