Dhirubhai also emerged as saviour of the market when an even greater supply crisis occurred in 1967, Kothary recalled. On a report that ‘actual user’ import licences had been traded and misused, the customs authorities in Bombay under the then Assistant Collector, a Mr Ramchandani, impounded all incoming cargoes of artificial fibres. The government insisted that whoever imported the yarn had to be the manufacturer who wove it into cloth.
According to Kothary, yarn worth about 40 million rupees (then about $5.3 million) was seized. Many traders then defaulted on loans taken out to cover the imports. The entire artificial textile market was paralysed. ‘It could have made us all insolvent,’ Kothary said. ‘This is when I came very closely in touch with Dhirubhai. It was he who saved us all. We fought for about six months. I used to go with him to lawyers day in and day out. We went to Delhi to see Morarji Desai [the then Finance minister]. That was the time I could see he was a wizard. He used all the ways and means.’
The crisis ended as quickly as it started, ostensibly after a one-day hearing of the importers’ appeal in the Customs, Excise and Gold (Control) Appellate Tribunal under Justice Oberoi, who found for the appeal. Kothary indicates that an agreement engineered by Dhirubhai was behind the judicial settlement. The details are not revealed, but presumably come under the category of ‘India!’ also.
• • •
On their move to Bombay Dhirubhai and his young family had moved into an apartment on the third floor of the Jai Hind Society building in Bhuleshwar, a very crowded district of shops, markets and residential tenements in the central part of the city. The building is one of the type known as a chawl in Bombay: numerous small apartments, often just single rooms, opening on to galleries around a central courtyard, which is set back from the street behind commercial premises. Quite often the toilets and washing facilities are shared at ground level.
Later accounts of Dhirubhai’s early career often paint this home as Dickensian in the extreme. The flat, since bought by a later tenant, had two small bedrooms, a living room, kitchen and internal bathroom in 1995. Vakharia, who used to visit the Ambanis for a holiday each Christmas from 1959 to the late 1960s, remembers it being ‘quite luxurious’ compared to the single rooms many Gujarati families had to occupy in Bombay at that time. Even so, Dhirubhai and his young family, eventually two boys and two girls, lived austerely in surroundings that were crowded, noisy and dirty. The two sons, Mukesh and Anil, who took over day-to-day management of Reliance in the late 1980s, might have had engineering degrees and management studies from American universities, but the lean early years gave them a hungry ambition, unusual for the second generation of a successful Indian business family.
As his confidence grew in his Bombay success, Dhirubhai developed his taste for ‘letting loose a scorpion’ through practical jokes and whimsy. Vakharia recalls that when he visited Bombay with his new wife for the first time in 1959, he and Dhirubhai were invited home by their senior mentor Mathura Das Mehta. Mehta’s wife served the young men mango juice and kept refilling their glasses as soon as they were emptied. Dhirubhai whispered: ‘Let’s do some mischief.’ The two asked for a fourth glass, then kept accepting more. After more than a dozen glasses each, the Mehta kitchen ran out of mangoes and a servant had to be sent to the market to buy more, which were all duly consumed. The Mehtas continued to be friends, ‘but they never invited us back for any lunch or dinner at their house’, Vakharia said.
Each year, Dhirubhai would make it a point to play an April Fool’s joke on an elderly employee named Ghulabchand, an old associate from Aden. For all his experience, Ghulabchand never failed to fall for it. On one occasion, Dhirubhai announced that everyone was invited to dinner across town at an address at Mafatlal Bath. Ghulabchand was sent in a taxi with Vakharia and another member of the office, Ramanbhai Patel. At Marine Drive they stopped outside a building and Patel went in to look for a fourth member of the group. After fifteen minutes waiting, Vakharia also went in. Ghulabchand eventually gave them all up and took the taxi to Mafatlal Bath, where he found no one. On returning home, he found Dhirubhai and the others eating a dinner they had warned Ghulabchand’s wife to prepare.
