The Dhirubhai Ambani Legacy

<p><em><strong>Sutanu Guru </strong>wonders if the Ambani-Nusli Wadia war resembles the one between Modi and Rahul</em><br><br>On July 6, 2003, Mumbai was being lashed with torrential rains. But that did not stop literally the who is who of India gathering to pay tribute to the most legendary entrepreneur of post independent India, Dhirubhai Ambani who passed away on July 6, 2002. President A.P. J Abdul Kalam delivered the keynote address. Also present to pay tribute were Maharashtra Chief Minister Sushil Kumar Shinde, Gujarat Chief Minister Narendra Modi, Uttar Pradesh Chief Minister Mulayam Singh Yadav, Madhya Pradesh Chief Minister Digvijay Singh and a host of politicians and industrialists. But the media attention that day was on the Union Telecom Minister Arun Shourie and what he would say. Shourie surprised many and shocked a few that day by saying: "I first learnt about him&nbsp; (Ambani) through the articles of my colleague S. Gurumurthy. The point of most of these articles was that Reliance had done something in excess of what had been licensed. It was producing in excess of that capacity...Most would say today that those restrictions and conditions should not have been there in the first place, that they are what held the country back. And that the Dhirubhais are to be thanked not once but twice over: they set up world class companies and facilities in spite of those regulations and thus laid the foundations for the growth all of us claim credit for today...second, by exceeding these limits in which these restrictions sought to impound them, they helped the case for scrapping those regulations, they helped make the case for reforms". Ambani had passed away on July, 6, 2002.<br><br>Shourie's unabashed praise for Dhirubhai Ambani was indeed a surprise for many gathered that evening. But no one was surprised by the absence of one man that day: Nusli Wadia. For more than two decades, Ambani and Wadia had fought a bitter battle that habitually spilled over to the media and government. For a long time during this no holds barred battle, Arun Shourie had willy nilly become an ally of Nusli Wadia as a journalist and the editor of The Indian Express. In 1986, a group of brokers in Mumbai banded together to crash the stock price of Ambani's Reliance Industries even as The Indian Express launched a relentless campaign against him and his company. There was a time when Ambani family insiders admit that the Ambani Empire was teetering on the verge of collapse and things never looked bleaker when Ambani suffered a stroke. Movie buffs would be familiar with this stuff thanks to the Mani Ratnam directed film Guru where Abhishek Bachchan plays the role of his life by portraying Dhirubhai Ambani. The Mani Ratnam movie no doubt did a fair job of portraying the life and times of Ambani. But it just about skimmed over the real battle: the one between Nusli Wadia and Dhirubhai Ambani.<br><br>And this is one big fat juicy war that Indians must read about, for sheer entertainment if not enlightenment. It is a classic war between India and Bharat. To a large extent, it explains why and how a fellow Gujarati like Narendra Modi keeps rising and looks a winner against Rahul Gandhi despite all the early odds being stacked in favor of Rahul.<br><br>Ambani, like Modi, had a truly humble upbringing. Born to an impoverished school teacher, Ambani, like tens of millions of fellow Indians like him, was destined to a life of lower middle class struggle. In contrast, Nusli Wadia was born with the proverbial golden spoon, the child of Neville and Dina Wadia and the grandson of Mohammed Ali Jinnah, the founder of Pakistan. Incidentally, like Wadia, Rahul inherits a Parsi heritage from his father's side. His grandfather Feroze Gandhi was a Parsi. While Ambani spent his teen years and early youth as an attendant at a petrol pump in Aden, Yemen, Wadia got the best and most expensive of schooling and education. Under ordinary circumstances, the world to which the two belonged were so distant from each other that&nbsp; even an astrologer would have thought twice before predicting that their paths would inevitably cross. But determined to rise above the limitations imposed by his background, Dhirubhai gathered his savings and dreams and came back to Bombay, the city of dreams. His decision to focus on textiles led to the inevitable encounter with Nusli Wadia and the rest, as they say, is history, or folklore or fairy tale, depending on how you look at it.<br><br>The reader has to bear with some technical detail here. But really, there is no more fascinating story than the war between Ambani and Wadia and the cast of colorful characters that played pivotal roles in this thriller. If it were the United States, there is little doubt that dozens of books would have been written on this. But then this is India where the 'Book' co exists with the oral tradition. By the 1970s, Dhirubhai had become a fairly successful manufacturer of textiles under the Vimal brand name and an importer of Polyester yarn and fibre that were raw materials for synthetic textiles, which were far cheaper than pure cotton fabrics. His company Reliance Industries was incorporated in 1966. In contrast, Bombay Dyeing was founded by Nusli's grandfather Nowrosjee Wadia back in 1879. As Dhirubhai started expanding his wings, he realized two things. The first was that you needed a license from Delhi to manufacture anything; in fact, you needed a license to even manufacture more of what you already made. The more important corollary to this was that nothing could be done unless you kept an army of bureaucrats, fixers and politicians happy in Delhi.&nbsp; This was the heyday of the license permit raj fashioned by Nehru and turned into fine art by Indira Gandhi. The second was that Indian banks and financial institutions simply could not lend him enough money to finance his ambitious projects even if the right levers were pulled.<br><br>So the first thing that Ambani did was to maximize his "access" to Delhi. He simply outmuscled and outsmarted the established industrial houses when it came to "managing Delhi". Second, he realised that the newly emerging middle class in India had the money to finance his dreams. Reliance went public (sold equity shares to retail investors, the public, literally) in 1977 and Ambani started a love affair with investors that is now the stuff of legend. If you or your parents were fortunate enough to invest Rs 10,000 in Reliance back in 1977, you would be worth crores today. Incidentally, Bombay Dyeing controlled by Nusli Wadia was then a blue chip in the stock market and a part of the Bombay Sensitive Index or Sensex (The 30 most valuable companies of the market become part of the Sensex). It has since long dropped and faded out of the Sensex and it would be a stretch to call Bombay Dyeing a blue chip in contemporary times. Simultaneously, Ambani went on an overdrive in managing Delhi. Whispers had already started about how he could miraculously change policies. When he was an importer of polyester yarn and fibre, import duties were low. When he started manufacturing them, duties went up, making imports costlier than the yarn manufactured by Reliance. But he really entered the big league when he launched his petrochemical ambitions in earnest. He decided to manufacture a petrochemical intermediate called Purified Terepthalic Acid (PTA) that was a raw material to manufacture polyester yarn and fibre. At that time, Bombay Dyeing and the public sector blue chip Indian Petrochemicals Ltd (IPCL) manufactured a rival intermediate called Di Methyl Terepthalic Acid (DMT). War broke out when Ambani obtained the license and set up a plant in record time as Wadia faced a direct challenge to his inherited business Empire. Till then, the hostility between Wadia and Ambani was the stuff of whispers. Soon, it became big news in the media. Things were so bad that even attempted murder allegations were made against people allegedly close to Ambani in the late 1980s. Despite the best efforts of Wadia, and many other "old money" business families, Ambani proved to be unstoppable. He became even more so when the license permit raj was dismantled in 1991. Incidentally, the public sector IPCL was taken over by Reliance during the turn of the century.<br><br>Some analysts say that comparing the "old" Ambani-Wadia battle with the new Modi-Rahul war is facile. But then, this blog is not a serious attempt at analysis. Thirteen years after Dhirubhai Ambani died, it is just an attempt at putting things in perspective through colourful memories.</p>