Blitz’s editor, Russy Karanjia, was right that a corporate war was about to spill over into politics. But his article was wrong about the main battle. Kapal Mehra had just spent fifteen days in jail over Diwali, the festival of lights that marks the new year in the Hindu calendar. He was facing massive penalties on charges of evading excise and customs duty. Earlier, his son had been abducted near Orkay’s Patalganga factory, beaten up and dumped in a drainage ditch some miles away. Mehra was already knocked out of the combat.
In the bigger fight just warming up, Nusli Wadia was Dhirubhai’s opposing gladiator. And while Wadia was bleeding, Dhirubhai was on the back foot. Things had started to go badly wrong for him in the second half of 1985. But Blitz was correct in painting this fight over a mundane textile and its chemical ingredients with the colours of an epic. It went on for years, reached to highest levels of politics, dragged in some of India’s best talents, sullied some of them and made heroes of others and caused governments to fall. Far from being a tabloid beat-up, the Mahabharata Polyester War was central to Indian politics, for critical years in the 1980s – to the point where one former minister in the central government could state, with only a little exaggeration: ‘The course of Indian politics is decided by the price of DMT [dimethyl terephthalate].’1
• • •
According to stories put out by Reliance sympathisers over the years, the war began with a snub. Back in the late 1960s and early 1970s, the social gap between Dhirubhai and Nusli Wadia could not have been much wider for two people in the same industry. Dhirubhai was a paan-chewing trader roaming from client to client in Pydhonie to sell his polyester and nylon yarns, flashy in personal tastes and with a small-town Gujarati social background.
In Bombay Nusli Wadia was Establishment. The Wadia family were Parsi, followers of the ancient Zoroastrian religion in Persia who had fled to the west coast of India in the tenth century AD to escape forcible conversion to Islam. In the eighteenth century, the Wadias had become shipbuilders to the East India Company in Surat. When British commerce shifted to Bombay the Wadias followed and joined India’s first wave of modern industrialisation. In 1879 they set up Bombay Dyeing and Manufacturing Co., which moved from dyeing of cotton yarn into spinning the yarn, then into the weaving of cotton textiles. Under Nusli Wadia’s father, Neville Wadia, chairman between 1952 and 1977, the company continued to modernise and became one of India’s largest textile manufacturers and exporters.
Like many Parsi families, they adopted English ways in speech, dress and social behaviour. The Parsis have long been a cosmopolitan element in Bombay, and intermarriage with members of other Indian communities or foreigners was common. Neville Wadia had married the daughter of Mohammad Ali Jinnah, leader of the Muslim League in pre-independence India. Nusli Wadia had been born with all the advantages and had been educated at schools in Britain. Like his father, Nusli held British citizenship and travelled widely. As Dhirubhai was beginning his climb up from the yarn market, Nusli had just returned to join the family business. He was in his mid-twenties – some twelve years younger than Dhirubhai – handsome in an acquiline way, dressed in quiet but classic English fashion and always cuttingly direct in his impeccable English.
The Parsis, like many colonial elites, went through a crisis of self-esteem when the colonial power went home without them. Their own self-image became one of failure, eccentricity and emasculation. The younger Wadia was the great exception. He was anything but inclined to relax and live off inherited wealth. In 1971 his father wanted to sell the company and retire abroad. Nusli Wadia, then 26, enlisted the support of J.R.D. Tata to help in a shareholders’ battle against the sale and rallied 700 employees in an offer of a staff buy-out of some shares. His father dropped the sale and, after handing the company over to Nusli in 1977, settled in Switzerland.
It was the first of many battles in which Nusli Wadia showed his remarkable fighting capacity when he felt his own vital interests, or those of friends who sought his help, to be under threat. Wadia was never inclined to take a public stage. He did not join business associations or appear constantly at conferences and seminars like many other big businessmen, or host lavish parties in hotels. He avoided the press. But he developed a wide circle of friends and contacts who came to appreciate his fearless advice. Among them were tycoons many years his senior, like Tata and later the press baron Ramnath Goenka of the Indian Express.
The Ambani version of the snub is that Wadia simply refused to buy C. Itoh & Co.’s yarn from Dhirubhai, for reasons that have not been explained. Another variation is that Wadia kept Dhirubhai cooling his heels in the corridors of Bombay Dyeing.
