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Early life
Dhirubhai Ambani was born on 28 December 1932 at Kukaswada near Chorwad in
the then princely states of Junagadh. (Now the state of Gujarat, India) to Hirachand
Gordhandhas Ambani and Jamnabe in a Gujarati family of modest means.
Hirachand Gordhandhas Ambani was a village school teacher with little income.
Hirachand and Jamanaben had two daughters - Trilochanaben and Jasuben and
three sons - Ramnikbhai, Dhirubhai and Natubhai. Dhirubhai was the second son.
Dhirubhai was precocious and highly intelligent. He was also highly impatient of
the oppressive grinding mill of the school classroom. He chose work which used
his physical ability to the maximum rather than cramming school lessons. When
Jamnaben once asked Dhirubhai and Ramnikbhai to help his father by earning
money, he angrily replied "Why do you keep screaming for money? I will make
heaps of money one day". During weekends, he began setting up onion/potato fries
stall at village fairs and made extra money which he gave to his mother.
Life in Aden
When he was 16 years old, he moved to Aden, Yemen. He worked with A.
Besse & Co. for a salary of Rs.300 (Present Day $6.64). Two years later, A. Besse
& Co. became the distributors for Shell products, and Dhirubhai was promoted to
manage the companys filling station at the port of Aden. He was married to
Kokilaben and had 2 sons, Mukesh, Anil and two daughters, Nina Kothari, Deepti
Salgaonkar. He also worked in Dubai for some time during his early years.
During those days of him, the Yemini Rial was made of pure silver coins and was
in much demand at the London Bullion Exchange. Young Dhirubhai bought the
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Rials melted them into pure silver and sold it to the bullion traders in London.
During the latter part of his life, while talking to reporters, it is believed that he
said The margins were small but it was money for jam. After three months, it was
stopped. But I made a few lakhs. In short, I was a manipulator, a very good
manipulator. But I dont believe in not taking opportunities.
Dhirubhai has been an opportunist right from his childhood. All he needed
was the whiff of a business opportunity and he was off to tap it. Dhirubhai has
always shown all the critical leadership qualities. He would always grab an
opportunity and strike on it.
He believed that if a person wants to succeed in something then he should
have complete access to information on that topic. Whenever he wanted to
approach the government to get licenses, information about the competitors,
market size etc. he would collect all these information, no matter at what cost it
came.
He also believes in destiny and gives all the credit to his luck. This shows
how down to earth he is. He had a simple ritual of Puja when a new machine is
installed. He isnt proud of what he is and he still believes in Simple living,
Modern thinking.
He always followed the rule to be the pioneer to do anything. He would just
grab an opportunity that would come up because of some government policy
changes and would implement it successfully.
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LEADERSHIP STYLE OF
DHIRUBHAI AMBANI
The following is a description of the leadership style of Dhirubhai Ambani,
the founder of Reliance Industries. The managerial practices in Reliance were all
affected completely by the leadership style of its founder. The great success story
of Reliance can be completely attributed to the style of management brought in by
Dhirubhai Ambani which was perfected by his sons and to some extent by experts
in business management hired by the Reliance Group. But the fact remains that the
comprehensive and integrated personality of Dhirubhai Ambani permeates and
penetrates through all aspects of working of Reliance Industries and all its
subsidiaries.
Sheiks request even a consignment of Indian soil was sent to Aden to grow roses
in the desert showing that Ambani had the knack to identify an opportunity and
strike the iron when it is hot. Branching out to yarn trading, he started the first
spanking new mill at Naroda as he foresaw synthetics as the fabric of the future
which shows the visionary nature of the man in general. Dhirubhai registered
Reliance Textile Industries with a paid up capital of 150000 as a power loom unit.
This is where the backward integration concept first took roots and later became
the central theme for all strategic planning in Reliance.
three factors, namely, choosing the right product mix, identifying the market and
establishing a viable distribution structure. When faced with resistance from
traditional cloth marketers, Dhirubhai opened his own showrooms and appointed
agents and offered franchises to his own shareholders. He also opened up non
metro urban segments in smaller towns as a result of which by 1980, Reliance
fabrics were available to twenty company owned retail outlets, 1000franchised
outlets and more than twenty thousand regular retails stores. This was comparable
in speed and numbers only to Italian Benetton and American Mc Donalds.
