The Polyester Prince (8 page)

Ever since the emergence of Vimal, he has developed the Midas touch. Everything he touches becomes gold. Everything he starts blossoms into success. Naturally, nothing succeeds like success.’

Dhirubhai Ambani remained in Bombay because manufacturing was only one facet of his business. For a decade, the textile plant at Naroda was supportive and subsidiary to his yarn trading activities. In addition, he was steadily augmenting his skills at breeding money from money, and at wielding political and bureaucratic influence on government policies and their interpretation. Dhirubhai was never simply an industrialist, a trader, a financial juggler or a political rnanipulator, but all four in one.

From his earliest days in Junagadh, Dhirubhai had learned that relationships were the key to unlocking help, and that the law could be argued with. ‘One thing I have noted with Dhirubhai is that if he starts an acquaintance with someone he will continue it,’ said Manubhai Kothary, the trade group Sasrnira’s president. ‘He never throws away any relationship.’

He was endowed with a photographic memory for faces and names, and any contact-however fleeting-he could try to turn into a common background on which some affection could be based. For example, Sir Nicholas Fenn, who was British High Commissioner in New Delhi in the early 1990s, was amazed to find Dhirubhai claiming him as an old friend from Aden. In the early 1950s, Fenn had been a Royal Air Force pilot flying transports through to the Far East and Australia. Dhirubhai remembered him from refuelling stops at the Shell facility at Aden’s airport.

Dhirubhai’s philosophy was to cultivate everybody from the doorkeeper up. ‘I am willing to salaam [bow down to] anyone,’ he told a magazine interviewer in 1985, in a statement that shocked many readers for its bluntness.

In the India of economic plans and government control of the commanding heights’ that had developed by the 1960s, a lot of grovelling was required for businessmen to get the clearances they needed. Inevitably, the bureaucratic signature needed to move a file from desk to desk came to have a price on it as well. The Congress Party had degenerated from a movement of freedom fighters into a dispenser of patronage, with ministers allocating resources and licences while the bureaucracy worked out ways to make the process look objective.

After getting on his feet back in Bombay, Dhirubhai used to make frequent trips to New Delhi. He frequently went in the company of Murli Deora, a fellow yarn trader who was then working his way up the Congress Party machine in Bombay. Deora later became the head of the Bombay Municipal Corporation-the mayor-and then for many years the representative for South Bombay, the area containing the business district and elite apartments, in the Lok Sabha (the lower house of parliament).

Dhirubhai and Deora used to catch an early flight up to Delhi, and park their bags with a sympathetic clerk at the Ashoka Hotel while they did their rounds of politicians and bureaucrats to speed up decisions on import licences. Too poor to afford an overnight stay, they would collect their bags and fly back to Bombay the same evening.

Later, Dhirubhai could afford to keep a room ready at the Ashoka, a government hotel built in a vaguely Moghul monumental style. His nephew Rasik Meswani also came into the lobbying activity, and eventually selected a canny South Indian, V Balusubramaniam, as full-time lobbyist for Reliance in New Delhi.

For the lesser bureaucrats, journalists and others who helped promote the company’s interest in various ways, Dhirubhai’s standard gratuity was a suit or sari length of material made by his factory Gradually Dhirubhai also learned the channels for large-scale political donations in the top echelons.

In 1966, Indira Gandhi had become prime minister following the sudden death in Tashkent of Lal Bahadur Shastri, who had been India’s leader since the death of her father jawaharlal Nehru in 1964. With her only ministerial experience the Information portfolio under Shastri, but a lifetime of watching her father and her late husband Firoze Gandhi in politics, Indira was well versed in Congress Party machinations but had a shallow grasp of policies. Power steadily exacerbated a deep psychological insecurity and a melancholic nature that led her to place inordinate trust on unworthy people in her inner circle, as well as on her headstrong son Sanjay, who was extorting funding for his pet scheme of developing an indigenous ‘people’s car’.

Among the sweeping economic changes of 1969 was one small legislative amendment that had the effect of entrenching corruption, though its ostensible intention had been the opposite. Until then, a section of the Companies Act allowed directors to make political contributions to any party. This was repealed in 1969. As one of the officials who supervised the amendment later admitted, this led to political payments by ‘black’ money.

