The Ambani brothers
A durable yarn
A revealing account of India’s most colourful business family.
DHIRUBHAI AMBANI grew up in a two-room home with an earthen floor in the Indian state of Gujarat, close to the Arabian Sea. Later this month his eldest son, Mukesh (pictured, right), head of Reliance Industries and the world’s fourth richest man, will throw a party to show off his new home in Mumbai, a towering vertical palace with six floors of parking space, three helipads and a hanging garden.
The story of how the Ambanis moved from dusty provinces to city skyscrapers is a tale of pluck, guile and vaulting ambition. But telling it also requires courage and tenacity. Hamish McDonald, an Australian journalist who was posted to Delhi in the 1990s, brought out his first book on Ambani, The Polyester Prince, in 1998. Publication in India was scrapped after Reliance set its heart on legal action, but the book became required reading for anyone interested in Indian industry. In his new work, Mahabharata in Polyester, Mr McDonald brings the story up to date, adding chapters about Dhirubhai’s death in 2002 and the subsequent feud between his two sons, Mukesh and Anil.
The young Dhirubhai lacked money, but not charisma. He raised his first 100,000 rupees (now $2,250) from a second cousin’s father and was introduced to yarn trading by a nephew. His first ventures into textile-making were run by Gujaratis back from Yemen, where Dhirubhai had worked for a petrol company during the day while trading rice, sugar and other commodities in the souk after hours.
Indians complain that social connections trump hard work. But no one worked harder than Dhirubhai at forging connections. His philosophy was to cultivate everybody from the doorkeeper up, Mr McDonald remarks. With the help of these relationships, Reliance set about making the most of India’s famous License Raj.
At that time the government took a suffocating interest in a firm’s imports and output. In 1987, for instance, the Customs Directorate alleged that Reliance’s yarn factory had more than twice its permitted capacity and that it had evaded over 1 billion rupees of duty on imported machinery. Reliance denied breaking the rules and the charges were subsequently dropped. But the rules themselves were strangling Indian industry. In exceeding these limits, Reliance made the case for their removal, according to Arun Shourie, a journalist, former minister and one-time critic of Reliance who later made his peace with the company.
Some of those restrictions also worked to Reliance’s benefit. In 1982, for example, the government raised duties on imported yarn to over 650%, which allowed Reliance to charge high prices for its homespun polyester yarn. Later in the decade import restrictions on paraxylene, a petrochemical, forced India’s other big polyester-maker to buy the crucial ingredient from Reliance, its bitterest rival. Clumsy curbs on trade are bad for the economy, but they are not always bad for individual businesses.
Dhirubhai Ambani knew how to appeal to the people as well as the powerful. By the late 1980s, Reliance Industries boasted the widest shareholding in the world. Dhirubhai held annual meetings in football stadiums and scattered subscription forms for one debenture from a helicopter. His roguish side only added to his appeal. Like India’s most popular Bollywood stars, Dhirubhai was an anti-hero, cocking a snook at complacent and hypocritical guardians of privilege.
By the time Dhirubhai died, Reliance was one of India’s biggest companies. But it was not big enough for both his sons, who soon fell to squabbling. Their mother brokered a split of the family’s assets in 2005. Mukesh got the heavy industry (hydrocarbons, petrochemicals and polyester) with the rich cashflows. Anil got the weightless businesses (telecommunications and financial services) with their rich share valuations. Both had inherited a driving ambition from a father who did not let them rest on their laurels. Within hours of his final MBA exam, Anil left Wharton (where, among other things, he learned to cook and iron his clothes) to look after a textiles factory in Gujarat. Mukesh returned to set up a polyester factory even before completing his MBA at Stanford. Their father told them they could either command respect through their efforts, or be left vainly to demand respect from people who badmouthed them behind their backs.
Outsiders rarely have the patience to dig through the details of India’s corporate life. Mr McDonald is an exception. His book puts the reader in the thick of the sweatiest corporate wrestling matches. He cannot quite sustain that intensity in the later chapters, in part because they were written from a distance long after he left India, but also because less is at stake. Dhirubhai Ambani’s rise symbolised a struggle for the heart and soul of India. His sons squabbles seem petty by comparison, even if the sums involved are huge.
Mukesh’s new palace is in the same neighbourhood he lived in as a youngster. In the intervening years this middle-class address has become an exclusive neighbourhood for Mumbai’s rich and famous. Reliance has grown, but India has grown with it. The Ambani brothers are big fish and swimming in a much bigger pond.
Mahabharata in Polyester: The Making of the World’s Richest Brothers and Their Feud. By Hamish McDonald. UNSW Press; 432 pages; A$34.95
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Filed under: BHATT, English, Hindustan, India, PRESS, SANTOSH BHATT | Tagged: Arun Shourie, Dhirubhai Ambani, Hamish McDonald, India, Master of Business Administration, Mukesh, Mukesh Ambani, Reliance Industries |