Vakharia recalled another prank in 1965. The India/Pakistan War was on, and a blackout had been imposed on Bombay for fear of naval and air attacks by Pakistan. About 10pm Dhirubhai said: ‘Let’s go out and take a round of the city.’ The two drove around the darkened Bombay, with Dhirubhai bluffing police at roadblocks that he was on official business and handing out small tips of ten rupees or so. ‘He got saluted all the way,’ said Vakharia. ‘On the way back we saw some lights in the Japanese consulate, so Dhirubhai went in and told them to douse the lights.’
On yet another occasion, around 11pm on a cold winter night, Dhirubhai announced an immediate picnic. The cook was told to assemble supplies, and Vakharia and the family piled into Dhirubhai’s car. Another dozen friends were telephoned and told to rendezvous in their cars. ‘We were not told where we were going,’ Vakharia said. ‘We ended up at Rajeswari, about 50 or 60 kilometres from Bombay, at about 3am. The cold was very severe and we went to a dharamsala [pilgrims’ lodging] at a hot springs resort. It was meant only for sadhus [ascetic Hindu holy men]. Dhirubhai said we would all sleep there. After half an hour we were still shivering, and Dhirubhai got up and lit a camp fire. When the sun came up we had tea and a bath in the hot springs and cooked kedgeree on the camp fire. We told jokes and sang songs and didn’t get back home until late in the afternoon.’
Dhirubhai’s fast pace caused a rift with his partner Chambaklal Damani in 1965. According to Vakharia, Damani preferred to trade with great caution, leading to constant tension with Dhirubhai, who was a risk-taker. The final rupture came after one clash when, at Dhirubhai’s urging, Reliance built up a large holding of yarn in the expectation of a price rise. Damani pressured Dhirubhai to cut back their exposure. So Dhirubhai sold the yarn stockpile – to himself, in secret. Two or three weeks later the price of yarn shot up, and Dhirubhai made a killing. ‘Later Dhirubhai told Chambaldal: “I am prepared to share profit with you”,’ Vakharia said. ‘“But in future if you do not know the business do not intervene.”‘
Many others among Dhirubhai’s ex-colleagues and trade associates believe the partners were incompatible. ‘He takes so much risk that people fear something will go wrong,’ said Vradlal Depala, who knew Dhirubhai in Aden. ‘But the risks are all calculated. They are not blind risks.’
‘Someone advised Dhirubhai’s partner that he had made sufficient money – and now should come out,’ said Susheel Kothari, an ex-colleague from Besse & Co. who later worked for Reliance. ‘Dhirubhai’s business is catching live serpents.’
Much later, Chambaklal Damani himself would say only that ‘We agreed to separate willingly’ or that ‘We just became separate as a friend’. But he agreed that the version given by Kothari and others about differences over commercial risk were ‘to some extent true’. Damani went into trading in a new company, while Dhirubhai and his brothers paid Rs 600 000 to buy him out of Reliance. Soon after, Dhirubhai moved the office to bigger premises in the more central Court House building at Dhobi Talao, named for the laundrymen who originally worked in the area.
• • •
After ten years at Bhuleshwar in 1968, Dhirubhai moved his home out of the chawl to a more comfortable flat in Altamount Road, one of the city’s elite areas on a hill overlooking the Arabian Sea. The oldest son, Mukesh, later recalled his childhood there with great fondness:
We were a close-knit family and the four of us – Dipti, Nina, Anil and I – were left to do what we wanted. There were boundaries, of course, but within those, we were not micro-managed … I remember my father never came to our school even once. Nevertheless, he was hugely interested in our all-round development for which he did some amazing things …
In the mid-60s, he put out a newspaper ad for a teacher, but specified that his responsibility would be non-academic; he would have to impart genera
l knowledge. He … selected Mahendrabhai Vyas who taught at the New Era School. Mahendrabhai used to come every evening and stay with us till 6.30–7pm. His brief was our all-round development. We played hockey, football and different kinds of games, watched matches at Cooperage, travelled in buses and trains and explored different parts of Bombay. We went camping and stayed in a village for 10–15 days every year. These experiences have helped us a lot … The two hours with Mahendrabhai every evening were great fun.