‘Companies had to generate black funds by under/over invoicing, fictitious sales etc. A pattern of wholesale corruption and large-scale corporate malpractices, through double-accounting, over - invoicing and under-invoicing, came into being, creating massive unaccounted-for and therefore untaxed funds.”

One of the conduits to Indira Gandhi was a private secretary named Yashpal Kapur, a Hindu the Western Punjab in the 1947 Partition who displayed all the financially grasping tendencies this community brought across to Delhi. In “All these Years”, her memoir of the Nehru and Indira Gandhi years, the well-connected magazine publisher Raj Thapar recalls Kapur thus: ,”… one glance at him and you felt the grease all over you. He was smooth and unintelligent, outwardly vacuous and inwardly scheming who then only performed what we called the chal-pani [tea-making] jobs, or so we thought in our innocence.’

By 1971, Thapar noted how Kapur’s role had taken on a weird’ shape. ‘Yashpal Kapur, that oily cupbearer, was growing in stature by the minute and his corruption was becoming legend and his ability to get Indira to sign on the dotted line became the bazaar gossip,’ she wrote. Thapar’s bureaucrat husband Romesh, who early had been a trusted confidant of Indira, felt duty-bound to tell Indira. ‘He sought an appointment, went to the office, gave her a run-down of what the average person was thinking, of how the PM’s office now harboured a nest of corrupt people led by the favoured Yashpal. She was furious. “You know I would never touch a penny.” “Maybe, but you are seen as the queen bee. The others do the collecting.”’

Thapar went on:

“…An unending string of stories were current about Yashpal’s power, how he was sought by the high and mighty, how he was well in with Sanjay who was beginning, bit by nibbling bit, to tamper with the administration in his favour. Yashpal was of course no longer in the PM’s office. His place had been taken by his nephew, R. K. Dhawan, who was rapidly to assume much vaster powers than his erstwhile uncle and together they were to manipulate patronage in this vast country.”

Dhirubhai not only cultivated Yashpal Kapur, says one old acquaintance, ‘he practically purchased him’. In due course, the relationship passed on to R. K. Dhawan, who moved eventually from the prime minister’s office under Indira and then Rajiv Gandhi into parliament and ministerial portfolios himself.

Over the years, Dhirubhai developed close ties with politicians in many parties. These included figures such as Atal Bihari Vajpayee, senior leader of the Hindu-nationalist Bharatiya Janata Party who became prime minister of a brief minority government in 1996, and several on the left such as Chandrashekhar, another short-term prime minister in 1990-91. But his strongest connections were always with the Gandhi ‘coterie’ within Congress, even though he never liked Indira’s socialistic policy phase in 1969-70, and then later with P V Narasimha Rao who took over the Congress mainstream and prime ministership in 1991.

The links were not always based on money, however. Dhirubhai is widely acknowledged to be a masterful exponent of his own business visions, which have generally been more farsighted than those of almost anyone else among India’s business leaders. He was quick to grasp that many Indian politicians, officials and bankers could be captivated by intellectual excitement or flattery at being in the inner circle of such an emerging tycoon.

Should such individuals later show signs of self-interest or personal financial difficulty, Dhirubhai or one of his lieutenants would pick up the signals. A post-retirement job, a business opportunity for a child, indirect funding or a burst of inspired publicity might then follow for the person concerned.

Dhirubhai also played on the perception that he was an outsider and ‘upstart’ who deserved help to break through the glass ceilings of vested interest and privilege in the business community. That there was an inner circle in the ‘Licence Raj’-the allocation by New Delhi of licences to set up factories and expand production capacity-was evidenced in 1967 with a report by a Bombay University economist, R. K. Hazare, to the Planning Commission which revealed that the Birla group of companies had received 20 per cent of the licensed industrial investment approved by the government between 1957 and 1966. The early support given by Ghansyam Das Birla to Mahatma Gandhi had certainly paid off in the independent India ruled by Congress. Writing in 1981 on Birla’s 88th birthday, the journalist T N. Ninan noted that the Biria companies had multiplied from 20 in 1945 to about 150. ‘If any industrial house benefitted from the licence-permit raj,’ wrote Ninan, ‘it was the house that Birla built.’

