Gurumurthy sent copies of his complaint to the Prime Minister and other ministers concerned with law enforcement and corporate affairs. But more than a year later he was still writing letters trying to stir action. As he said in a poignant note to a letter sent to the Finance minister, Jaswant Singh, in January 2003: ‘I would never have got into investigating Reliance Group but for the fact that there is today not a single newspaper or magazine, which would publish anything against this group. Not a single political party or leader who would expose their misdeeds. Not a single official who would conduct a fair and fearless investigation against them.’4
Alvi’s charges had met a spirited response from Reliance, in a sixteen-page letter to the Finance minister (then Yashwant Sinha) dated 27 July 2001, under the name of Yogesh Desai, the chief corporate publicist.5 But Reliance didn’t have to try too hard to defend itself. Gurumurthy’s despondent note was accurate enough: no one had the energy, trust or resources to take on the company. Reliance was too big, too much part of the ‘India story’ that was once again seizing imaginations in the world’s financial centres and India’s own middle class.
• • •
The sniping and criticism continued, but Dhirubhai was above it all. In June 2000 he was able to tell shareholders at his annual general meeting that the huge new oil refinery at Jamnagar, with a capacity expanded to 27 million tonnes a year, had been completed in just three years of construction and within three months had been ramped up beyond full capacity. (After its first full year of operation, Dhirubhai reported in June 2001 that output had been 107 per cent of rated capacity.) Covering the arid Saurashtra landscape with a sculpture of silver piping, tanks, retorts and towers, ablaze with powerful lights through the night, it was India’s biggest single private industrial investment, having cost Rs 250 billion or $6 billion. Even the vast mango plantation around it was aimed at the record book. Visiting the project, Dhirubhai had asked the Reliance executive handling agriculture, I.M. Thimaiah, whether the 66 000 trees made it the biggest mango grove in the world. Thimaiah searched the internet and found a reference to the Mughal emperor Akbar having had the biggest-ever plantation, with 100 000 trees. Thimaiah immediately ordered 36 800 more trees, thinking, ‘We’ll make Dhirubhai the new emperor.’6
Immediately Jamnagar accounted for 25 per cent of India’s entirely oil refining capacity. It was now one of the biggest in Asia, with capital costs for each tonne of output put at 30 to 40 per cent below those of its regional competitors.
Speaking in what turned out to be his last address to shareholders, a meeting called in April 2002 to approve the long-expected plan to merge the petroleum subsidiary back into Reliance Industries, Dhirubhai recalled the Reliance legend, that all this had been achieved in one lifetime (‘We are still a first generation enterprise’) and that owning an oil company had been his plan all along. ‘In my youth, I had left India, to work as a sales attendant at the retail outlet of a multinational energy company in Aden. At that time, far away from my native shores in Gujarat, I had a dream of coming back to my country and creating India’s own global energy giant.’7
It’s unlikely that many people had been using words like ‘global’ and ‘energy’ in the 1950s, least of all in Aden. Reliance was still a small player alongside the multinational petroleum majors, and its exports, although growing fast, were still only a small part of the group’s sales, while the group was largely dependent on imports of crude oil from other producers. But Dhirubhai certainly now had his own oil company, positioned to grow with India’s oil energy and petrochemicals demand as it caught up with world consumption levels, and the group had bought twenty-five oil and gas exploration blocks around the shores of India.
As well as pumping out diesel and petrol, the Jamnagar complex included huge production lines for many of the petrochemical ingredients needed by Reliance factories, like paraxylene, naphtha and polypropylene. This enabled Reliance to cut its dependence on imports and outsourcing and once again reap great cost-savings from vertical integration, 25 to 30 per cent of Jamnagar’s output being consumed within the group.
The scale of its refineries and crackers at Jamnagar and Hazira in fact put Reliance in a position of market dominance in most of its petrochemical products. By mid-2001 Dhirubhai was able to report that the company had more than 51 per cent of India’s polyester market and more than 80 per cent of the markets for the polyester intermediates PX, PTA and MEG. It produced 52 per cent of the polymers (plastics) consumed in India.