A third track running at that time, apart from academics and the fun stuff, was that my father shared with me his passion for business and entrepreneurship from very early on. Even when I was in high school, I used to spend long hours at office on weekends. For my father, life was uni-dimensional. Reliance was his life. Yet, some of my most vivid memories are about spending time with him. However busy he may have been, whatever the pressure, Sunday was for his wife and kids … He was a big nature lover and during our school days, we went to different places every Sunday – we walked through the forest or had a bath in streams.1
Fond of driving fast, Dhirubhai had first bought a Fiat car and then moved on to a Mercedes-Benz. Later, in the 1970s, he indulged a taste for flashy automobiles by acquiring a Cadillac, one of the very few in the country then or since. Friends remember him as a dashing figure, the slightly dark skin inherited from his father (the only such characteristic, some say) offset by a white safari suit, the hair slicked back. For a while he put on weight and then trimmed down by taking vigorous dawn walks along the three-kilometre sweep of Bombay’s Marine Drive, enlisting friends, colleagues and neighbours as companions.
• • •
Within a year of splitting with Damani, Dhirubhai took Reliance into textile manufacturing for the first time. He decided to locate it in Gujarat rather than Bombay because land was cheaper and sent his older brother Ramnikbhai to select a site. Ramnikbhai enlisted Vakharia, then becoming known as a lawyer in Ahmedabad, and the two drove around the state in a small Fiat.
They settled on a plot of 10 000 square metres, the last going in a new industrial estate developed by the Gujarat government at Naroda on the fringes of Ahmedabad. Vakharia had got a contact, state Minister for Industries Jaswant Mehta, to approve the purchase and, by a further stroke of luck, the farmers owning 100 000 square metres of adjacent land were willing to sell. Dhirubhai had a simple factory built, installed four knitting machines and appointed his brother as plant manager.
Dhirubhai was again lucky in that, around this time, the British hold on Aden was becoming more tenuous. Even ahead of the British withdrawal in 1967, foreign nationals felt threatened by the insurgency mounted by the People’s Liberation Front. Many of the Indians working for Besse & Co. decided it was time to go home. So Dhirubhai had a ready-made source of educated managers, accountants and salesmen, drilled to European standards. The word went around that Dhirubhai would find jobs for his old colleagues, and a dozen old hands from Besse & Co. accepted his offer. Most stayed for the rest of their careers.
None of them knew very much about textile production, however, and it was a case of learning by trial and error. As M.N. Sangvi, who left Aden in 1967 and immediately joined Reliance, recalled, ‘The first two years, 1966–67, was a very hard time. The product had to be established. We worked from morning to late evening. Dhirubhai was very encouraging and we had a family atmosphere.’
Susheel Kothari, who had returned from Aden in 1966, said that at one point in 1967 it appeared the mill would have to close because Reliance could not sell the cloth it was making. Dhirubhai told Kothari that if the factory had to shut down he should do it gradually and see that no blame attached to his older brother Ramnikbhai. But the Aden hands rallied. After putting in a full shift at the factory in Naroda, from 7am to 3pm, they would spend the afternoons and evenings touring markets around Ahmedabad trying to persuade shopkeepers to stock Reliance fabrics. ‘We were determined we should not fail,’ Kothari said.
Dhirubhai worked everyone hard, often calling his managers in Naroda at 6am from Bombay before they started out to work. They were expected to solve problems on their own initiative. Dhirubhai himself set the example. Suresh Kothary recalled one incident when spare parts were urgently needed for imported machines at Naroda. Dhirubhai had the parts flown in from Germany, then discovered that no trucks were available for the haul up to Ahmedabad. He bought two trucks, one to carry the parts and one as a back-up, and sent up the consignment. The trucks were then sold in Ahmedabad.
But he was forgiving of honest mistakes, as Sangvi recalled. In one case, Sangvi was overly trusting of some merchants who had placed an order from Patna, the capital city of Bihar in eastern India. Sangvi sent the consignment by rail, collectable on presentation of a payment receipt at a Patna bank branch. The merchants forged the receipt and took delivery from the railway yard. Reliance lost Rs 900 000, a considerable sum at that time, and it took months to recover it. Sangvi said, ‘Dhirubhai just told me: “Nathu, nothing to worry – in business, anything can happen. I know you have done it to increase the sales. I am with you and you just concentrate on the business.”’