Birla’s rapid expansion contrasted with the moderate growth of the Tata group, the Parsi-controlled empire that had grown strongly under British rule. The then head of Tata, J. R. D. Tata, told an interviewer: ‘I think it wrong for a businessman to run newspapers [the Birlas had set up The Hindustan Times, the strongest paper in New Delhi], wrong for him to play a political role … But it does seem that others who do not mind mixing politics with business have done extremely well for themselves.’

For G. D. Birla, his political connections and the ostentatious philanthropy that saw various Birla institutes and garish Hindu temples built around India were all supportive of his preordained role. As the Bhagavad Cita says, every man must do his duty, which means if you are a wealthy man, you must do your duty by your wealth,’ the Birla patriarch reasoned. A businessman’s karma [fate] is to amass wealth and his dharma [duty] is to provide for the general welfare. If political action is involved in this, I don’t see why I should fight shy of it.’

One of Dhirubhai’s earliest backers, the banker and politician T A. Pai, falls into the category of intellectual sympathiser. Pai came from an extraordinary upper-caste family based in the tiny village of Manipal on the Karnataka coast, far south of Bombay. It is still an out-of-the-way place, on a barren hilltop overlooking the sweep of palm trees and exposed beaches fronting the Arabian Sea. In 1925 the Pai family had established the Syndicate Bank there. By the mid-1960s it was the tenth largest Indian bank, with some 190 branches. As well as bankers, the Pais were educationists and used their wealth to found a college at Manipal in 1942. It has since grown into one of India’s largest private universities, attracting fee-paying students from Malaysia, the Middle East and the West Indies.

The Pais prided themselves on being discoverers and nurturers of talent. A small museum at Manipal is devoted to the family patriarch T. M. A. Pai (older brother of T A. Pai) and his teachings. One cherished precept: ‘A pygmy nourished well can become a giant.’, According to K. K. Pai, a family member who eventually became general manager of the Syndicate Bank, Dhirubhai was introduced to TA. Pai in the mid-1960s by a former bank employee named H. P Rao who was an insurance agent. The bank was interested in developing its foreign exchange activities, and began handling some transactions for the young spice and textile trader. ‘Our first impression was that he was very enthusiastic, very enterprising, a man of ideas,’ Pai said. ‘From the beginning I had the impression he was a go-getter. He was very persuasive, very convincing in his arguments. He was able to present his case and business proposals very clearly. He gave me the impression he was reliable and knew what he was doing.’

The Syndicate Bank became the main financier for Reliance Textile Industries when it started manufacturing soon after, in 1966, providing much of the Rs 1,5 million needed to buy the first four knitting machines. Another early backer was the Industrial Credit and Investment Corporation of India (
ICICI
), whose chairman Harkisan Das Parekh, another Gujarati, also took a shine to Dhirubhai’s big schemes.

Dhirubhai continued to impress the Pais by his insistence on the best equipment and personnel, as well as his knowledge of the market and its trends. He also made conspicuous donations to the educational institutes run by the family. Throughout the late 1960s, Dhirubhai kept in close touch with T A. Pai, making sure he was among the first to call whenever the bank chief visited Bombay from Manipal, and to give Pai advance notice of ‘ any major initiatives. Pai’s nephew Ramdas Pai, who later became president of the Manipal Academy of Higher Education hers Dhirubhai coming to Bombay’s airport in 1968 to g’reet him on his first trip back from studies in the United States. T A. Pai in turn promoted Reliance where he could, even to the point of carrying around samples of its Vimal-brand material in his briefcase to show others.

The bank continued to be the major lending institution for Reliance even after Indira Gandhi nationalised it and all India’s other leading banks and insurance firms in July 1969. Although the Pais were unhappy about losing their asset, family members like K. K. Pai continued to hold the top executive positions for many years. T A. Pai’s policies of directing credit to small entrepreneurs, agriculturalists and business newcorners-which built up a portfolio of very small but sound loans for the bank-were exactly what Indira had hoped to achieve by the bank nationalisation generally Ironically, the government takeover led to the steady bureaucratisation of management and lending directed by political connections rather than commercial viability. This destroyed the soundness of the Syndicate Bank and all the other 20 nationalised banks.