Reliance didn't grow on permit raj: Anil Ambani
Reliance Industries has denied charges that the group had thrived on the pre-reform 'licence raj' of the 1970s and 1980s to become the country's largest private entity, and attributed the growth to the vision of group's patriarch Dhirubhai Ambani.
"The licence raj prevailed for everybody, not only for us. You can get an industry licence to set up a plant, but that doesn't raise your financing, it doesn't raise your technology, it doesn't produce your quality, it doesn't market your products, it doesn't help you raise money from the capital markets. You don't suddenly get 3-4 million shareholders into the company," said Reliance group Vice-Chairman Anil Ambani, in an interview conducted by Vir Sanghvi for Star Talk.
"India went for reforms in 1991. The growth for Reliance has been the highest in the last ten years than it was in permit raj. I don't see any harm in building relationships with people whether it's my customer or my vendor, whether it is my shareholder, or somebody in a position of power who we need to convince about our case.
Nobody can say that we have run away with anybody's money. Though I can tell give you a list of Indians who've taken their companies bankrupt," said Ambani.
Ambani spoke about various aspects of his life, his education and his business. Excerpts:
On what life has taught him:
"I think I'd like to put it differently, and look at what have been the key messages thrown at us over the last two or three decades that I've been in corporate life. And those have certainly been my father's core values that were ingrained in us: being down to earth, being humble, and being very simple. That's how he is even today and I think that's a big message for us.
On childhood memories:
Many years ago, our family lived in the backstreets of Mumbai, in a chawl at Kabootarkhana, which was a co-operative housing society, where over six hundred families lived together. Everyone has a one-bedroom accommodation. People find it shocking that neither I nor Mukesh drink or smoke, are vegetarian, are god fearing, and don't gamble.
These are not values that are passed on by any sort of action, but more a part of one's upbringing. Praying to god, respecting other individuals… I think it's been really put together by my mother. My father was very, very busy.
On his parents:
My mother is a very simple down-to-earth person. My grandfather, that's my mother's father, was a postman. He rose to become the in-charge of a post-office in Jamnagar in Gujarat. So she comes from that background.
Her marriage to my father was, obviously, an arranged one. My paternal grandfather was a schoolteacher. Soon after my parents got married, they went of to Aden in Yemen. That's where he started working as a gas station attendant (a petrol pump attendant in Indian parlance), and typically he went there to raise capital, conserve capital and come back.
My mother really supported my father through those tough times. I don't think I recall -- during my entire school or college career -- my father spending time with me, sitting with my homework or my tuitions or anything of this sort.
It was left to my mother, who was just a high-school graduate, to be on our case. However, not knowing the content she couldn't really add value to what we really wanted to do.
My father looked at it very simply, saying "I think we are going to give you the best upbringing to help create the best values for you. I believe you have the brains so you should study hard. You don't have the financial problems that I had when I wanted to study. Well you don't have any monetary problems, so go and try to look for the best school, college, university that you can go to."
Time and again I've asked him what he misses most, and he always said that it has been a good education. He wanted to study, but he didn't have the resources. Fortunately, in our case, we had no such problem.
I was 10-years-old when we moved out of the chawl. I have clear memories of living there. It had one bedroom; we were seven members in the family, including my grandmother. There was a common bathroom and toilet for a hundred families together in the chawl.
It was on the fourth floor, that's about a flight of 50-60 steps. We stayed at Kabootarkhana, Bhuleshwar; I think it was called Jaihind Estate.
We moved to Usha Kiran later. But nothing came very easy. We had no lack of monetary resources, but we were given sort of goal-oriented finances. This was very important; my father would ask us to do something to earn.
For example, if we played a match or went hiking or trekking or walking or whatever else…. At the end of the trek he would give us a choice of two things: we could have one drink and one snack, or two snacks and no drink. The budget was five bucks, and it didn't change for a long time.
I recall it was the summer of early 1970s and he said to us, "Look this is the mango season, I know you guys are very fond of mangoes, but the only ways you can get a full box of mangoes is if you travel by the lower deck on the Bombay to Goa steamer. And, you know, our incentive was the mangoes, not the trip to Goa!
He could afford to send us by air, yes. But he wanted us to go through that "lower deck experience", where there was no reservation and everybody was puking. He just wanted us to go through that event because he believed that there is no way we could ever buy that sort of experience.
On his education:
In 1981, I went to The Wharton School at the University of Pennsylvania to do my masters in Business Administration. That was the first time I was leaving home alone. Typical of all mothers, mine was apprehensive. She told my father, "He is going to a faraway place, he has never lived alone, he is a vegetarian… He will die of starvation, so why don't we send somebody along with him…"
My father said, "Absolutely not. He is going to stay on the campus for the next 18 to 24 months. That experience is going to be invaluable. Cannot be measured in terms of money; it is going to be infinite in terms of value.
That's where I learnt how to cook, clean up, ash and iron my clothes, clean my toilet, et cetera. That was a huge confidence-building exercise.
On learning the ropes:
When I came back - I still recall it was the 2nd of December 1982, 3 o'clock when I finished my last exam at Wharton. I took the 8 o'clock flight from New York, which is three hours' drive from Philadelphia and landed in Mumbai on the night of December 3.
On 4th of December, I met him and said dad I've graduated, I've got my masters. I've done it in 14 months, instead of 24 months! So its time for a break; you know take two-three weeks off and 'chill out'. He said, "Absolutely not. You are going this evening to Ahmedabad and that's where you will stay for the next few years and look after our textile business."
