Model of Business Leadership - (Late) Mr. Dhirubhai Ambani

This is the last in our series on model of business leadership. We are giving the profile of an Indian business leader, who has been called the greatest creator of wealth in the twentieth century in India. (Late) Mr. Ambani's life is a typical rag to riches story you normally come across in fairy tales. If he had been born in USA, he would have been the richest man in the world, because he always thought big and had global outlook in a time when India was an inward looking restricted economy. He did not have lineage, money and education. At that time, it was a probable impossibility to succeed in business with such a background.
(Late) Mr. Dhirubhai Ambani.
Born: December 28, 1932; Died: July 6, 2002;
Mr. Dhirubhai Ambani built India's largest private sector company. Created an equity cult in the Indian capital market. Reliance is the first Indian company to feature in Forbes & Fortune 500 list. Dhirubhai Ambani was the most enterprising Indian entrepreneur. He is remembered as the one who rewrote Indian corporate history and built a truly global corporate group.
Dhirubhai Ambani alias Dhirajlal Hirachand Ambani was born on December 28, 1932 in Gujarat. It is the same state the great Mahatma Gandhi came from. People from Gujarat are very shrewd in business, trading and money management like the Marwari community, who come from the state Rajasthan. They may not be highly qualified or educated but will make an Ivy League MBA look like a school boy in front of them in money management. His father was a school teacher. Dhirubhai Ambani started his entrepreneurial career by selling "bhajias" to pilgrims in Mount Girnar over the weekends (Note for western readers - 'Bhajias' are deep fried chips of potato, onions, raw banana, green chilly and many other vegetables and very tasty). After doing his matriculation at the age of 16, Dhirubhai moved to Aden, Yemen. He worked there as a gas-station attendant and as a clerk in an oil company. He always had ambition of owning an oil company. At 25, Ambani returned to India with 15,000 rupees ($3,150 in those days) and set up a trading company to export spices to Yemen. It was called Reliance Commercial Corp. He soon demonstrated his entrepreneurial spirit, representing people whose insurance claims had been rejected and splitting the settlements he managed to negotiate.
Dhiru Bhai Ambani built India's largest private sector company, Reliance Industries Limited, from scratch. Over time his business had diversified into a core specialization in petrochemicals with additional interests in telecommunications, information technology, oil, energy, power, retail, textiles, infrastructure services, capital markets and logistics.
Dhirubhai Ambani is credited with shaping India's equity culture, attracting millions of retail investors in a market till then dominated by financial institutions. Dhirubhai revolutionized capital markets. From nothing, he generated billions of rupees in wealth for those who put their trust in his companies. His efforts helped create an 'equity cult' in the Indian capital market. With innovative instruments like the convertible debenture, Reliance quickly became a favorite of the stock market in the 1980s.
In 1992, Reliance became the first Indian company to raise money in global markets, its high credit-taking in international markets limited only by India's sovereign rating. Reliance also became the first Indian company to feature in Forbes 500 list. Dhirubhai Ambani was named the Indian Entrepreneur of the 20th Century by the Federation of Indian Chambers of Commerce and Industry (FICCI). A poll conducted by The Times of India in 2000 voted him "greatest creator of wealth in the century in India".
Success in India requires three ingredients: money, lineage and education. Dhirajlal Hirachand "Dhirubhai" Ambani had none of them. "So people asked: 'Where did this upstart spring from." They demanded to see his credentials." Reliance is the largest corporation in India and is expanding at a pace that makes the old-money empires look slothful. It is said that if Reliance ever went under, it would take the Indian economy with it. The taxes and duties paid by Reliance amounts to 3 to 4 % of India's GDP.
Reliance owes its position almost entirely to Ambani, a man who combined the shrewdness of the Gujarati businessman with American-style entrepreneurship and a Japanese penchant for technology. Having established a small textile company, Ambani sought vertical integration by producing the raw materials that go into weaving, first synthetic fibers, and then petrochemicals. He was among the first in India to enter the latter sector, fostering and then dominating the domestic industry. Reliance took the next logical step: refining, oil exploration and Telecommunications. While most corporate bosses were content to sit behind India's walls of protectionism and rake in profits from obsolete, overpriced goods, Ambani innovated. To overcome wholesalers' monopoly of the cloth and textiles market, he set up a chain of retail franchises. His 'Vimal' brand of textiles is one of the industry's top sellers.
Often spurned by banks when he was starting out, Ambani turned to small investors to fund his expansion into synthetics and petrochemicals. In 1977 his became one of the first family managed Indian companies to go public. Since then there have been further offerings, record convertible-bond issues and even a foray into European money markets. Ambani keeps investors happy with big bonuses and healthy dividends. Reliance's shareholders are fiercely loyal as a result; thousands turn up for meetings in sports stadiums. The AGMs are seen to be believed with roadside cobblers and rickshaw pullers mingling with business suit clad executives.
Not everyone is an admirer. Reliance's domestic competitors deeply disliked the self-confessed "riff-raff boy" who seems to prosper in any environment and under any regime. Ambani has been known to dismiss other Indian firms. "My real competitors are DuPont, ICI and Shell," he once said. With the ongoing liberalization of India's petrochemicals sector, an obligation under World Trade Organization rules, Reliance's next challenge was to meet its international competitors on a level playing field. Meanwhile, Ambani had approved aggressive diversification into telecommunications, power and transportation. His sons Anil and Mukesh took over day-to-day operations when Ambani suffered a stroke in 1986. Mukesh is an engineer from Massachusetts Institute of Technology and Anil a MBA from Wharton School of Business.
Unfortunately, after his death the empire had broken up and the brothers have separated, carving the business into two groups. This often happens in family managed enterprises after the patriarch departs. However, both his sons are highly qualified, capable and with the strong foundation laid out by their father, it should not be difficult to carry the legacy forward. The Ambani brothers are in the top 25 of the richest and wealthiest people in the world in Fortune rankings and credit for that goes to their father.

© Copyright, Written June 3, 2008. Without prejudice. All rights reserved




Model of Business Leadership - (Late) Mr. Dhirubhai Ambani - To learn more about this author, visit Madhavan T Gopalachary's Website.

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