From Mumbai to Gujarat

After initial successes in Mumbai Dhirubhai had gained confidence and the ground had been prepared for his take off. He turned towards his home state, Gujarat. He set up a mill at Naroda with a small capital of just Rs. 15,000 only. For his mill Dhirubhai undertook business of the purchase sale of synthetic fibres. He bought the raw material from Nirlon Chemicals and Synthetic Fibres. But in 15 years he reversed the entire process. Now he was supplying raw material to the same company earlier he used to take from. Infact he was supplying in massive quantities. He had employed no underhand deal or dishonest trick. Dhirubhai only used his talent of entrepreneurship and business acumen.
His simplicity, commitment and single minded devotion was unique. It was only in 1966 that he ralised it was about time he put up his name plate in his office. As a first step towards Reliance Public issue share holding policy he already had begun textile production in Naroda, Ahmedabad on the warp- knitting machines with six dozen workers.
Amongst fellow trade and industry people Dhirubhai Ambani was known as a soft spoken and resourceful person. He could be seen ever ruminating on paan. What others could not see was his innovative mind that kept chewing out the outdated and unproductive traditional business mindset of India. He put his new approach in practice by the end of two decades of his being in trade. During 1977, Dhirubhai had made up his mind to come out with his first public issue. By then he had established himself as a manufacturer of quality fabrics.
The first public issue of Reliance was the harbinger of new economic culture in India. Before that all the businessmen depended on financial institutions for financial support. The industrialists who used these traditional financial resources after independence to set up industries could not firm up their grounding. All the profits generated went into servicing of the debts. The industrialist did raise some personal properties and assets but their industries languished. Only a few long term enterprises made it. The decade of eighties brought in some liberal economic policies of the government.

Waving back to cheering shareholders

In 1968 Vimal Textiles brand had been launched in the market. It proved an unprecedented success and Dhirubhai became a new entrant to the Indian corporate world. Till then the old industrial dynasties ruled the corporate world.
The success of Vimal brand gave Dhirubhai Ambani the confidence that through public issues he would be able to raise capital for his new projects. Vimal testimonial should win the trust of the people and make common folk invest in his public issue. Then the financing for big projects was being done only by Public sector banks. The red-tapeism in Indian Banking system was endemic and crippling. Dhirubhai won’t even look at that source. He was loathe to delays and prevarications.
Anyway, in 1977 Dhirubhai came out with his public issue for subscription. For its success he used the magic of PR (Public Relation) methods. Mass media was extensively used for publicity. The critics and evaluators of finance passed adverse remarks but inspite of that Reliance public issue was oversubscribed seven times. Those who had invested their faith in the issue got back 100 times of their investment as profit. Ambani Group became the first choice of share and debenture subscribers.
Thus, Dhirubhai Ambani got financial support from the public for his ambitious mega projects. Some charges were leveled about the misappropriation of the capital but that made little difference. The investors kept their faith in the integrity of Dhirubhai. As an industrialist he was the first Indian who had realised that he could use the small savings of the middle class people for his big projects. To put faith in such possibilities then was unexpected of others but Dhirubhai did and made his fortune. It was all because he was industrial Columbus who dared to explore new shores, take risks and try new ideas.
He had no patience to dawdle along the mixed economy path with the old school boys. He turned upside down the long established ways of the business world of India.
Whenever the retrospection of Indian market shall be made Dhirubhai’s role shall serve as its watershed to divide the period table. The pre- Dhirubhai period shall consist of those industrialists who used to invest capital based on gold and land. This space was strictly reserved for traditionally rich royals and those born with silver spoon in mouth. These common middle class Indian had no place. But with 1977 Reliance public issue doors of investment for the middle class people with small capitals to offer opened up and they encashed the opportunity. After it the public issue became a common practice to raise the capitals. This change was brought about by Dhirubhai Ambani and a new era of economics was ushered in. It was the crowning glory of his business sense and industrial vision.
The question arises why Dheerubhai had so much faith and trust in middle class small investors? It was not a blind gamble. He had carefully worked out and calculated the savings of the middle class Indians. Then, he investigated the minds of those people at various levels and found out their eagerness to invest their small savings in worthwhile ventures that gave him confidence and a new chapter in Indian business culture was written. A new category of investors was born.
In 1977 Reliance paid its initial investors a 43% annual profit even when the profit level of share market was quite low and investment was not safe also. Dhirubhai enthused his small investors with high returns and earned glory as a hero of share holders. He had created such a faith and trust in investors for him which would prove very profitable in future.

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