MAHABHARATA
in Polyester
HAMISH MCDONALD is Asia-Pacific Editor of the Sydney Morning Herald. He has been a foreign correspondent in Jakarta, Tokyo, Hong Kong, Beijing and New Delhi, where he was bureau chief of the Far Eastern Economic Review. He has twice won Walkley awards, and has had a report on Burma read into the record of the US Congress. He is the author of books on Indonesia and India, and was made an inaugural Fellow of the Australian Institute of International Affairs in 2008.
MAHABHARATA
in Polyester
The making of the world’s richest brothers and their feud
HAMISH McDONALD
A New South book
Published by
University of New South Wales Press Ltd
University of New South Wales
Sydney NSW 2052
Australia
www.unswpress.com.au
Copyright © Hamish McDonald 2010
First published 2010
This book is copyright. Apart from any fair dealing for the purpose of private study, research, criticism or review, as permitted under the Copyright Act, no part may be reproduced by any process without written permission. Inquiries should be addressed to the publisher.
National Library of Australia
Cataloguing-in-Publication entry
Author: McDonald, Hamish, 1948–
Title: Mahabharata in polyester: the making of the world’s richest brothers and their feud/by Hamish McDonald.
ISBN: 978-1-74224-011-4
Notes: Includes index.
Subjects: Ambani, Dhirubhai.
Ambani family.
Reliance Industries Ltd. – History.
Businessmen – India – Biography.
Industrialists – India – Biography.
Vendetta – India.
Dewey Number: 338.92
Cover photo Ambani & Sons: Anil (left) and Mukesh with Dhirubhai at Maker Chambers IV, Mumbai, soon after they returned from studies in the United States. (India Today)
Digital conversion by Pindar NZ
Contents
Acknowledgments
Glossary
1 Protean capitalist
2 A persuasive young bania
3 Lessons from the souk
4 Catching live serpents
5 A first-class fountain
6 Guru of the equity cult
7 Friends in the right places
8 The great polyester war
9 The paper tiger
10 Sleuths
11 Letting loose a scorpion
12 Business as usual
13 Murder medley
14 A political deluge
15 Under the reforms
16 Housekeeping secrets
17 Dhirubhai’s dream
18 The polyester princes
19 Corporate Kurukshetra
20 Mother India
21 The Ambanis apart
22 Goodbye, Gandhi
Notes
Acknowledgments
The Ambani story grabbed me as soon as I landed in India in December 1990 for what turned out to be an enthralling six years, and it still has me in its grip, long after my assignment in New Delhi ended. Dhirubhai Ambani embodied all of the revolutionary capitalism that sympathetic and impatient analysts within the prevailing Western paradigm believed was lurking inside the Indian economy, pressing to be released from bureaucracy. The turbulent election of 1991 resulted in a government that set about unleashing this spirit across the economy. To me, this was the crucial narrative of modern India, behind the more immediate news-making events like caste conflict, Hindu nationalism, Islamist movements, and insurgencies in Kashmir, Punjab and the north-east. Ambani had already pushed out of the subservient position reserved for business, to the point where he had a well-earned reputation as a maker and breaker of governments, and of political and bureaucratic careers. With the economic reforms giving greater access to domestic and global sources of finance, his Reliance group redoubled its rapid growth towards Ambani’s target of becoming a petroleum giant. My position reporting for a leading business magazine gave me a ringside seat and, initially at least, personal acquaintance with Ambani and his two sons. Inevitably, the glowing picture of an entrepreneurial hero, so beloved of business magazines, took on more light and shade with detailed study of the Ambani and Reliance story. Still, the relationship of government and big business emerged increasingly as the missing element of popular and academic writing about contemporary India. This book is the result.
