The Polyester Prince (6 page)

In March 1954, Dhirubhai married at the age of 22, in a match arranged by his mother (his father had died in 1951) but which Dhirubhai himself had supervised. His partner was Kokila Patel, the daughter of a postmaster in Jamnagar, the port on the western side of Kathlawar. Her family was not particularly wealthy, so it was not a financially advantageous match for Dhirubhai. But Kokilaben’ was also a Modh Bania, as the strict caste endogamy of the time demanded and her character complemented that of Dhirubhai, a solid home anchor very much, grounded in traditional values and religious piety.

Although he was doing well, Dhirubhai was far from happy with his position as an employee. ‘I saw in him he was somebody that was different than others,’ recalls M. N. Sanghvi, who worked alongside Dhirubhai in the Shell division and later went to work for him back in India. ‘I could see he wanted to make something of himself.’ His room-mate Susheel Kothari also remembers the ambition. ‘Right from the beginning he was determined to do something big,’ Kothari said. ‘He was never comfortable in service. He was a born businessman.’

After office hours, which finished at 4.30 in the afternoon, Dhirubhai would invariably head for the Aden souk. Initially he just watched the Arab, Indian and Jewish traders in action. Later he began taking positions in all kinds of commodities, particularly rice and sugar, in gambles against rises and falls in prices at time of delivery Doing business on one’s own account was strictly forbidden to Besse employees by the terms of their contract, and his older brother Ramnikbhai disapproved, so Dhirubhai would simply say he was ‘studying the market’.

Dhirubhai made some profits, and learned the fundamentals of business and money. But he also made some near disastrous mistakes, which almost wiped out his capital. On one occasion he suffered a tight financial squeeze when an incoming cargo of sugar was damaged by sea-water and his customer refused to accept delivery Pending settlement of his insurance claim, Dhirubhai had to pass the hat among Besse colleagues for loans to bail himself out.

One particular ally was a Besse employee named jamnadas Sakerchand Depala, a relative by marriage, who lent Dhirubhai 5000 shillings on this occasion. Depala was close to Dhirubhai and the two usually had lunch together, even after Dhirubhai had married. It was an odd relationship, another attraction of opposites. Depala was not a worldly man and lent money again to Dhirubhai for his ‘market studies’, but had a strong influence nonetheless. ‘Jamnadas was morally in control of Dhirubhai,’ said Susheel Kothari, who had been in the same bachelors mess with Dhirubhai. ‘If Dhirubhai was drinking too much, no one else could stop him. He’d just swear at them. Kokilaben used to call Jamnadas and Dhirubhai would listen to him.’

According to one version of events, Jamnadas made considerable sacrifices for Dhirubhai. One one occasion, so this story goes, Jamnadas and Dhirubhai were reported to Besse management for their private deals, and got suspended from service. Jamnadas took responsibility and resigned from service, allowing Dhirubhai to complete the seven year’s service that earned him the right of residence in Aden.

Another story told by ex-Besse staff is that, after leaving the company, Jamnadas continued to invest in rice and sugar deals masterminded by Dhirubhai, and lost heavily, to the point of losing most of his capital. Jagani remembers Jamnadas being ‘very depressed’ around 1961. Whatever the truth of this, Dhirubhai continued to act as though he was in debt to Jamnadas. Some years later, Jamnadas came back to India and was given a shop selling textiles for Dhirubhai. After a while Jamnadas stopped coming to work, but Dhirubhai saw that his salary was paid until his death in 1987.

Dhirubhai left Aden in 1958, with his seven years service and right of residency as a failback, to try his hand in business back in India.

The house of Besse lasted only another nine years, as long as British rule in Aden, which was being eroded by the sandblast of pan-Arabic nationalism. Some of the transistor radios sold at Steamer Point found their way to the villagers of the Yemen hinterland, who picked up President Nasser’s message of Arab nationalism through Radio Cairo.

Resulting hit-and-run attacks by rival liberation fronts made Aden unsafe for foreigners.

In the second half of 1967, British forces pulled back into an ever – tightening perimeter until the rearguard was lifted out by helicopter to a naval task force offshore on 29 November 1967.

The territory fell unconditionally to the National Liberation Front. It applied its harsh version of Marxism-Leninism, abolishing private property and nationalising most foreign companies. By then the closure of the Suez Canal in the 1967 Arab-Israel war had cut Aden’s bunkering business. Racked by periodic coup attempts and wars with northern Yemen, the new state of South Yemen became an economic back-water and haven for international terrorists-a modern version of the pirates’ lair the British first subdued.

