BUSINESS PERSONALITY- DHIRUBHAI AMBANI

Dhirubhai Ambani, was an Indian business tycoon and founder of Reliance Industries Limited. Known as Dhirubhai, was born on 28 December 1932, at Chorwad, Junagadh in the state of
Gujarat, India, into a Modh family of very moderate means. When he was 16 years old, he moved to
Aden,Yemen and worked there as a gas-station attendant, and as a clerk in an oil company. Ten years later, he returned to
India and started a business (Reliance) with a capital of Rs. 15000.00 (US$ 375). Fables about him abound, many of which were recalled by the media when he passed away on July 6.The most-quoted one was the familiar rags-to-riches story, of a determined individual who ostensibly arrived in Bombay (now Mumbai) from Aden in the late 1950s with Rs.500 in his pocket and went on to build a Rs.65,000-crore empire. He had established himself as a legendary leader among industrial capitalists in India.Despite his almost Midas Touch, Ambani has known to have flexible values and an unethical streak running through him. There are stories of ruthlessness, when it came to bending the rules and winning the game that made him the success that he was.  Fables such as these, built often on a modicum of truth and sometimes from thin air, were testimony to the success of Dhirajlal Hirachand Ambani. Needless to say, as is true of all winners, in Dhirubhai’s case too, individual qualities – an acute mind, a sense of the other, a degree of cunning, an element of ruthlessness and a large dose of gumption that is required to make the dash to victory – would have contributed to the end result in no small measure. Reliance focussed on the domestic market where revenue opportunities were not lacking, and margins were much higher, permitting the generation of huge investible surpluses. In adopting this strategy, Ambani’s Reliance group acquired through outright purchase the best-practice technologies in the field. With world-scale plants, Reliance proved doubly competitive: not only was it able to displace both domestic producers and international suppliers from the market at prevailing customs duty rates, but in fact it could remain competitive even when duty rates were reduced. The strategy of ‘going it alone’, while investing in world-scale plants based on outright purchase of technology, obviously raised domestic financing requirements substantially.

Reliance under Ambani decided to enhance its equity strength to undertake new investments by tapping stock markets. It was here that Ambani exploited the other opportunity that the changing times offered. This was the possibility of mobilizing money from households through the stock market.
India’s stock markets were until the 1970s dominated by the financial institutions and a few large players, with trading activity being minimal and limited to a few shares. The first instance of equity serving as an option for investment of household savings arose when foreign companies, pressured by the Foreign Exchange Regulation Act (FERA), decided to dilute their equity through sale in small lots. Reliance made its first public issue in 1977, when it offered a chunk of Rs.10 shares to investors. The shares opened at Rs.23 reflecting the premium that Reliance was in a position to command. In the years to come, Reliance was to exploit the market through many routes to finance its breakneck expansion, garnering in the process huge premiums on the shares of existing companies. By the end of 1992, out of a total capitalization of Rs.34, 255 crores, share premium reserves and surpluses alone accounted for Rs.7,640 crores. Besides this, Reliance was to use the convertible debenture route and the American Depository Receipt (ADR) and Global Depository Receipt (GDR) issues to much benefit.

By inclination and instinct, Dhirubhai was a fighter. Dhirubhai’s greatest acumen was in understanding finance. He earned the devotion of millions not because he was a great industrialist, but because he treated his shareholders very well. He was the first Indian entrepreneur to understand the importance of the ordinary investor.
Dhirubhai realized that he would have no financing headaches if he could earn the trust of investors, and he took care to ensure that the investor earned a decent return. Not only by way of dividends, but by continuous appreciation of the Reliance scrip.He was a man who always dreamed big. At a time when capacities were fragmented and small, Dhirubhai dared to dream big. Instead of setting up capacities that would cater to current demand, he set up the capacity and then set about creating the demand. He knew where latent demand existed and decided to supply it. He made no compromises on quality, insisting that his machinery must be state-of-the-art.

 

Reference 

http://muraleedharan.tripod.com/legends_dhirubhaiambani.html

http://www.india-seminar.com/2003/521/521%20paranjoy%20guha%20thakurta.html

(group 5a)