It started with a push from Robin Jeffrey, then of La Trobe University, Melbourne, aided by Marika Vicziany of the National Centre for South Asian Studies, Jenny McGregor of Melbourne University’s AsiaLink, and the late Ken McPherson of Curtin University’s Indian Ocean Centre, for putting together an ad hoc fellowship to let me start work. Later, Rodney Tiffin and Jim Masselos of the University of Sydney helped with working space and advice. Navnit Dholakia gave me vital introductions to the Gujarati immigrant communities in London and Leicester. D.B. Patel, of Leicester’s Shree Sanatan Mandir, took time out to guide me. Himatbhai Jagani, secretary of Shree Aden Depala in London, welcomed me to this association of former Indian residents of Aden. Other help came from K.D. Patel, C.B. Patel of the Gujarat Samachar, and Ramniklal Solanki of the Garavi Gujarat. In Ahmedabad, Susheel Kothari, formerly of Besse & Co. in Aden, then Reliance, was both hospitable and informative.
In Mumbai, there are many to thank: Manish Mankad, librarian of BusinessIndia, S.J. Vasani of Vyapar, Kirtikant K. Kapadia and Kishanbhai Kapadia, of the Swastik Textile Agency, who gave me tea when I walked in off the street and told me about the Pydhonie textile market; Sucheta Dalal and Debashis Basu, now running MoneyLife; Pradip Shah; Kanti Bhatt and Sheela Bhatt. In Manipal, Ramdas M. Pai of Manipal Academy of Higher Education. In New Delhi, my thanks to S.R. Mohnot. In Chennai, L. Seshan of the Indian Express helped with records of the Gurumurthy investigations. Many other businessmen, members of parliament, lawyers, stockbrokers, merchant bankers, government officials and journalists gave freely of their knowledge about the Ambani story, but would not want to be identified. However, Jamnadas Moorjani, who died in December 2002, can now be mentioned as a wonderful source of information and fair opinion.
Although neither the Ambani family nor Reliance cooperated in this project, the Reliance spokesmen who were my points of contact in earlier times – Yogesh Desai, Tony Jesudason, Jacob John and Deepak Neogi – were always accessible and courteous. When letters from law firms in both Mumbai and Sydney, and court injunctions in India, made it clear that Reliance was opposed to my earlier book The Polyester Prince appearing at all, Patrick Gallagher of Allen & Unwin courageously stuck to his publishing plans.
This was not the closing of the book, however, just of a chapter. Dhirubhai Ambani went on to achieve his vision of opening one of the world’s biggest oil refineries. Every recovery from previous controversies and scandals had been followed by predictions that his company would become a more ‘normal’ and predictable corporation taking fewer risks. Yet it became clear that pushing the limits was normal for him. Dhirubhai’s sons inherited control of Reliance – and his modus operandi – on his death in 2002, but two years later started the bitter feud that divided India’s biggest business house. My holidays in India soon turned into research trips for this new book, which has been encouraged by numerous Indians, from India itself and from the diaspora in America, Europe, Asia and Australia, who have contacted me.
Engagement with India is not something that can be turned off by absence. With me, in this lifelong entrancement, has been my wife Penny and our children Alex and Laura, who were born in New Delhi as the first book took shape and
for whom India is mother nation. I can only give thanks that they rejoice in India too.
Glossary
BCCI Bank of Credit and Commerce International
BR banker’s receipt
BSES Bombay and Suburban Electric Supply Company
CDMA code-division multiple access
crore 10 million
DGTD Directorate-General of Technical Development
DMT dimethyl terephthalate
GDR Global Depository Receipt
GSM global system for mobile communications
ICICI Industrial Credit and Investment Corporation of India
IMF International Monetary Fund
IOC Indian Oil Corporation
IPCL Indian Petrochemicals Ltd
LAB linear alkyline benzene
lakh a hundred thousand
lathi wooden stave, used by police
LIC Life Insurance Corporation
MEG monoethylene glycol
NRI non-resident Indian
NTPC National Thermal Power Corporation
ONGC Oil and Natural Gas Corporation
PFY polyester filament yarn
POY partially oriented yarn
PSE public-sector enterprise
PSF polyester staple fibre
PTA purified terephthalic acid
PTI Press Trust of India
RBI Reserve Bank of India
RCS Reliance Consultancy Services
REP Replenishment licence (abbrev.)
