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Remembering the Prince of Polyester

4 minute read
Hamish McDonald

Mohandas Gandhi and Dhirubhai Ambani were the two most famous scions of the Modh Bania, a Hindu commercial caste based in the arid Saurashtra peninsula of India’s western Gujarat state. The Mahatma idealized traditional village ways, passive resistance, and homespun cotton. Ambani, a billionaire industrialist, preached prosperity to a burgeoning Indian middle-class via a business empire built on polyester.

Each changed India. Ambani’s public wore his textiles as durable suits and glittery saris. Indians invested by the millions in his Bombay-listed Reliance Industries, a sprawling conglomerate with $12.3 billion in annual sales that recently became India’s first privately owned entrant to the Fortune 500. When Ambani died on July 6 at age 69 after nearly two weeks in a stroke-induced coma, the country’s media recounted his rags-to-riches life as an Indian morality play.

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The popular version of Ambani’s story goes like this: born in an impoverished village, at 16 he goes off to Aden to learn business. He returns 10 years later and starts a small company. By canny trading around the textile bazaars of Bombay, he corners the market in imported polyester, starts his own factory, outwits sclerotic bureaucrats in New Delhi who are trying to run the economy by regulation, and ultimately ignites the moribund Indian stock market with his vision of turning Reliance into a petrochemical and oil refining empirea dream he realized not long before he died.

There is also a noir version. In the 1980s, allegations were raised in Parliament and in newspapers that Ambani was a master manipulatorthat he received favors from politicians, cajoled officials to interpret the rules his way, brought down endless audits and inspections on his rivals, and reputedly had the power even to make or break governments. In 1985, leaders of opposition political parties signed a letter urging a thorough legislative probe into Reliance over “massive and ingenious schemes and methods adopted by the company in gross contempt of public policies and statutory laws…”

The heroes of India’s ancient literary epics are never purely heroic. Ambani’s reputation was not untarnished, but his great achievement was that he showed Indians what was possible. With no Oxford or Yale degree and no family capital, he achieved what the Elite “brown sahibs” of New Delhi could not: he built an ultramodern, profitable, global enterprise in India itself. What’s more, he enlisted four million Indians, a generation weaned on nanny-state socialism, in an adventure in can-do capitalism, convincing them to load up on Reliance stock. His messianic annual shareholders’ meetings were held in a Bombay football stadium, and Ambani became high priest of an “equity cult” that finally drew the enormous savings of India’s middle classes into productivealbeit, riskyinvestment.

The pity is that while manipulations might have been a virtual necessity to succeed in business in the corrupt and stultified economy of the 1970s and 1980s, Ambani’s tactics continued to raise concerns after 1991 when liberalizing reforms began to kick in. Reliance nearly suffered a disastrous collapse in investor confidence in 1995, when the Bombay Stock Exchange raised questions over share duplications and other accounting anomalies that appeared to disadvantage minority shareholders. The company subsequently pleaded guilty to technical breaches and clerical errors but no intent to defraud was found. Confidence was ultimately restored and the share price rebounded.

If Reliance gets much bigger in India, the government may be forced to weigh whether it has become a threat to competition. But will it continue to grow? Ambani is succeeded by his two accomplished and well-educated sons, Mukesh, 44, and Anil, 42, as joint chief executives. So far, they show little of the fraternal rivalries that have split many older Indian business houses. But without the entrepreneurial founder, Reliance may settle into comfortable middle age, eclipsed by India’s globally wired I.T. giants like Wipro and Infosys as exemplars of India’s economic future. Still, Ambani seems destined to be remembered as a folk heroan example of what a man from one of India’s poor villages can accomplish with non-shrink ambition.

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