While Reliance was starting to shift out of cheap textiles and lay off 4600 workers in this area, it was not about to lose its interest in polyester. Dhirubhai foreshadowed an expansion of polyester capacity by a third over the following two to three years, to 1.2 million tonnes a year, by ‘de-bottlenecking’ and expanding existing plants and acquiring other producers. Dhirubhai noted that India’s consumption of polyester had grown from 50 000 tonnes a year when he opened his first plant at Patalganga in the 1980s to about 1.3 million tonnes. But this was only a third of the consumption levels in China.
With Jamnagar in production, the Reliance group accounted for more than 3 per cent of India’s gross domestic product and contributed about 10 per cent of the central government’s indirect taxation revenues. Reliance Industries and Reliance Petroleum had been India’s No. 1 and No. 2 private sector companies. The combined market capitalisation was Rs 450 billion or $9.3 billion, making it by far the country’s biggest non-government business group and the first to make the Fortune 500 list of the world’s biggest companies.
The group was also starting to pour investment into two of India’s crucial but underdeveloped infrastructure sectors: telephony and electric power. In 2001 India still had only 30 million telephone connections for its one billion people, and even its biggest cities were subject to frequent blackouts.
Reliance had outlaid heavily to acquire mobile telephone licences covering a third of the country’s area and population in the mid-1990s rush, but hardly the best bit of the Indian market. The fifteen states covered by 26 per cent-owned Reliance Telecom included the impoverished West Bengal, Bihar and Orissa and by mid-2001 had provided only 380 000 subscribers. There was also a fixed-line operator’s licence for Gujarat. But Dhirubhai was able to sketch plans to escape this regulatory net, with a separate venture called Reliance Infocomm, which was to spend some $5 billion on a nationwide fibre-optic network to provide broadband data services and, according to a preliminary approval, ‘basic’ telephone services across most of the country, about which we will read more startling developments in a later chapter.
Reliance had also begun a move into power generation, making a limited offer for shares in Bombay and Suburban Electric Supply Co. (BSES), the country’s biggest surviving electricity supplier and distributor in the private sector and, largely because of that, India’s most efficient utility. By mid-2001 Reliance had become the biggest shareholder in BSES, owning 30 per cent of the company.
After the petroleum subsidiary’s merger, Reliance had 3.5 million individual shareholders, meaning that one in four Indian share investors had a stake in Reliance. They had seen its net profits grow by 29 per cent a year on average during the 1990s. By March 2001 it yielded 30 per cent of the total profits of the Indian private sector and 10 per cent of profits if government-controlled corporations were included. Accounting for about 12 per cent of total Indian share market capitalisation, it had weightings of 22 to 25 per cent in the main market indices.
It was not a company for anyone, even the highest authorities in India, to take on lightly. And while foreign investors owned 23 per cent of the company in 2001 and, to further its overseas capital raising, the company was putting itself under international audits, the foreign investment custodians remained passive – if often sceptical or bewildered – participants in the Reliance story.
• • •
In the early 2000s there was less and less interest in curbing Dhirubhai’s methods and a growing sentiment that
India needed more like him. The BJP and its coalition remained in power under Vajpayee for six years. As the government settled in, it became more focused on economic growth, the consumerist dreams of the middle classes and the reassertion of India’s place in the world economy.
America’s quick forgiveness of the nuclear test was signified by President Bill Clinton’s visit in 2000. Pakistan’s sneak invasion of Kashmir at Kargill, an attack by Islamic militants on India’s parliament in December 2001 and Vajpayee’s logistical help for the American interventions in Afghanistan and Central Asia after the 11 September 2001 attacks by al-Qaeda all encouraged a benign view of India as a strategic pillar in Asia, counterbalancing both anti-Western sentiment in the Islamic world and the rising economic and military weight of China.
