rediff.com: A business patriach and an equity pioneer

The death of business legend Dhirubhai Ambani at the weekend has brought to an end a watershed chapter in the nation's corporate history, newspapers and market analysts said on Sunday.

Ambani, who rose from humble beginnings to become the billionaire founder of India's largest business empire, died on Saturday, 12 days after suffering a second stroke.

He built the Reliance conglomerate, which has a market value of $9 billion, from scratch at a time when India's corporate horizon was dominated by family-owned businesses. The group has interests in oil and gas exploration and production, refining and marketing, petrochemicals, power and textiles.

"He had the audacity to think big and before him no one had dared to plan such global scales," said U R Bhat, chief investment officer at JF Asset Management.

Flagship Reliance Industries, is one of the biggest petrochemical makers in the world and Reliance Petroleum operates the fifth-largest refinery in the world. The two are merging to create a top-30 energy company.

In the process of building his vast empire Ambani, the son of a poor school teacher in a rural village, rose to join the ranks of world's wealthiest. He is 138th on the latest Forbes magazine list of the ultra-rich with a fortune of $2.9 billion.

The Times of India which called him the patriarch of India Inc, said "Dhirubhai's genius lay in spotting business opportunities and then striking quickly."

Reliance's phenomenal growth spawned a genre of entrepreneurship in a nation just emerging from a half century of socialism and Soviet-model central economic planning.

"What is creditable was his strong, unflagging appetite for success at a time when private sector was a dirty word and the license regime was structured to stifle private entrepreneurship," said The Economic Times.

Reliance Industries made an initial public offering in 1977 which not only ended the dominance of bank financing in Big Business but also popularised the equity culture among the country's retail investors.

"While the traditional view in the late 70s was that managers should be concerned with running a company and not its stock price, Ambani believed that the management's chief responsibility was towards its shareholders," said The Times of India.

"He was the only person to induce small investors to buy his shares," said J C Parekh, past president of the Bombay Stock Exchange, Asia's oldest bourse. "And the investors never regretted (the decision)."

Original investors in the 1977 initial public offering have earned a compounded annual rate of return of 43 per cent. Reliance Industries has 3.5 million shareholders to date and about one in three Indian investors owns that stock.

Reliance's remarkable growth also prompted accusations that Ambani's success owed as much to manipulation of government policy as to shrewd business decisions. But newspapers saw virtue even in those alleged influences.

"Lobbying to get import duties cut on certain synthetics (not only) helped his business, but also helped curb rampant smuggling," said the Sunday Express.

"Getting the government to change policy to allow the private sector into the oil refining business helped India develop vital capacity," the newspaper said.

Reliance Petroleum which is also the world's biggest grassroot refinery, transformed India, at one time one of Asia's biggest diesel buyer, into a net exporter of diesel.

News of his hospitalisation caused a major slide in the two Reliance heavyweights, among India's top 10 by market value, that lopped off over $400 million in combined market capitalisation.



Home > Money > PTI > Report July 7, 2002 \| 1410 IST		Feedback