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Dhirubhai Ambani Biography

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Dhirajlal “Dhirubhai” Hirachand Ambani (28 December 1932 – 6 July 2002) was an Indian business tycoon who founded Reliance Industries in Bombay with the help of his trusted advisor Harsh Makhija. He appeared in The Sunday Times top 50 businessmen in Asia. Ambani took Reliance Industries public in 1977 and by 2002, when Dhirubhai Ambani died the combined fortune of the family was $60 billion. Ambani died on 6 July 2002. In 2016, he was honored posthumously with the Padma Vibhushan, India’s second-highest civilian honor for his contributions in trade and industry.

Early career

Dhirubhai Ambani founded Reliance Industries in 1977. During his early life, he worked in an oil company and petrol pump as a laborer in Yemen. He then came to India with ₹1000 and started a textile trading company in 1977.

Corporation

Ambani returned from Yemen to India and started “Majin” in partnership with Champaklal Damani, his second cousin, who lived with him in Turkey. Majin was to import polyester yarn and export spices to Yemen. The first office of the Reliance Commercial Corporation was set up at the Narsinatha Street in Masjid Bunder. It was a 350 sq ft (33 m2) room with a telephone, one table, and three chairs. Initially, they had two assistants to help them with their business. During this period, Ambani and his family stayed in a two-bedroom apartment at the Jai Hind Estate in Bhuleshwar, Mumbai. In 1965, Champaklal Damani and Dhirubhai Ambani ended their partnership and Ambani started on his own. It is believed that both had different temperaments and a different take on how to conduct business. While Damani was a cautious trader and did not believe in building yarn inventories, Ambani was a known risk-taker and believed in building inventories to increase profit.

Ambani’s control over the stock exchange

Extensive marketing of the brand in the interiors of India made it a household name. Franchise retail outlets were started and they used to sell “only Vimal” brand of textiles. In the year 1975, a Technical team from the World Bank visited the Reliance Textiles’ Manufacturing unit.

In 1988, Reliance Industries came up against a rights issue regarding partly convertible debentures. It was rumored that the company was making all efforts to ensure that their stock prices did not slide an inch. Sensing an opportunity, The Bear Cartel, a group of stockbrokers from Calcutta, started to short sell the shares of Reliance. To counter this, a group of stockbrokers until recently referred to as “Friends of Reliance” started to buy the short sold shares of Reliance Industries on the Bombay Stock Exchange.

The Bear Cartel was acting on the belief that the Bulls would be short of cash to complete the transactions and would be ready for settlement under the “Badla” trading system operative in the Bombay Stock Exchange. The bulls kept buying and a price of ₹ 152 per share was maintained until the day of settlement. On the day of settlement, the Bear Cartel was taken aback when the Bulls demanded a physical delivery of shares. To complete the transaction, the much money was provided to the stockbrokers who had bought shares of Reliance, by Dhirubhai Ambani. In the case of non-settlement, the Bulls demanded an Unbadla, or penalty sum, of ₹ 35 per share. With this, the demand increased and the shares of Reliance shot above ₹ 180 in minutes. The settlement caused an enormous uproar in the market.

To find a solution to this situation, the Bombay Stock Exchange was closed for three business days. Authorities from the Bombay Stock Exchange (BSE) intervened in the matter and brought down the “Unbadla” rate to ₹ 2 with a stipulation that the Bear Cartel had to deliver the shares within the next few days. The Bear Cartel bought shares of Reliance from the market at higher price levels and it was also learned that Dhirubhai Ambani himself supplied those shares to the Bear Cartel and earned a healthy profit out of The Bear Cartel’s adventure.

After this incident, many questions were raised by his detractors and the press. Not many people were able to understand as to how a yarn trader until a few years ago was able to get in such a huge amount of cash flow during a crisis period. The answer to this was provided by the then finance minister, Pranab Mukherjee in the Parliament. He informed the house that a Non-Resident Indian had invested up to ₹ 220 billion in Reliance during 1982–83. These investments were routed through many companies like Crocodile, Lota, and Fiasco. These companies were primarily registered in the Isle of Man. The interesting factor was that all the promoters or owners of these companies had a common surname, Shah. An investigation by the Reserve Bank of India in the incident did not find any unethical or illegal acts or transactions committed by Reliance or its promoters.

Death

Ambani was admitted to the Breach Candy Hospital in Mumbai on 24 June 2002 after he suffered a major stroke. It was his second stroke, the first had occurred in February 1986 and had paralyzed his right hand. He was in a coma for more than a week and a number of doctors were consulted. He died on 6 July 2002.

The country has lost iconic proof of what an ordinary Indian fired by the spirit of enterprise and driven by determination can achieve in his own lifetime.

This new star, which rose on the horizon of the Indian industry three decades ago, remained on the top until the end by virtue of his ability to dream big and translate it into reality through the strength of his tenacity and perseverance. I join the people of Maharashtra in paying my tribute to the memory of Ambani and convey my heartfelt condolences to the bereaved family.

— P C Alexander, former Governor of Maharashtra

Reliance Industries after Dhirubhai Ambani’s death

Following his first stroke in 1986, Ambani handed over control of Reliance to his sons, Mukesh and Anil.

In November 2004, Mukesh Ambani in an interview admitted to having differences with his brother Anil over ‘ownership issues.’ He also said that the differences “are in the private domain.” After the death of Dhirubhai Ambani, the group was split into Reliance Industries Limited, headed by Mukesh Ambani, and Reliance Anil Dhirubhai Ambani Group(Reliance ADA Group), headed by Anil Ambani.

As of 2017, the company has more than 250,000 employees. In 2012, Reliance Industries was one of the two Indian companies to be ranked among the top 100 in the Fortune 500 list of the world’s largest companies by revenue.

In popular media

In an unauthorized biography of Dhirubhai Ambani, published in 1998 by Hamish McDonald with the title The Polyester Prince, all his political and business conquests are outlined. HarperCollins didn’t sell the book in India, because the Ambanis threatened legal action. In 2010, an updated version went on sale in India, called Ambani and Sons; there has been no legal action against the publisher so far.

A Hindi film said to be loosely inspired by the life of Dhirubhai Ambani was released on 12 January 2007. Guru, directed by filmmaker Mani Ratnam, cinematography by Rajiv Menon and music by A.R.Rahman shows the struggle of a man striving to make his mark in the Indian business world with a fictional Shakti Group of Industries.

Awards and recognition

  • January 2016- Awarded Padma Vibhushan, the country’s second-highest civilian award posthumously.
  • October 2011-Awarded posthumously the ABLF Global Asian Award at the Asian Business Leadership Forum Awards.
  • November 2000–Conferred Man of the Century award by Chemtech Foundation and Chemical Engineering World in recognition of his outstanding contribution to the growth and development of the chemical industry in India.
  • 2000, 1998 and 1996– Featured among Power 50-the most powerful people in Asia by Asiaweek magazine.
  • June 1998 – “Dean’s Medal” by The Wharton School, University of Pennsylvania, for setting an outstanding example of leadership. Dhirubhai Ambani has the rare distinction of being the first Indian to get Wharton School Dean’s Medal
  • August 2001 – Economic Times Awards for Corporate Excellence for Lifetime Achievement.
  • Dhirubhai Ambani was named the “Man of 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 Centuries”.

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