A strong thread of the BJP’s ideology was rejection of the statist economic legacy of the Nehru era, epitomised in the large and, in many cases, moribund state-owned enterprises that dominated the formal sector of the economy and consumed an inordinate share of government revenue. To reinvigorate the sell-offs and shut-downs started under Narasimha Rao, Vajpayee chose Arun Shourie, who had been Goenka’s editor of the Indian Express from 1987 to 1990, covering the aftershocks of the Gurumurthy series and the Bofors scandal. With a doctorate in economics from Syracuse University in the United States, Shourie had been an economist at the World Bank early in his career. He had become a prolific independent columnist and polemicist after leaving the Express. Always ready to cultivate potentially valuable contacts in their up-and-coming phase, Dhirubhai had made sure his own newspaper, the Observer of Business and Politics, carried Shourie’s column. The BJP drafted him into the Rajya Sabha, and in July 2000 Vaypayee made him India’s first Minister for Disinvestment (later adding information technology and communications to his role).
Pointing out that previous governments has wasted some $8 billion propping up thirty public sector enterprises over the previous decade, Shourie set about an ambitious program to raise more than $2 billion by selling down government stakes in a score of enterprises, including food processors, metallurgical firms and the suddenly demonopolised telecom carriers.
Reliance had one spectacular loss in this program. It was keen on acquiring a controlling stake in the long-distance telecommunications agency Videsh Sanchar Nigam Ltd, a highly profitable carrier. Thanks to its network of informants, it was confident its bid was three rupees per share higher than that of its main rival, Tata. However, at the last minute before the tender closed, Ratan Tata decided to raise his firm’s bid sharply, from Rs 175 to Rs 203 a share.
From Dhirubhai’s point of view, the most interesting were the two smaller players in the oil refining sector, Hindustan and Bharat, and the state-owned Indian Petrochemicals Ltd (IPCL). The largest refiner, Indian Oil Corporation, was vastly bigger than Reliance (at 60 million tonnes annual refining capacity) and not for sale, except in small portions cautiously parcelled out to institutions and other investors with the government retaining 82 per cent. Indian Oil had outbid Reliance for the smallest of the state refiners, the nationalised Indo-Burmah Petroleum. Hindustan or Bharat would have been attractive to Reliance. As well as some small and elderly refineries and, in Bharat’s case, operating production platforms in the Bombay High offshore field, each had some 4500 petrol stations across the country, which would have given the new producer an instant retail network. But political jitters stalled any immediate sell-down of the refiners. Out of the corporate navratna (nine jewels) of the public sector, it was a near-controlling 26 per cent stake in the listed petrochemicals giant IPCL that was put up for tender in early 2002.
When bidding closed in mid-April that year, Reliance emerged far ahead of the field, offering Rs 231 a share at a time when the IPCL share price was hovering around Rs 93. The next closest bids came from Indian Oil at Rs 128 a share and the detergent producer Nirma at Rs 110, while the government’s reserve price was later disclosed as Rs 131. For Rs 14.91 billion, Reliance had captured the jewel, Shourie announced on 17 April 2002.
More than a year later, Shourie was to give a revealing account of the process. He talked of ‘unbelievable pressures’ to have Reliance disqualified. ‘The pressures brought not just this transaction but almost the whole disinvestment program to a halt,’ Shourie said. But the government had decided to stick with its rules. ‘If Reliance fell foul of those guidelines, then it must be disqualified, no matter what, if it did not, it must be allowed to bid, no matter what.’ Shourie said that ‘throughout the period, Dhirubhai never contacted me as he was getting to know what was going on – for he had sources in places where mere journalists like me do not even know there are places’. But following the results, Dhirubhai had rung Shourie and in a voice ‘choked with emotion’ had said: ‘I know what you have been put through – anyone else would have given up. I will never forget … I do not care about business. I care about relationships. No one in my family will ever forget.’8
• • •
Dhirubhai did not live long enough to savour these triumphs. The merger of the oil-refining subsidiary, to create the integrated giant that was now Reliance and the capture of the state ‘jewel’ IPCL turned out to be the culmination of his remarkable career. Within weeks, on 24 June 2002, Dhirubhai was felled by his second massive stroke. He lingered in a coma on life support for twelve days, while India’s business circles also went into a kind of suspended animation; then he died on 6 July.