Dhirubhai established a good rapport with his dealers by making his
business with them risk free because he used to sayif you lose, come back to us,
but if you make profits, they are all yours! Dhirubhais future gazing skill could be
inferred from the fact that though India is a poor country, people will not mind
paying a little more for synthetics provided they have a good quality and had a
longer wear and tear. The Naroda mill transformed Dhirubhai from a simple yarn
trader to a great mill owner on par with Mafatlals, Sarabhais etc. Dhirubhai spread
out countries abroad through his Reliance synthetic textiles. His dynamism and
confidence in the future made him reach a sales turnover of Rs 1 billion in just
twelve years whereas Bombay Dyeing needed hundred years. Dhirubhai was
accused of black marketing and corruption to improve his sales and get things
done. After 1977, when Reliance went public, Dhirubhais holdings were 16% but
he had thousands of share holders from the public to support him in all his
endeavors. By converting debt into equity through successful debenture issues
through 1979 to 1982, he was able to raise up to Rs 500millions.
A very important philosophy of Dhirubhai was always to ensure that
Reliance share were in the ascendant to draw maximum benefit for the
shareholders for whom he was prepared 7to bend the Govt. rules, use his political
influence and any legal Hera pheri required for the purpose.Dhirubhai made sure
that whenever Reliance had to impress the Govt. to modify the existing rules and
regulations, they used to have all the information in India and abroad on the
fingertips of the group which met and influenced the Govt. Reliance always
managed to maintain its zero-tax status by changing its accounting practice by
capitalizing interest for the long term debt for the purchase of fixed assets. Many
people felt that Reliance was avoiding taxes by cheating the Govt. However, all the
profits were ploughed into the company by Dhirubhai and his family so that
business prospered.
up and all the investors could make through this process. Though, the Government
of the day was against this equity cult starter by Dhirubhai per say, but, over a
period of time based on precedence in foreign companies, the statute book itself
was modified to be in line with this innovative idea. Consequently, the volumes of
business in Reliance increased very fast along with quick multiplication of its share
capital.
Dhirubhai was a visionary who foresaw that mere financing through banks
and public limited companies will not suffice to increase the wealth base of
Reliance. So, he was able to convince the people of rural Gujarat and elsewhere
that shareholders of the company will have handsome returns on their investments.
This approach resulted in having more than 3 million shareholders investing in
Reliance, which is the highest number in the world for any company. As a result,
Reliance Industries was the only public limited company whose annual general
meetings had to be held in open air stadiums. So much so, with almost 20% of the
shareholders in India belonging to Reliance, it became a dictating factors in Indian
economy, courtesy the Indian stock markets.
Dhirubhai Ambani believed that his people were his most important assets.
The most talented professionals were drawn from all and sundry, were nurtured
and continuously provided initiative to aim for still higher goals and targets. These
highly motivated people comprised the core of what is known as the Reliance
family. This practice improved the working of not only Reliance, but other
prospering companies who followed this practice also prospered in the long run.
He also empowered his managers by giving authority to them to work
independently to work independently he had
9 belief in the capabilities of his people.
This has grown to become the core of the Reliance groups HR policy of staff
recruitment and maintenance.
Dhirubhai was a risk taker, but was only prepared to take calculated risk
based on the expected future trends. He invested his entire earnings to purchase a
huge stock of polyester yarn which was felt as a wrong decision by others because
cotton was the king in India at the time. But he proved right and this made him a
billionaire as polyester caught the fancy of the people for better value and longer
wear and tear period of the clothing. This influenced Reliance to such an extent
that it went on with the purchase of polyester technology from DuPont as the first
non- American company to do so. This move gave the Reliance Group
monumental financial resources that helped build a robust growth engine and also
developed a core competence to grow business, expand and diversify into a potatoto-petrochemicals conglomerate at a break neck speed.
When Dhirubhai felt that was a lot of opposition for the introduction of
polyester cloth for retail outlets, he started his own chain of distribution centers
and gave retail agencies to many of his shareholders on franchise basis. This made
it possible for only Vimal to penetrate through A and B class cities and semi-urban
neighborhoods which made the market blossom to absorb additional supplies and
increase the demand for the same all over the country. In the long term perspective,
this also helped develop the much needed knowledge of supply chain management
strategies in the Reliance Group, which now boasts of one of the best supply chains
in the country in the category of departmental stores, food chains, pharmacy drug
stores etc.
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Dhirubhai Ambani was the one of the first Indian businessmen to realize that
high quality actually costs less. Dhirubhai always insisted that Reliance use the
best and finest state-of-the-art machinery, equipment and manufacturing facilities.
Under his stewardship, the Reliance Industries operated the best manufacturing
plants in the country, a comment by the World Bank team affirming the same being
a testimony to its technological advancement. In the long run this emphasis on
constant up gradation of facilities improved the capacity utilization, economies of
scale and reduced the production costs per unit in various factories of the company.