Besse & Co was among the companies appropriated by the new regime. From retirement in France, former director Peter Besse wrote in 1996 that the ‘vast trading empire … of my father collapsed on the arrival of various “People’s Democratic Republic” governments. Today nothing is left.

At the end of 1958, Dhirubbai returned to India with his wife Kokilaben and first child, a son named Mukesh. They were expecting their second child (another son, Anil, born in June 1959, to be followed by daughters Dipti, born in January 1961, and Nina, born in July 1962). From all his years with Besse & Co and all his evenings ‘studying the market’

he had accumulated savings of just 29000 East African shillings-then worth about US$3000-which, as his Besse colleague Susheel Kothari had reminded him, would be just ‘chutney’ back in his homeland.

Dhirubhai was determined to go into business on his own account. At first he looked at Rajkot, the port city in his native Saurashtra facing the Rann of Kutch. Krishnakant Vakharia, who was then practising law in Rajkot, remembers that Dhirubhai came to visit. ‘He was toying with the idea of a dealership in automobile spare parts there,’

Vakharia said. ‘I had a friend who was doing just that, and who was not doing very well.

So I advised Dhirubhai that he should not go into this business, and instead of Rajkot he should go to Bombay.’

At Dhirubhai’s request, Vakharia accompanied him down to Chorwad and stayed there a few days while Dhirubhai sounded out friends and acquaintances about ideas and help.

He found support in the family of Chambakial Damani, a second cousin (Dhirubhai’s grandfather and Damani’s grandmother were brother and sister) who had been working in Aden for family companies at about the same time that Dhirubhai was there. One business, Madhavas Manikchand, had imported textiles and yarns from India, ran a transit business into Ethiopia, and held the agency for Bridgestone Tyres. The other, Anderjee Manekchand & Co, had imported textiles from India and Japan. When necessary, Dhirubhai had used the names of these firms during his own after-hours trading.

Damani’s father, Madhaylal Manikehand, had closed his businesses in Aden and Ethiopia on retiring in 1957, and decided to put Rupees (Rs) 100 000 into a trading business for his son and Dhirubhai in Bombay. Vakharia saw the agreement concluded in his presence, and returned to Rajkot.

Dhirubhai and Chambaklal called their new business Reliance Commercial Corp. The first office was a room of about 350 square feet in Narsinathan Street, in the crowded Masjid Bandar district of Bombay. It had a telephone, one table and three chairs. If the two partners and their initial two employees were all present, someone had to stand.

At first, the business traded spices back to the partners’ contacts in the souk of Aden-betel nut and curry ingredients – and shipped some cotton, nylon and viscose textiles to Ethiopia, Somalia and Kenya. But local contacts led them quickly into the frenetic and potentially profitable business of trading synthetic yarns – one of more than 60 commodity markets serving all of India that were located in Bombay, nearly all of them run by Gujaratis. The Rajkot lawyer Vakharia had introduced Dhirubhai to a fellow activist in the Socialist Party, a successful yarn trader called Mathura Das Mchta. And Dhirubhai’s talented nephew Rasikbhai Meswani (the son of Dhirubhai’s older sister), had begun trading in yarns a couple of years earlier.

At the tiny Masjid Bandar office, Dhirubhai began to assemble a team that stayed with him for decades as Reliance grew. They included Meswani, older brother Ramnikbhai who had also returned from Aden, younger brother Nathwarlal (Nathubhai) on completing his education, and two former schoolmates from Junagadh named Rathibhai Muchhala and Narottambhai Doshi. Dhirubhai also enlisted the services of old acquaintances from Aden, including Liladhar Golkaldas Sheth, who had been a dealer in textiles, coffee and foreign exchange in Yemen, Burma and Aden (suffering several bankruptcies along the way) before settling back as a foreign exchange dealer in Bombay in the 1950s.

Dhirubhai quickly became a familiar figure around the streets of Pydhonie, the synthetic yarn trading district of Bombay where Gujarati merchants then did their business sitting on spotless white canvas gaddi floor-coverings, entering trades in compendious ledgers, and consuming endless cups of tea thick with sugar, spices and hot milk. From late morning until about 4 pm, Pydhonie was busy with trading as dealers made forward trades, trying to guess the future price of yarn of this or that micron size.