The next day’s funeral rites brought an outpouring of public mourning that was unusual in its sweep for a business figure, more akin to the orgies of grief at the passing of major political or cinematic stars. Indeed, these Indian worlds also joined in paying their respects, helping draw in crowds of ordinary citizens to throng Dhirubhai’s last journey through the streets of the great city on the Arabian Sea.
After the long days of their bedside vigil, Mukesh and Anil were with Dhirubhai when he expired without regaining consciousness. Anil later recalled that Dhirubhai’s personal physician, a Dr Pandey, had predicted the morning of that Saturday that his patient would choose such a day to die. ‘Sir planning mein chaltey hain na?’ Pandey said. ‘Sir jayenge to Saturday raat ko hi jayenge.’ (‘Sir is going according to plan, isn’t he? If Sir goes then he will go on Saturday night itself.’) As he explained: ‘Sir is a person who will not inconvenience anybody. If he goes on Saturday night, it will be after a day’s work. The funeral will be on Sunday. As that’s a holiday, there will be no office, people can attend, there will be no traffic for the funeral site. It will be over by evening and on Monday morning, everyone can get back to work.’ Dhirubhai indeed died later that day, shortly before midnight. Anil recalled getting home at 2.30am, grabbing some sleep, then going to tell Kokilaben around 5am:
She saw my face, folded her hands and asked: ‘When did it happen?’ I told her and she said, ‘Did he go peacefully?’ I said, ‘Yes, he had a big smile on his face.’ I said I would bring Papa back home at 8am. My mother said, ‘I will be ready to receive him.’ She was very composed. And seeing my grief, she said to me: ‘Your father has gone to heaven – that is his permanent home. God sent him to earth on a mission. He chose India and he chose this family. Now there are others to carry on his mission here, so God needs him back in heaven to do His work.’ It was a mother’s way of comforting her son. She also did it to convey the message that her husband would want life to go on.9
Dhirubhai’s body was laid out in the lobby of Sea Wind amid cloth hangings in white, the Hindu colour of mourning, huge photographs of his smiling face in earlier times and garlands of roses. Sticks of incense wafted sweet smoke through the heavy mid-monsoon air, and speakers carried the holy songs ‘Shri Krishna Sharnam Mamah’ and ‘Om Bhur Bhuvasva’. From 9am that Sunday, the great and the humble of India began filing past the body in the customary ceremony of darshan, the imagined communication with the spirit of the dead person. Dressed in white traditional clothes, Dhirubhai’s four children – Mukesh, Anil, Nina and Dipti – and
daughters-in-law Nita and Tina stood in a receiving line, thanking visitors with folded hands.
The mourners included chiefs of establishment business like Ratan Tata, Adi Godrej and Anand Mahindra, as well as some fallen business heroes like the former Unit Trust of India chairman P.S. Subramanhyam and stockmarket ramper Ketan Parekh. From the world of national politics came the deputy Prime Minister, L.K. Advani, the former Prime Minister, H.D. Deve Gowda, and the opposition Samajwadi party leaders Mulayam Singh Yadav and Amar Singh, along with a procession of political heavyweights in Maharashtra state and old political cronies like Murli Deora and, representing the Congress matriarch Sonia Gandhi, her old family lieutenant R.K. Dhawan. From the film world came Amitabh Bachchan along with his wife Jaya and son Abhishek (who was later to play a thinly disguised Dhirubhai in the bio-pic Guru )among other Bollywood leading lights.
Mahabharata in Polyester Page 28
