Ambani and Sons

Title: Ambani & Sons – The Making of the World’s Richest Brothers and Their Feud

Author: Hamish McDonald

Publisher: Roli Books, 2010 (First)

ISBN: 978-81-7436-814-0

Pages: 382

Reliance Industries is India’s largest and most profitable company in the private sector. Built by Dhirajlal Hirachand Ambani (Dhirubhai) from scratch, the enterprise struck deep roots during India’s License-Quota-Permit raj. When the economy opened up, he could build on the groundwork he’d already prepared and the company rapidly grew into one of the most profitable ventures in the world. Dhirubhai’s murky dealings in cornering plum government allocations and excluding his business rivals is the subject of the author’s controversial book, The Polyester Prince, which is officially banned in India though e-books can be freely downloaded from the web. However, this work is free of contentious issues in the sense that the author has applied brakes on his investigative drive so that it could be sold in India. Details of several clandestine and unethical deals are given of course, but the consistent refrain is that none of these would have been needed if India had practised an open-market, free-enterprise policy which it adopted in the last decade of the past century. The book is indeed a good read.

Dhirubhai was born in Kathiawar, Gujarat in 1932. After completing his high school education, he was forced to look for work, prompted by the very small income of his father, who was a school teacher. Belonging to the Bania caste, he had extensive contacts rooted on caste lines with merchant communities worldwide. He was employed by a merchant firm in Aden, Yemen where he worked as a salesman for Shell products, garnering a slew of business contacts across the Red Sea littoral and East African ports. Aden was a busy British port-town in those times, similar in stature to Singapore. His business acumen and risk taking was phenomenal. It is said that he used to buy up Yemeni silver rials which had more metal in it than the prevailing exchange rate with pound in order to melt it to make silver ingots for trading. In 1958, he was back in India, looking for business opportunities which saw the birth of Reliance Commercial Corporation which traded spices and textiles for export to the Middle East and East Africa.

At that time, India was standing mute witness to one of the most ridiculous exercises in centralized planning and bureaucratic control on business ever imposed on a democracy, but clearly modeled on authoritative communist regimes. Nehru and later his daughter, Indira Gandhi, both prime ministers, thus paved the way for inefficiency, nepotism and corruption to saturate decision-making machinery of the government. Those industrialists who had friends or bribe-takers in positions of power to pull strings greatly benefited from this sorry state of affairs. It is often said that Ambani didn’t engage in illegal activities. He simply changed the rules when it best suited him through his extensive connections at the right places. In its frantic bid to earn foreign currency, Indira’s government was willing to go to any illogical extreme. Ambani exported cheap nylon fabrics at elevated prices to free ports which languished and later got damaged there. But, based on the calculated value of exports, he could import polyester filament yarn (PFY) which attracted huge margins, nearly reaching 600%. The scheme was of course, open to every one, but Dhirubhai saw it first. When the others too got wind of it, the margins naturally fell.

McDonald identifies and explains Reliance’s expansion phase in the 1980s. After Indira Gandhi’s death in 1984, Ambani’s plans were thwarted by Rajiv Gandhi’s initial enthusiasm at fair governance. This was in sharp contrast to that of his mother, who had pushed corruption to the centre-stage of Indian administration through her ruinous measures of stifling bureaucratic control of every aspect of the economy. But when Rajiv himself was later bogged down in accusations of corruption, notably in the Bofors gun deal, he changed track and Dhirubhai entered his good books. Together, they hunted down Nusli Wadia of Bombay Dyeing, who was Ambani’s business competitor and the Indian Express, which unleashed a tirade against corruption through a brilliant correspondent, S. Gurumurthy. Ambani had a powerful opponent in the figure of V P Singh, who was Rajiv’s finance minister. Singh ordered several inquiries into cloudy deals, but soon lost favour with Rajiv who slowly became the unwitting victim of the machinations of a coterie around him.

V P Singh’s election victory in 1989 brought in a difficult time for Dhirubhai, but it didn’t last long. The author has finely summarized the deals that brought him down in 1990 - the Mandal and Masjid issues. Narasimha Rao’s reforms policy brought in a revolutionary change which wiped away most of the roadblocks put by an over-enthusiastic officialdom. Reliance’s growth was huge by any standards in the last decade of the century. Ambani’s death in 2002 soon forced the simmering tension between the brothers to break out in public. A settlement was reached in 2005 and a conciliatory partition of assets was enforced. McDonald ends the book with a reminder that it has reached a pause in the story, to which the not-so-old brothers and their unbridled energies could in future provide fertile grounds for more juicy anecdotes.

McDonalds’s lack of awareness of social realities in India makes itself felt at many places. Extravagant claims like Reliance made or broke many prime ministers may be written off as inevitable loud mouthing, characteristic of a book of the genre. But on other issues, the author is not knowledgeable enough to pass comment. When narrating the antecedents of S Gurumurthy of Indian Express, it says “He was the product of a Brahmin family near Madras and was blocked from university by Tamil Nadu’s policies of favouring lower-caste students” (p.124). Coming from Australia, which has one of the worst cases of economic and social repression of the indigenous aboriginal communities, McDonald may be forgiven for not fully grasping the measures of social justice put in place for the lower castes, whose condition was much worse than Australia’s aborigines. The reservation is not 100 per cent and if Gurumurthy was smart enough to come on the top 30-40%, he could’ve attended the university. Presumably, he was not bright enough!

The book presents a picture of continuous economic liberalization measures starting from 1980 onwards whereas we normally credit P V Narasimha Rao for initiating the reforms in 1991 which catapulted India to the world’s fourth largest economy in purchasing power parity. What we read from the book is that the pace was so gradual at first that it was not felt. However, there is sufficient proof from the pages that Rao and Manmohan’s reforms were anticipated very early on and all the prime ministers of the period, Indira, Rajiv, V P Singh and Chandrashekhar followed it even if with some demur.

The book is recommended.

Rating: 3 Star