If cotton and silk had been the materials of India’s textile industry right from the old handloom days to the industrial looms of the early 20th century, by the 1950s the industry and its consumers were hungry for the artificial threads created by modern chemical science. Nylon, viscose and polyester were cheap, hardwearing, quick-drying and creaseproof, and could imitate both cotton and silk.

The problem for yarn dealers at Pydhonie was not usually to find buyers but to secure supplies. The tightening of industrial controls and import quotas since Independence had choked supply of these ‘luxuries’ as the economic Brahmins of New Delhi channelled national resources towards new complexes making capital goods such as power stations and steel mills-what Prime Minister Jawaharlal Nehru called the ‘temples of modern industry’.

India had one viscose factory owned by the Birlas, and one government-owned nylon plant. The first polyester fibre plant did not open until the 1970s. These domestic factories supplied only a small fraction of local demand from textile weavers. Smugglers supplied some of the demand, bringing in yarn by either misdeciaring cargoes at regular ports or simply running small ships to the numerous creeks and beaches of India’s west coast. Made-up textiles were also smuggled as well, via Dubai or Singapore. Indian visitors to Japan’s artificial textile industries, then in their great postwar expansion phase, recall seeing vast production of sari-length material, for which officially there was no open market in the subcontinent at all.

The other source came from the strictly controlled import licences given to registered exporters of textiles, allowing import of raw materials worth a certain percentage of their export earnings. Like many others, Dhirubhai realised that these import or ‘replenishment’

licences (known as
REPS
) were as good as money, even though some of them were officially not transferrable and imports had to be made by the ‘actual user’ of the materials. By paying higher margins than any other traders, Dhirubhai soon became the main player in the market for
REP
licences. The margins were tiny in the trade itself – but his dominance also put him in the position of being able to turn on and off much of the supply of yarn into the Indian market.

Suresh Kothary, whose family business was importing agent for Du Pont products including textile fibres, chemicals and dyes from 1958 to 1993, and also active in yarn trading, remembers first meeting Dhirubbai in 1964 at the Masjid Bandar office.

Dhirubhai would often drop by at Kothary’s shopfront at Pydhonie thereafter, lounging on the white cotton mattress and drinking tea or coffee. They were in effect rivals, as Dhirubhai mostly imported his yarns from Asahi Chemicals in Japan or Ital Viscosa via a long-resident Italian businessman in Bombay, a Dr Rossi, while Kothary handled only the Du Pont product from the United States and elsewhere. Dhirubhai was a sporting rival, Kothary said: ‘He would always say: “This is what I’m going to do, boy!” Whenever he fights an enemy he goes in the open.’ Not everyone in the Bombay textile trade would agree.

Kothary and many others in the Pydhonie market remember Dhirubhai’s intervention in a market crisis in the mid-1960s when spiralling textile prices led government authorities to crack down on ‘speculation’ in the yarn market by banning forward trading, and then arresting traders found to be continuing the practice. ‘Consumers must have complained to the government about fluctuations in prices-some people, about a dozen, were arrested in the market,’ Kothary said.

The trading community was despondent as their colleagues languished all day in the cells of the Picket Road Police Station. Approaches to officials by the Bombay Yarn Markets and Exchange Association got nowhere. Then, late in the evening, Dhirubhai arrived like a storm at the police station, shouting greetings to the senior officers, and handing out snacks to everyone. Within an hour, all the arrested traders had been released, and the complaints against them shelved. Kothary can only guess at Dhirubhai’s intervention.

‘The usual-India!’, he said.

Dhirubhai also emerged as saviour of the market when an even greater supply crisis occurred in 1967, Kothary recalled. On a report that ‘actual user’ import licences had been traded and misused, the Customs authorities in Bombay under the then Assistant Collector, a Mr Ramchandani, impounded all incoming cargoes of artificial fibres. The government insisted that whoever imported the yarn had to be the manufacturer who wove it into cloth.

According to Kothary, about 40 million rupees (then about US$5.3 million) worth of yarn was seized. Many traders then defaulted on loans taken out to cover the imports. The entire artificial textile market was paralysed. ‘It could have made us all insolvent,’ Kothary said. ‘This is when I came very closely in touch with Dhirubhai. It was he who saved us all. We fought for about six months. I used to go with him to lawyers day in and day out. We went to Delhi to see Morarji Desai [then finance minister]. That was the time I could see he was a wizard. He used all the ways and means.’