So I asked, "Should I not get a break?" He said, "There will be enough time in the future for you to enjoy life, this is the time for you to work." And that was it, there was no further argument, there was no debate and I took the evening flight and I stayed for the next five-six years in Ahmedabad, five days a week at our textile plant.
My father thought that working from the shop floor, all the way to the top, was the right way to do it. He left me with one very simple message when I left. He said, "Look, you have the choice. You have the ability either to command respect or to demand respect. Choice is yours. People will respect you when you are in the commanding mode, because of what you are. If you are in the demanding mode, then they won't respect you and bitch about you as soon as you turn your back to them.
On life after his father's stroke:
My father had a stroke in 1986. Both Mukesh and I were in mid twenties then. That was the real period of exposure for us; challenges, growth, and "the era of tempering steel" - as my father fondly refers it -- because that's the time we were exposed to every possible adversity that anybody can think of. And we had to battle through all of that and I think those years of learning are very, very precious.
Getting an MBA clearly didn't teach me how to manage the environment in India after I came back. My fathers description of an MBA in Gujarati is "Mane badhu aawe chhe (I know everything). And that is how all MBA behave once they graduate. The feeling is "Hey! You guys don't know anything. I am 22-years-old and I know everything." I think during that stage -- I would from 1986 to 1989-90 -- we had a large number of factions working against us in number of ways.
I still recall that after the first few weeks when my father was recovering, I asked him what he thought about the way things were building up. He said, "That's part of life. It's the Indian crab theory, so don't worry about it." He always refers to all the people who are so-called adversaries as "the well-wishers of Reliance." Always, even today.
The task was clearly challenging. Today, one crore (10 million) means nothing much in rupee terms, but I do recall that I went on a number of occasions where a particular lender wanted his one crore back though it was not due. I must have gone and met him 16 times, I had to say, "Please don't take this one crore away." But they said, "No." I said, "Fine, I respect your instructions and we'll honour whatever we'll have to honour."
In the history of Reliance, we've never, ever defaulted, we've never even delayed repayments, and that is the trust and confidence and track record we enjoy today. That is clearly a value my father created.
There was a phase when many people said that it was over, that we might survive as a company, but the era of growth was over. They said even if my father resumed work after his stroke, he would never be back to his old self, and both of us (Mukesh and I) were just kids. But, both of us looked it as a great opportunity.
Whenever people tried to push us down, Mukesh -- being an engineer -- reminded us of Newton's third law: every action has an equal and opposite reaction; so the more the people pushed us down the more we sprang back and said we are going to prove everybody wrong and I think that's what we have done.
There was great determination, there was a great deal of commitment, and I would say there was an ultimate belief in god. We are believers in fate, destiny and karma. At the same time, you have to help yourself. You just can't be sitting on your chair and believe that Vir Sanghvi is going to interview you. You've got to show up at the studio and be in front of him….
On when the major business shift for Reliance occurred:
I think it goes back to my father's vision. He had a vision when he was a petrol-pump attendant in Aden and later grew up to be a marketing manager. He also worked on a small refinery in Aden and dreamt that some day he would get into the energy and oil business.
So as we looked at the growth of Reliance, we charted the course for vertical backward integration. The only reason to start that way was we had no access to capital. This was a first-generation enterprise.
So we started with textiles, which was the least capital-intensive. Then we went back to manufacture of polyester of and then all the way upstream to oil and gas exploration, refining, marketing of petroleum, petrochemicals, plastics the entire energy chain… That's how we really did it.
Till 1977, early 1978, Reliance Textile Industries was a private limited company… we then went public and are a largely publicly held company now.
On his sons:
I've two sons, Anshul and Anmol. They are 11 and 6. My father still insists they travel second-class in the local trains, he insists we send them to school camps where a hundred children live in a dorm, and don't have a bath for three days… so they are going through that sort of thing.
They follow values: they don't see me eating meat -- nothing religious about it, just a personal choice -- so they follow that, they don't see me smoking, so they follow that too.
On his routine and fitness:
I get up at 5:30 everyday to go jogging. I do a variety of things. I run about half a marathon a week… I am learning how to play polo, I swim, I do all sorts of funny things.
Maybe that keeps me going and that's my intoxication, my high, my level of satisfaction. That comes through my physical performance or my achievement.
I think it was a couple of years ago when I was at an investor meeting in New York and one of the investors after the presentation was over said, "Well, Mr Ambani, the company looks in great shape and we have great confidence in its future. But have you looked at yourself recently in the mirror." And I said well that's a personal question, can we discuss it separately and he said, "No. I have the guts to ask this question in front of everybody, so I need the answer now." I said, "No I've not looked at myself recently in the mirror." Well, he said, "If you are not in a good shape, I don't think your company can be in good shape."
I came back after that presentation looked at myself at the mirror; I was a hundred and three kilos in weight and I said, "I look awful."
So a couple of years ago I started a programme, which is not a typical diet programme… just a change in lifestyle programme. Happily, I shed 35 kilos and I've changed my complete lifestyle to whatever I think is going to sustain me and I am doing pretty well.
I am lower in my weight than when I was in 1981 and possibly fitter than before. I just have to improve my physical performance a bit more and maybe one of these days I'll officially run a marathon. I've run that couple of times in Mumbai, but not in a competitive environment.