A more elaborate version is that Dhirubhai called on Wadia at Neville House during the early 1970s and made a presentation about the superior quality of his C. Itoh yarn. Wadia questioned the backing for this claim, whereupon Dhirubhai pulled out a copy of a test report made by Bombay Dyeing’s own laboratory for internal company use. Wadia, according to this version, told Dhirubhai that next he would find Reliance telling his laboratory what to report and that he would not deal with him.2
Dhirubhai did not mention this incident, and Wadia has told inquirers he has no memory of it or any other such encounter with Dhirubhai, although he could not completely exclude it as a possibility. Whatever the case, Dhirubhai clearly felt put down and, according to many later articles by friendly writers, nursed the hope that one day he would have Wadia coming to him as a supplicant. The industrial rivalry developed after Wadia took over from his father at Bombay Dyeing and started moves to get the old cotton mill directly into the polyester production chain. In 1978 Bombay Dyeing applied to New Delhi for a licence to set up a DMT plant, and in December that year it received a ‘letter of intent’ (a preliminary approval) for a 60 000-tonne-a-year DMT plant to be located at Patalganga. It was a move that would have leapfrogged Bombay Dyeing past Reliance up the petrochemical chain. At the time, Dhirubhai was just moving towards applying for a licence to make polyester yarn, using DMT as his initial feedstock. Bombay Dyeing would have become one of only three domestic sources of the chemical. Wadia would have been in a position to apply Dhirubhai’s own trick of calling down higher tariff protection and then squeezing a bigger profit out of dependent clients – who would include the new Reliance plant.
Although he was not close to the Prime Minister, Morarji Desai, Nusli Wadia had a good image with the Janata government. The Scindia family, one of the great Maratha ruling families and hereditary maharajas of Gwalior in central India, had had a business relationship with the Wadias through an investment company that gave them indirectly a minor shareholding in Bombay Dyeing. Madhavrao Scindia, the cricket-playing scion of the family, had entered parliament with the Jana Sangh before crossing to Congress, where he later flourished as a minister.
But as the months wore on in 1979, nothing happened with Bombay Dyeing’s licence, which normally followed about six months after the letter of intent. Then the Janata government fell and new elections were called. Not long before the vote, Wadia received an invitation to come to New Delhi late in 1979 to meet Indira Gandhi and her son Sanjay He arrived in the capital with some presentation copies of Bombay Dyeing’s new corporate history marking its centenary year, which he felt might be of interest particularly as Gandhi’s late husband, Firoze Gandhi, had also been a Parsi.
Wadia was directed first to meet Sanjay Gandhi, who made a blunt demand for a political donation. Wadia demurred. ‘Sorry, we just don’t do that,’ he said. ‘None of us – the Tatas, the Mahindras, us – give money to political parties. We do not have black income. It’s just not something we do.’ On being shown in to Indira Gandhi and having presented the company history Wadia broke the subject directly. He knew the reason he had been summoned, but really it was not the way his company operated. He talked on, then noticed Indira was doodling on papers on her desk, looking away. Wadia took his leave and received a curt nod from Indira.
Two or three months after the Congress win i
n early January 1980, Wadia again received a call to New Delhi from Sanjay Gandhi. Having endured imprisonment and sustained invective for his Emergency excesses during the Janata period, Sanjay was now even more firmly ensconced as Indira’s Crown Prince.
‘From being a wielder of authority delegated to him by his mother, he had now become her partner in power,’ wrote the commentator Inder Malhotra. ‘At this time Sanjay’s power was at its zenith and practically irresistible.’3
‘You lied,’ Sanjay greeted Wadia. ‘Tata and Mahindra have paid.’ This was almost certainly a bluff. Mahindra, well-established maker of Jeeps and other vehicles and machinery, and Tata were unlikely to risk their reputations by illicit payments, certainly from their central managements. But many years later sources close to the Congress Party insisted that some contributions had indeed gone to Indira Gandhi from the Tata group’s flagship, the Tata Iron and Steel Co. It was dear that Wadia would get his licence only one way.
A few months later, however, Sanjay Gandhi was abruptly removed from the scene. He had been accustomed to venting his energy by taking up a light aircraft for aerobatics over New Delhi. On the morning of 23 June 1980, the plane crashed into a wooded area in New Delhi, killing Sanjay instantly.