RSS Rashtriya Swayamsevak Sangh (National Volunteers Order)
SEBI Securities and Exchange Board of India
STC State Trading Corporation
TRAI Telecom Regulatory Authority of India
UTI Unit Trust of India
1
Protean capitalist
In January 2007 a Bollywood movie had an unusual launch in three corners of the globe. The full-length Hindi feature film, incorporating the usual song and dance sequences, was shown simultaneously in Mumbai, Toronto and Sydney – thereby claiming to being in the vanguard in the globalisation of Indian popular culture, although in Sydney at least audiences were almost exclusively of Indian origin.
The ‘purely fictional’ film was titled Guru and told of the rise of one Gurukant Desai, son of the local headmaster in the Gujarat village of ‘Idhar’. After a spell of trading spices in Istanbul, the ambitious young Guru moves to the textile markets of Bombay, where he lives in a chawl tenement with his new wife.
He battles to break into a closed trading circle controlled by an aquiline-featured, wealthy young textile mill owner, prone to golfing in plus-fours and driving about in an open sports car. Intense, active and always looking for loopholes to push through, Guru manages to build up his company, Shakti Trading, diversifying into the manufacture of polyester and raising his capital from adulatory shareholders, to whom he delivers inspirational speeches at mass meetings held in a sports stadium. He wins the friendship of newspaper baron Manikdas Gupta, but the publisher becomes alarmed and insulted by Guru’s bribery of his staff – from the peon’s polyester safari suit to the editor’s new car – and sets Shyam Saxena, a bright young journalist of his newspaper Swatantra, to expose him.
Posters summarised the film story as ‘Villager, Visionary, Winner’. That the film was meant as more than just entertainment is clear from the ‘foreword’ that Mani Ratnam wrote for the cover of the digital video recording later put on sale:
If you are ambitious, if you have dreams, India is the place for you – today. But it wasn’t like this always. After independence we were a huge nation, a young nation, where abstinence was respectable, ambition was not, where society took precedence over the individual. Today we have moved from left of centre to the right. When did this happen? How did this happen? Or did it happen in front of us and we couldn’t see it? Guru is a revisiting of that time, of three decades during which India changed slowly but surely. And the mirror to that change is the life of one man – Gurukant Desai.
The film asserted, sometimes crudely, that Guru was a revolutionary figure, representing a raw new India pushing against the constraints of remnant colonial power structures and nostalgic doctrines. ‘I’ve worked enough for the white man,’ says Guru when announcing his decision to strike out in his own business. His dismissive rivals include Parsi business leaders, dressed in the white robes and tall black hats normally worn at fire temples to make the point. ‘Neither you nor your khadi army can stop me,’ Guru declares to newspaper baron Gupta, referring to the home-spun cotton dress of his generation of freedom fighters against British rule. There is a defiant address to supercilious judges looking into the allegations raised by Gupta’s newspaper. He tells his shareholders the establishment is against them all ‘because we are commoners, middle class’. One of the most contentious figures in contemporary India was being turned into celluloid myth.
Sixteen years earlier, the man being played by one of India’s hottest hearth-throb film stars, with music by the famous score-writer A.R. Rahman, had dropped his name on our doorstep in New Delhi. In January 1991 a messenger delivered a card, elaborately embossed with a picture of the elephant-headed deity Ganesh, improbably carried on the back of a much smaller mouse: Dhirubhai and Kokilaben Ambani invited us to the wedding of their son Anil to Tina Munim in Bombay.
The young couple’s courtship had been a stormy one. The bride, Tina Munim, was a girl with a past. A film starlet, Tina had had a well-publicised affair with a much older actor before meeting Anil. The groom was the tearaway one of the two Ambani boys. His parents had frowned on the match. Bombay’s magnates usually tried to arrange matches that cemented alliances with other powerful business or political families. This one was not arranged, nor did it bring any more than a certain popularity. Hired assailants had been sent with acid and knives to scar Tina’s face, so went the gossip (apocryphal: Tina’s face turned out to be flawless). Anil had threatened suicide if he could not marry Tina, went another rumour. Finally the parents had agreed.
