The Lateral Thinker

Yet, to dismiss Dhirubhai as just an influence-manager would not just be unfair, it would be totally untrue. Dhirubhai’s biggest contribution to not just Reliance Industries, but to India, was his ability to think BIG. So, under him, Reliance built a 27 million tonne grassroot refinery (it’s the largest in the world) when most public sector rivals had less than a third the capacity in a single location.

He popularised innovative financial instruments, such as the partially convertible debenture, that assured investors good fixed returns, and so got millions of them to invest in Reliance’s equity at the same time. On a few occasions in the early 80s, the Ambanis mopped up half the total capital raised by all of Indian industry in the year. With one in every three Indian investors holding shares in the Reliance Group, Dhirubhai was truly the father of India’s stock market culture. Hiring football stadiums to hold company AGMs further fuelled the Ambani myth of invincibility.

Hundreds of such examples abound about Ambani (an acronym, some say, for Ambition and Money). There’s the by now mythical story of how he turned the tables on the bear cartel that was hammering down his shares by selling a million of his shares. Dhirubhai formed an association of friendly brokers, found out the bears didn’t actually own the shares they’d sold, got his brokers to buy around nine lakh shares and ask for physical delivery. The bears beat a hasty retreat, and paid Dhirubhai a king’s ransom to square the deal. (During his days as a yarn trader, business historian Gita Piramal reports, a rival spread the rumour Dhirubhai was bust. Dhirubhai reacted by, on the market board, inviting everyone he owed money to come and collect it. He didn’t have a single paise at that point, but no one came to collect.)

Dhirubhai, say those who knew him well, did benefit from various schemes, but he always acted in the national interest. Lobbying to get import duties cut on certain synthetics, for instance, helped his business, but also helped curb rampant smuggling. Getting the government to change policy to allow the private sector into the oil refining business, or to liberalise licensing in the petrochemicals sector helped India develop vital capacity in a critical area.

Dhirubhai, even his critics admit, was incredibly focussed on the big picture, and how India fitted in it. Unlike most of his counterparts, Dhirubai didn’t just worry about what would happen if a war broke out between India and Pakistan. He got his colleague, and head of the newspaper he owned, R.K. Mishra to carry on parallel Track II negotiations with Pakistan, and to coordinate this with the government. Prime Minister Vajpayee’s Lahore bus trip had something to do with Ambani’s parallel diplomacy.

Where does the group go, with the patriarch no longer there to give it strategic vision? Will the Ambani brothers split? These, and a flurry of other queries are, naturally, going to be answered only by time. But a few things must be said. Thanks to the system Dhirubhai developed, and his very long succession planning, the group’s never been in better shape. Mukesh and Anil have been running the group since Dhirubhai’s first stroke in 1986 — since 1991, the group’s turnover has gone up 28 times and profits 35 times. Market capitalisation, similarly, has gone up 24 times, from Rs 1,878 crore in 1991 on Rs 45,840 crore today. Clearly a long way from the ’80s when even his supporters gave some credence to those who said Reliance was a bubble waiting to burst.