The state funeral was marked by excesses of sycophancy, although expressions of relief were voiced in many quarters all over India. Indira allowed a posthumous personality cult to be constructed around her late son until she realised that Sanjay’s widow Maneka, whom she detested, would benefit. Hence Indira speeded up the political induction of her eldest son Rajiv, who had been working as a pilot with Indian Airlines and keeping out of the public eye as much as he could. Rajiv had strong misgivings about entering politics, and his Italian-born wife Sonia opposed it, although she and Indira got on well. But at the end of 1980 Rajiv left his airline job and adopted the uniform of politics, the Indian kurta pyjama suit, to become his mother’s principal secretary. In June 1981 Rajiv was elected to parliament from his brother’s constituency and made a general secretary of the Congress Party at the end of the year.
It was to Rajiv Gandhi that Wadia turned for help to ‘unblock’ his licence, some months after Sanjay’s death. Rajiv was sympathetic to his complaint. ‘If injustice has been done to you, I will see that justice is done,’ he promised. Some time later, they met again, and Rajiv said he was meeting extraordinary resistance to his inquiries, in particular from Indira’s private secretary, R.K. Dhawan, and from the Congress member of parliament (later Home minister) P.C. Sethi. But Rajiv’s efforts eventually succeeded, and in June 1981 Bombay Dyeing received its licence for the DMT plant – two and a half years after the letter of intent.
Wadia still met obstacles. Bombay Dyeing bought a DMT plant second-hand from an American company and had it dismantled and shipped to India in two consignments at the end of 1981. When the shipments arrived in Bombay the company could not get them cleared by customs for nearly four weeks. Bombay’s Collector of Customs, S. Srinivasan, then ordered a rare 100 per cent inspection of all contents. On leaving the customs service some years later, Srinivasan was retained as an adviser by Reliance.
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Dhirubhai continued to enjoy beneficial policy changes throughout the rest of Indira’s second prime ministership, thanks to the influence of friends like Pranab Mukherjee and R.K. Dhawan. After the raising of duty on polyester yarn just after his Patalganga plant became operational, licences for expansion came promptly after lodgement of applications. In three months, August to October 1984, Reliance was given letters of intent approving the biggest single investment India had yet seen in artificial fibres: a 75 000-tonne-a-year purified terephthalic acid (PTA) plant at Patalganga, plus a 45 000-tonne-a-year polyester staple fibre plant and a 40 000-tonne-a-year monoethylene glycol plant. In addition, the fait accompli of its 25 25-tonne polyester filament yarn plant was retrospectively ‘endorsed’ by raising the permitted capacity from 12 000 tonnes.
The Reliance move into PTA production gave a big clue to the source of Bombay Dyeing’s problems, as it showed that Dhirubhai was also moving up the petrochemical stream to establish himself as a rival feedstock supplier to the fast-growing polyester industry. At that stage, no one else was making PTA.
According to background notes circulated in 1985 by Reliance, Dhirubhai had already begun switching his Patalganga yarn plant over to PTA feedstock and had completed the conversion during the first quarter of 1984. At that point, the Petroleum Ministry and the Industry Ministry had been notified and Reliance cleared to import its requirements of PTA. Out of the thirteen polyester units then in production, four others also began to use PTA for part of their feedstock requirements.
As we have noted, PTA was a substitute feedstock for DMT in the production of polyester. Both are usually made from the chemical paraxylene, which in turn is produced by ‘cracking’ the flammable liquid hydrocarbon naphtha, found in natural gas and petroleum liquids. Each feedstock had its advantages and disadvantages. DMT had been in use longer and needed less expensive containment vessels and piping in the plant, but in the polyester process it produced the toxic alcohol methanol as a by-product, for which a recovery system was needed. PTA required a more sophisticated purification process, corrosion-resistant equipment and more stringent control of catalyst mixing, but in polyester production gave a better yield to the paraxylene and MEG inputs. In practice, most polyester fibre plants were able to use either DMT or PTA with minor adjustments that could be made within a few months.
The licensing delays added to the cost of Bombay Dyeing’s DMT plant, and it took Wadia more than three years to get it reconstructed and operational at Patalganga. But when it started production in April 1985 it was still a low-cost entry into a product that became the mainstay of Bombay Dyeing’s sound profitability through to the late 1990s.