K.I. Patel, who had been recruited by his relative Maganbhai Patel to Besse & Co. in 1953, returned to India in 1965. Soon after, Ramnikbhai Ambani, with whom he had worked in the Besse automotive division, hired him for Naroda and put him in charge of the knitting machines. Patel knew nothing about them, but was sent to West Germany and Japan later for formal training. He stayed with Reliance until retirement in 1993. ‘The years passed before we knew it, we were so busy,’ Patel recalled.
The result was steady growth in sales and profits for Reliance. In 1967, the first full year of production at Naroda, the company recorded sales of Rs 9 million, yielding a net profit of Rs 1.3 million. Dhirubhai and his family shareholders refused to take dividends and kept ploughing earnings back into more machines. After a decade of manufacturing, in 1977 Reliance had a turnover of Rs 680 million and profits of Rs 105 million.
In an extensive write-up on the company in August 1979, the Indian Textile Journal reported on a massive factory at Naroda occupying 230 000 square metres and employing 5000 staff. It had banks of machines for texturising or ‘crimping’ artificial fibres to give particular sheens, machines for twisting the polyester and nylon fibres into yarns and machines for weaving the yarns into textiles. The yarns were sold to other Indian textile manufacturers or used in-house.
Most significantly perhaps, Dhirubhai established his own brand name, Vimal (named after a son of his brother Ramnik), by dint of lavish advertising under the slogan ‘Only Vimal’. This somewhat snobbish slogan and some well-publicised fashion shows in smart hotels added a touch of class to a product that appealed mainly to less wealthy market sectors. In addition, Dhirubhai had got around the reluctance of established wholesalers and shopkeepers to accept a new brand by creating his own network of shops. Across India, 400 shops were franchised to sell the Vimal brand of polyester materials for saris, shirts, suits and dresses.
In one of the first of many eulogies to appear in the Indian press, the Textile Journal noted that Dhirubhai was held in ‘high esteem’ by his staff, who attributed Vimal’s success to his dynamic leadership. ‘When the construction of the factory was going on, it is reported, many snakes were seen in the area. According to a popular belief, appearance of snakes is a good omen. Dame Luck certainly seems to have favoured Mr Ambani. Ever since the emergence of Vimal, he has developed the Midas touch.’
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A first-class fountain
Dhirubhai Ambani remained in Bombay because manufacturing was only one facet of his business. For a decade, the textile plant at Naroda was supportive and subsidiary to his yarn-trading activities. In addition, he was steadily augmenting his skills at breeding money from money and at wielding political and bureaucratic influence on government policies and their interpretation. Dhirubhai was never simply an industrialist, a trader, a financial juggler or a political manipulator, but all four i
n one.
In his earliest days in Junagadh, Dhirubhai had learned that relationships were the key to unlocking help and that the law could be argued with. ‘One thing I have noted with Dhirubhai is that if he starts an acquaintance with someone he will continue it,’ said Manubhai Kothary, a president of the textile trade group Sasmira. ‘He never throws away any relationship.’ Dhirubhai was endowed with a photographic memory for faces and names, and he would try to turn any contact – however fleeting – into a common background on which some affection could be based. His philosophy was to cultivate everybody from the doorkeeper up. For example, Sir Nicholas Fenn, who was British High Commissioner in New Delhi in the early 1990s, was amazed to find Dhirubhai claiming him as an old friend from Aden. In the early 1950s Fenn had been a Royal Air Force pilot flying transport planes through to the Far East and Australia. Dhirubhai had remembered him from refuelling stops at the Shell facility at Aden’s airport.
In the India of economic plans and government control of the ‘commanding heights’ that had developed by the 1960s, a lot of grovelling indeed was required for businessmen to get the clearances they needed. Inevitably the bureaucratic signature needed to move a file from desk to desk came to have a price on it as well. The Congress Party had degenerated from a movement of freedom fighters into a dispenser of patronage, with ministers allocating resources and licences while the bureaucracy worked out ways to make the process look objective.
Mahabharata in Polyester Page 5
