From the India Today archives (2002) | Dhirubhai Ambani: He saw the future and pushed tomorrow into today

(NOTE: This is a reprint of a story that was published in INDIA TODAY MAGAZINE issue dated, July 22, 2002)

In 1864, a wealthy 25-year-old Jamsetji Nusserwanji Tata set sail from Mumbai with shares in his pocket and bales of cotton in the hold. By the time he arrived in London, his firm had become bankrupt and his pockets were stuffed with waste paper. In 1919, Ghanshyamdas Birla was in no better position. He had fought hard with his family and the colonial establishment to start a jute mill. World War I broke out before he could place orders for his machinery. He had based his projections on Rs 6,000 per loom. The price shot up to Rs 16,000. He went ahead. In 1950, aged 17, Dhirajlal Hirachand Ambani sailed, steerage class, to Aden to look for a job, any job. For the next eight years, he sweated it out. His first real job netted him a monthly salary of Rs 300. Eight years later, it was just Rs 1,100, barely enough for a man, one child and a pregnant wife.

India has plenty of business successes, even rags-to-riches stories, but few have caught our imagination as those of Jamsetji, GD and Dhirubhai. With the passing away of Dhirubhai on July 6, many wondered if he would find a place in India's history alongside the legends who laid the foundation of two of the biggest industrial empires in India. Though Dhirubhai began dreaming big well after the Tatas and the Birlas had become the first families of Indian business, his struggle and success are as legendary. This is a good time to compare Dhirubhai's with India's first generation of entrepreneurial heroes.

Few people know that there are a number of interesting similarities in their stories. None found it easy to raise the cash for his dreams and all three launched their careers in the cotton textile business. Three very different men. Three different leadership styles. Three different management philosophies. But all three learnt their early lessons in business in the school of hard knocks.

It is fascinating to see how cotton played an important part in their careers. After recovering from the London debacle, Jamsetji's fortune rebounded when the British Army ordered supplies during a military campaign. Tata immediately invested the surplus to buy a derelict oil mill which he converted into a cotton textile mill in 1869.

Around the same time, Birla, who was trying to break the Scottish hold on Indian jute by establishing a jute mill, also bought a small cotton mill in Mumbai. Dhirubhai took his first step towards becoming a textile tycoon by setting up four looms at Naroda in Gujarat in the 1960s. He registered Reliance Textile Industries with a paid-up capital of Rs 1,50,000 as a power loom unit. Each year he added to the mill, and every time a new machine was installed, Dhirubhai, a god-fearing man, would call a priest and hold a puja. The Naroda complex grew in leaps and bounds. The fixed assets rose from Rs 2,80,000 in 1966 to Rs 14.5 crore in 1977, more than doubling to Rs 37 crore in 1979. By 1983, on the eve of its entry into petrochemicals, Reliance would become India's largest composite textile mill, sprawling over 280,000 sq m, producing 3 million sq m of fabric every month and employing 10,000 workers. Dhirubhai understood the power of a brand. Billboards, radio, print and TV blazoned the mill's message: ONLY VIMAL. The brand was named after Vimal, Dhirubhai's eldest nephew, son of Ramniklal Ambani.

Dhirubhai's street-smart methods were strikingly different from those of Jamsetji and GD but like them, he had a radical blueprint for the future. They were all agents of change, whose influence on lives is not restricted to corporate balance sheets. Put on a shirt, switch on a light, sleep on a soft pillow, chances are, Dhirubhai had something to do with the making of that product. Sip a cup of tea, take a bus to work, read a book: chances are you are using a Tata product. Buy a suit, build a home, chances are, what you're using came from the House of Birla. Dream a bit, and the thought will come, "If they can do it, why not me?" Jamsetji, GD and Dhirubhai thus are role models for aspiring entrepreneurs.

The three were also economic nationalists in their own ways. A stray racist incident pushed Tata into building the magnificent Taj Hotel in Mumbai. Tisco's engineers helped build five of India's largest steel companies in the private sector. Birla's Hindalco was hacked out of jungles and forests. Dhirubhai, of course, was India's stock market messiah. He was the first Indian industrialist to appreciate the ordinary investor and his needs. His support for the small shareholder stemmed from personal experience. One, he knew what it was to be poor. And secondly, banks had often turned him away when he desperately needed money to build his factories.

Dhirubhai realised that in order to seduce the public into investing in his schemes, he had to offer them something more than what they were used to getting. And this was the steady appreciation of their shareholding. Until he came on the scene, managements rarely bothered about their company's share prices. The business of a company was to earn profit and declare dividends, not to dabble on the stock market, keep track of share prices and support a scrip whenever it wobbled. In contrast, Dhirubhai believed that the most generous of dividends could not make a shareholder rich, but capital appreciation of his shares could. This was an alien concept, an idea Dhirubhai picked up from the West. It took him almost half a decade to propagate this philosophy, but once it took root, it changed the entire mindset of corporate India and its way of doing business. Dhirubhai was also the force behind the world's largest grassroots refinery in Jamnagar. The benefits it brings to India include savings in foreign exchange and self-sufficiency in petroleum products.

All true legends are pioneers. Cutting-edge technology can mean the difference between a mediocre and world-class business. Tata and Birla recognised this, as did Dhirubhai. Tata recruited Charles Perin, an English technocrat, to put the processes for his firm in place. Birla hired British engineers and fired them as soon as an Indian could learn to do the same job. But I feel Dhirubhai stands heads and shoulders above the others. His conviction that Reliance had to have the best and the latest machinery, equipment, technology and processes brought the concept of world class to India. As standards shifted, a new genre of managers was being moulded. Dhirubhai once said, "It is a leader's role to inspire. My job is to motivate my people. We can buy the technical expertise to do anything new ... It is necessary to modernise men as well as plant and machinery." Reliance is a unique laboratory for both men and machines.

Legends build for the future. Dhirubhai understood the intrinsic obligation of a corporate monolith to social causes rather late in life—expanding his business took up all his time and energy. When asked on his 60th birthday if there was anything lacking in his life, he said, "I have not been able to devote enough time for social work and I feel sad about it. But, in another sense, 23 lakh shareholders (the number subsequently grew to 35 lakh) plus countless others have benefited directly or indirectly from Reliance's success. Still, in the area of social work, a lot needs to be done." The founder and canny strategist behind a stupendous Rs 65,000 crore business empire is bound to evoke bemusement as well as wonder. But despite the somewhat controversial route he took to a mega-billions empire, Dhirubhai was a big draw in life as well as in death. Workers found him an inspiration, shareholders came in droves to hear him and the biggest names in Indian politics came to express concern when he lay fighting for his life in Mumbai's Breach Candy Hospital.

Most of us dream about the future yet live so much in the present that we cannot force change. But the three men I have discussed did. India is also full of David-and-Goliath stories. And all the three entrepreneurs mentioned here were Davids in their time. But what makes a legend a legend? Legends leave an impact on the lives of you and me - on ordinary people - they don't just build empires. Dhirubhai Ambani, Jamsetji Tata and G.D. Birla saw the future and pushed tomorrow into today. In the process they helped build a new India. Which is why today we salute Dhirubhai Ambani.

—The writer is the author of ‘Business Maharajas and Managing Radical Change’

(The article was published in the INDIA TODAY edition dated July 22, 2002)

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