Until then, the only domestic supplier of DMT was government-owned Indian Petrochemicals, which made 30 000 tonnes a year against an estimated demand of 80 000 tonnes of DMT/PTA by Indian polyester producers in 1984. By the end of 1985 polyester output was expected to jump to about 150 000 tonnes, requiring 160 000 tonnes of either DMT or PTA. From April 1985 Bombay Dyeing would be well placed to capture this market, in competition with Indian Petrochemicals and with the other government-owned producer, Bongaigaon Refinery and Petrochemicals, which began its 45 000-tonne-a-year production in July 1985. But if Reliance started using PTA and managed to persuade many other polyester producers to do the same, the new DMT capacity risked redundancy.
As Wadia got his plant into operation in 1985, he encountered a sustained stream of press commentary describing his second-hand DMT plant as ‘junk’ and DMT itself as an ‘obsolete’ feedstock that would soon give way to the ‘more modern’ PTA. Many of these comments appeared under the bylines of those journalists who later became known as core members of the Reliance ‘Dirty Dozen’.
Dhirubhai, as we have seen, was then in his most triumphant phase in the eyes of his investor public. But his political support had been drastically undercut, although it was not to become evident until later in 1985, when the struggle for supremacy in the polyester industry became a more evenly balanced, tooth-and-nail fight.
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The cause was another violent death in the Gandhi family. At the beginning of June 1984 Indira Gandhi had ordered the Indian army into the Golden Temple in Amritsar, the holiest temple of the Sikh religion, to clear out the Sikh fundamentalist Bhindranwale. Eventually the army used tanks and artillery to subdue Bhindranwale’s well-fortified rebels. The Golden Temple itself was damaged and important adjoining buildings destroyed. Sikhs felt their holiest shrine had been defiled by violence. On the morning of 31 October 1985 Indira walked into her garden and was shot at close range by two Sikhs in her bodyguard.
Rajiv was sworn in as Prime Minister later the same day by the President, Giani Zail Singh, and confirmed by the Congress Party soon after Indira’s funeral. Elections were due early in 1985 on the expiry of In
dira’s five-year mandate in any case; Rajiv brought them forward to early December and received the benefit of a massive sympathy wave, lifting the Congress share of the vote to 49.1 per cent (from 42.3 per cent in December 1979) and winning an unpredented 401 seats (soon boosted to 415 in by-elections) out of the 545 in the Lok Sabha.
Despite his affection for his mother, Rajiv had been distant long enough from Congress circles to pick up the deep resentment on the part of many Indians at the pervasive corruption she had engendered. But for the sympathy vote, Congress might even have lost the elections, had its diverse opponents worked together. Rajiv was also aware of how new technology was helping to sweep aside regulatory regimes and empower individuals elsewhere in the world. He decided India and its politics needed to be opened up. But an element of hubris quickly crept in as well: Rajiv soon came to believe that the sympathy vote was actually enthusiasm for himself and his barely understood policies.
Among the first casualties were key friends of Dhirubhai. Rajiv sacked R.K. Dhawan from the Prime Minister’s office within hours of his appointment. And in his first cabinet he replaced Pranab Mukherjee as Finance minister with V.P. Singh, a choice that was eventually to bring down the heavens both on Dhirubhai and on Rajiv himself.
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Vishwanath Pratap Singh was to become one of India’s most controversial politicians. He inspired enormous trust and hope in some sections of society, intense hatred as an opportunist and class traitor in others, and ultimately a lot of disappointment and disillusionment. The adopted son of a childless rajah in Uttar Pradesh, Singh had studied law and later physics with an eye to joining India’s atomic energy research centre in Bombay, but settled on politics at the age of 38, when he won a Congress ticket to stand for the Uttar Pradesh state assembly. In the Emergency he stood by Indira and Sanjay and on Indira’s return was installed as UP’s chief minister. He was efficient and honest, but attracted most notice by giving police informal powers of summary justice to deal with the banditry sweeping the state. About 2000 alleged criminals died in ‘encounters’ with police. It was a sample of the ruthlessness Singh could show. But it was counterposed with a diffident streak to his character. A dabbler in painting and poetry, Singh often withdrew into himself. At critical moments, he would hesitate to commit. His most heroic roles were forced upon him.4
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