Also,
this
philosophy
helped
the
company
to
vastly
cut
down
its
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Reliance. Dhirubhai and Reliance were accused of manipulating tariffs to suit their
needs and outsmart their rivals.
He was considered to be a symbol of all that was wrong with the Indian
economy. It is said that Ambani used his connections with key politicians and
bureaucrats to obtain licenses and approvals for projects. He is also said to have
induced government intervention by offering bribes and using other forms of
lobbying prevalent in the US. Reliance was known to engage politicians,
journalists, and others to increase its sphere of influence. Some business men
described Reliance as "an out of control monster, a bubble that would burst any
moment." However, not all analysts would agree to that. They felt that Dhirubhai
was quick to recognize and exploit opportunities. Dhirubhai believed that
"business is nothing but a web of relationships and obligations."Keeping this
principle in mind, Dhirubhai managed to create favorable centers in all the
important areas among the bureaucrats, the ruling politicians, as well as the
media. These were the areas where power vested.
Dhirubhai was of the opinion that business was not all about ethics and
morality; it was about expansion and success. His amazing ability to use the state
and its policies to his advantage was responsible for the expansion of Reliance. Be
it licenses, foreign exchanges or quotas, he always succeeded in making the
best out of most difficult situations. However, his immense success earned him a
number of enemies. The fight between Nusli Wadia, the Bombay Dyeing chief and
Dhirubhai is well known in the Indian business circles. Both of them were adept in
using their business and political connections to suit their ends. During the Janata
Party rule (1977- 1979), Nusli Wadia obtained the permission to build a
60000 TPA di-methyl terephtalate (DMT)
13 plant. However, before his letter of
intent could be converted into a license, the government changed and when the
Congress government came to power, his license was being delayed (until 1981)
with one pretext or the other. This was the same time when Dhirubhai obtained
license to build a PTA plant. Dhirubhai was also contemplating on building
a Paraxylene facility. All this infuriated Nusli Wadia and marked the beginning of
one of the major battles in the history of Indian business which lasted for several
years. In the 80s, Ramnath Goenka, (Goenka) the proprietor of the Indian Express
Group which was into news publication, had often tried to act as a mediator and
solve the conflict between the two corporate giants; but in vain. Goenka backed
Nusli Wadia. He considered the latter his son and at times, urged Dhirubhai to
bring the rivalry to an end.
Even though Dhirubhai promised to do so, he continued his fight with Wadia
and Goenka felt betrayed. Soon, Goenka turned against Dhirubhai and launched a
series of press campaigns against Reliance. Goenka always promised Dhirubhai
that he would put an end to the campaigns being held against him in the press. But
the very next moment, he would scheme another plot against him. The assaults did
not stop even when Dhirubhai was hospitalized after his first stroke in1986.
Newspapers, magazines and weekend tabloids continually attacked Dhirubhai. To
counter these attacks, a few weeks later, Reliance issued 15 advertisements in
leading newspapers of the country including the Indian Express. The
advertisements contained key statements like "concern for truth", "allegiance to
ethics", and "commitment to growth". Goenka formulated a fresh assault issuing a
statement that Reliance had smuggled extra machines into the country,
and therefore had excess built capacity. This resulted in a show cause notice from
the customs, and a duty and penalty claim of Rs.1.19 billion on Reliance. In
spite of all these attacks, Dhirubhai never14failed to retain public confidence.
the debentures into shares was permitted and the pending licenses were cleared.
October 1986 turned out to be quite favorable for Reliance. The debenture
conversion move proved highly beneficial. A secret meeting between Dhirubhai
and Rajiv Gandhi seemed to trigger off a series of decisions in favour of Reliance.
Some more pending licenses were cleared. The customs levy of Rs 3 on each
kilogram of PTA was abolished, and the Patal Ganga complex was granted refinery
status thus, enabling it to pay a low level of excise duties for raw materials like
naphtha.
Presently Reliance enjoys global ranking in all major businesses and its
shares lead the domestic market. According to the global Fortune 500 rankings,
Reliance ranks amongst the top 200 companies in terms of net profit, amongst the
top 300 in terms of net worth, amongst the top 425 in terms of total assets, and
amongst the top 500 in terms of sales.
Reliance Mobile, the new venture of Reliance provides cellular telephony
services in 13Indian states, and Reliance Basic holds the license to provide
fixed line telecom services in the state of Gujarat. With the launch of Reliance
Infocomm, Reliance has taken another major step in its continuous search for
growth and excellence. It was Dhirubhai's dream to provide information
technology and communication facilities to the common man, at affordable prices.