The father, Dhirubhai, was no less colourful and even more controversial. Ambani had gone into polyester manufacturing in a big way and got huge numbers of Indians to invest in shares of his company Reliance Industries. In India, the home of fine cotton textiles, it seemed that people couldn’t get enough polyester. The only constraint on local producers like Reliance was the government’s licensing of their capacity or where they built their factories. To increase his capacity, Ambani had become a big political fixer. It was said his executives had been shuttling briefcases of cash to politicians all over Delhi. There had been epic battles, with the press baron Ramnath Goenka of the Indian Express and with a textile rival from an old Parsi business house, Nusli Wadia. A year or so earlier, a Reliance public relations manager had been arrested for plotting to murder Wadia. The man had been released, and nothing was moving in the case. Was it genuine or a frame-up? Indian colleagues were not sure: no conspiracy was accepted at face value.
• • •
The wedding was going to be big, so big that it was to take place in a football stadium, the same one where Dhirubhai Ambani had held many of his shareholder meetings. But it began in an oddly casual way.
As instructed, in mid-afternoon we went to the Wodehouse Gymkhana Club, some distance from the stadium. There we found guests milling in the street outside, the men dressed mostly in lavishly cut dark suits and showy ties, moustaches trimmed and hair brilliantined. The women were heavily made up, laden with thick gold jewellery and wearing lustrous gold-embroidered silk saris. Anil Ambani appeared suddenly from the club grounds, dressed in a white satin outfit and sequinned turban, sitting on a white horse. A brass band in white, frogged tunics struck up a brash, repetitive march, and we set off in separate phalanxes of men and women alongside the groom towards the stadium. Every now and then, the process would pause while the Indian guests broke into a provocative whirling dance, some holding wads of money above their head. The stadium was transformed by tents, banks of marigolds
and lights into a make-believe palace for 2000 of the family’s closest friends and business contacts. They networked furiously while a bare-chested Hindu pundit put Anil and Tina through hours of Vedic marriage rites next to a smouldering sandalwood fire on a small stage. Later, the guests descended on an elaborate buffet on tables that took up an entire sideline of the football pitch, starting with all kinds of samosas and other snacks, working through a selection of curries and breads and finishing with fruits and sweets wrapped in gold leaf. The next day the Ambanis put on the same spread – if not the wedding ceremony – at another reception for 22 000 of their not-so-close friends, employees and second-echelon contacts.
The lavishness was eclipsed by bigger displays of wealth in following years, but at the time it was seen as a gesture that Dhirubhai Ambani had made it through the political travails of the previous few years and was unabashed – and certainly not strapped for either cash or friends.
At an interview a month later, Dhirubhai Ambani came limping around a huge desk and sat down at a white leather sofa. Despite the obvious effects of a stroke in a twisted right hand, his mahogany skin was smooth and healthy, his hair plentiful and slicked back decisively in a duck’s tail. His attention was unwavering. Disarmingly Dhirubhai admitted to many of the youthful episodes that were the subject of rumours and responded evenly to the criticisms commonly levelled against him. He didn’t mind people calling him an ‘upstart’ or even worse names. It just meant they were trapped in their complacency while he was racing ahead. But the disputes were now ‘all history’ and the former critics were now all his ‘good friends’ who bought their polyester and raw materials from him.
‘The orbit goes on changing,’ he declared airily. ‘Nobody is a permanent friend, nobody is a permanent enemy. Everybody has his own self-interest. Once you recognise that, everybody would be better off.’
However, Ambani did point to an unfortunate trait in his countrymen. ‘You must know that, in this country, people are very jealous.’ It was not like in Hong Kong or other East Asian countries, where people applauded each other’s success, he claimed. In India success was seen as the prerogative of certain families. But he didn’t really mind. ‘Jealousy is a mark of respect,’ he said.
Mahabharata in Polyester Page 1