The Infocomm revolution will cover thousands of villages across the country by
2003. Reliance Power intends to pursue opportunities in the power sector with an
objective to achieve over 10,000 MW in the next decade. With Reliance General
Insurance and Reliance Life Insurance, the group has also entered into the
insurance sector. Dhirubhai's entrepreneurial abilities enabled Reliance to progress
on the roads to success both in the licensing era as well as in the era
of liberalization, privatization and globalization. He faced the toughest battles with
the toughest of politicians and bureaucrats and was eventually successful in
gaining a victory over all his political and corporate rivals. His business ideologies
have been praised and are being emulated the world over (Refer Exhibit VI, for
Management Mantras of Dhirubhai and Exhibit VII for achievements of
Dhirubhai).Some skeptics believe that Reliance would no longer be the same after
Dhirubhai.
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The extraordinary growth of the company was based on the vision, energy
and lobbying power of Dhirubhai as well as the willingness and ability of the
Indian government to promote its expansion. The competition now is with major
multinational players whose ability to influence governments in various ways is
well known. Right from the time he suffered his first stroke in 1986; Dhirubhai
groomed his sons Mukesh and Anil Ambani to take care of the day-to-day
operations of Reliance. It was from Dhirubhai that his sons imbibed the quality to
think big. Mukesh's skills were quite evident from his successful management of
the Patalganga and Jamnagar projects and Anil was adept at the finances. Despite
their elite education, their most important training came from Dhirubhai. He
provided them with a strategic vision. His sons always considered themselves as co
builders rather than inheritors of Reliance. Dhirubhai's words way back in 1993
reflected the immense confidence he restored in his sons, "Reliance can now run
without me." After his demise, Mukesh was appointed the Chairman and Managing
Director of the Reliance group while Anil became the Vice Chairman. It remains to
be seen whether Reliance will maintain its lead and growth over large
multinationals in years to come.
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INSPIRATIONAL DHIRUBHAI
From beginning Dhirubhai was seen in high-regard. His success in the petrochemical business and his story of rags to riches made him a cult figure in the
minds of Indian people. As a quality of business leader he was also a motivator. He
gave few public speeches but the words he spoke are still remembered for their
value.
With the force of 3million investors RIL will reap the title Worlds
Biggest Company.
Tax is for the poor or the stupid people.
I am deaf to the word no.
Growth has no limit at Reliance. I keep revising my vision. Only when
you dream it you can do it.
Think big, think fast, think ahead. Ideas are no ones monopoly
Our dreams have to be bigger. Our ambitions higher. Our commitment
deeper. And our efforts greater. This is my dream for Reliance and for
India .
You do not require an invitation to make profits.
If you work with determination and with perfection, success will
follow.
Pursue your goals even in the face of difficulties, and convert adversities
into opportunities.
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Give the youth a proper environment. Motivate them. Extend them the
support they need. Each one of them has infinite source of energy. They
will deliver.
Between my past, the present and the future, there is one common
factor: Relationship and Trust. This is the foundation of our growth
We bet on people.
Meeting the deadlines is not good enough, beating the deadlines is my
expectation.
Dont give up, courage is my conviction.
We cannot change our Rulers, but we can change the way they Rule
Us.
Dhirubhai at that time was already a name to reckon with and a VIP himself, but
that did not stop him from rolling up his sleeves and diving in to rescue a situation
that had gone out of control. Most bosses in his place would have driven up in their
swank cars at the last moment and given the manager a piece of their minds. Not
Dhirubhai.
Be a safety net for your team
There used to be a time when our agency Mudra was the target of some extremely
vicious propaganda by our peers, when on an almost daily basis my business ethics
were put on trial. I, on my part, putting on a brave front, never raised this subject
during any of my meetings with Dhirubhai.
But one day, during a particularly nasty spell, he gently asked me if I needed any
help in combating it. That did it. That was all the help that I needed. Overwhelmed
by his concern and compassion, I told him I could cope, but the knowledge that he
knew and cared for what I was going through, and that he was there for me if I ever
needed him, worked wonders for my confidence.
I went back a much taller man fully armed to face whatever came my way. By
letting us know that he was always aware of the trials we underwent and that he
was by our side through it all, he gave us the courage we never knew we had.
The silent benefactor
This was another of his remarkable traits. When he helped someone, he never ever
breathed a word about it to anyone else. There have been none among us who
havent known his kindness, yet he never went around broadcasting it.
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ACHIEVEMENTS
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 Asia
Week 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).
Newspaper article
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Book
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