×
Home Companies Industry Politics Money Opinion LoungeMultimedia Science Education Sports TechnologyConsumerSpecialsMint on Sunday
×

Indian to the core, and an oligarch—meet the ‘Chairman’

Indian to the core, and an oligarch—meet the ‘Chairman’
Comment E-mail Print Share
First Published: Sun, Jun 15 2008. 09 48 PM IST

Conscience-keeper?: Ambani with daughter, Isha, at an Indian Premier League match. She has questioned Reliance’s environmental record
Conscience-keeper?: Ambani with daughter, Isha, at an Indian Premier League match. She has questioned Reliance’s environmental record
Updated: Sun, Jun 15 2008. 09 48 PM IST
Mumbai: At a recent cricket match here, Mukesh D. Ambani sat in his private box quietly watching the team he owns, the Mumbai Indians. He seemed oblivious to the others around him: his son cheering wildly, his wife draped in diamond jewellery and a smattering of guests anxiously awaiting the briefest opportunity to speak with him.
A minor bureaucrat stood a few rows back, strategizing with aides about how to buttonhole “the Chairman,” as Ambani is sometimes called. Waiters in baggy tuxedoes took turns trying to offer him a snack, but as they drew near became too nervous to speak.
Conscience-keeper?: Ambani with daughter, Isha, at an Indian Premier League match. She has questioned Reliance’s environmental record
In the last century, Mohandas K. Gandhi was India’s most famous and powerful private citizen. Today, Ambani is widely regarded as playing that role, though in a very different way. Like Gandhi, Ambani belongs to a merchant caste known as the modh banias, is a vegetarian and a teetotaller and is a revolutionary thinker with bold ideas for what India ought to become.
Yet Gandhi was a scrawny ascetic, a champion of the village, a sceptic of modernity and a man focused on spiritual purity. Ambani is a fleshy oligarch, a champion of the city, a burier of the past and a man who deftly—and, some critics say, ruthlessly—wields financial power. He is the richest person in India, with a fortune estimated in tens of billions of dollars, and many people here expect that he will be the richest person on earth before long.
Although he lacks a politician’s silver tongue—he can be a nervous public speaker, and his diction can be halting—he talks more like a father of the nation than a corporate executive. Describing his goals, he says these are for India’s benefit as much as they are for his sprawling company, Reliance Industries Ltd.
Transformer: Ambani with his father, the late Dhirubhai Ambani
“Can we really banish abject poverty in this country?” he mused aloud in a rare interview at his headquarters here. “Yes, in 10, 15 years we can say we would have done that substantially. Can we make sure that we create a social structure where we remove untouchability? We’re fast moving to a new India where you don’t think about this caste and that caste.”
As millions of Indians graduate from burning cow dung for energy to guzzling oil, Reliance is ploughing billions of dollars into energy exploration and is building the world’s largest oil refinery. It has also opened a chain of nearly 700 stores selling food and various wares; Ambani promises that it will funnel money from the flourishing cities into the struggling agricultural heartland. He envisions Reliance, with $39 billion (Rs1.67 trillion) in revenue, as providing incomes to 12-30 million Indians within the next five years by buying from farmers and employing new workers in its stores.
And as Mumbai, Ambani’s hometown and the commercial and entertainment capital of India, has grown ever more populous and ever less livable, he has proposed that Reliance simply build a new, improved city across the harbour.
Ambani, 51, who feuded with his younger brother after their father died six years ago, took control of roughly half of the divided company. Even as he enters new areas, he has maintained his family’s dominance in its petrochemical, oil and gas and textile manufacturing businesses.
He maintains a low public profile; even those close to him describe him as inscrutable. On the one hand, he is seen as a man whose heart bleeds for India. He is motivated by “the ability to change the face of the country,:" said K.V. Kamath, the CEO of ICICI Bank Ltd and a long-time financier and friend of the Ambanis. “That is the biggest kick anybody would get today—that they could touch the lives of a large number of these billion people and make things better for them.”
On the other hand, Ambani is also known as someone who lets little stand in his or Reliance’s way.
“Remember: these guys all grew up in the Licence Raj,” said a close friend of the tycoon, referring to India’s decades-long experiment with rigid state control over the economy. “They grew up as lotuses from the filth. It makes them tough, it makes them suspicious, it makes them vindictive at times, and it makes them come out in a hurry. They always see life as, ‘Oh God, better not miss an opportunity.”’
“When they were growing up,” added the friend, who requested anonymity for fear of upsetting Ambani, “you didn’t get a second chance.”
Emblematic of his ascent is the towering residence he is building on what was once known as Altamount Road, one of the most exclusive streets here. Hundreds of feet tall, it will offer several levels of parking, a multi-tiered gymnasium, a ballroom, a theatre, ample living and guest quarters, and a helipad on the roof. (Although the price tag for the residence has drawn estimates as high as $2 billion, a Reliance spokesman said it would ultimately cost $50 million to $70 million.)
For generations, Altamount was a favoured address for India’s Anglicized elite, a group British imperialists groomed in their own image. To a 19th-century British official, Thomas Babington Macaulay, they were “interpreters between us and the millions whom we govern; a class of persons, Indian in blood and colour, but English in taste, in opinions, in morals and in intellect.”
As time went on, the elites were steeped in British culture, spoke with Oxbridge accents, pooh-poohed Bollywood films and danced only to British and American music. Then, in the 1990s, Bombay changed its name to Mumbai, and Altamount was renamed S.K. Barodawalla Marg. Neither name has stuck with everyone, but the changes were part of an emerging movement to purge India of its colonial legacy.
Such changes accompanied the rise to power of a new class of Indians who want to live and work and raise their children in India, who are tethered to Indian values, food and popular culture and who are unapologetic about their indigenous tastes. The Ambanis are this class’ first family.
Many other Indian business families have been rich for generations, and their scions don finely cut suits and flaunt fussy tastes. Ratan Tata cruises down Marine Drive on Sundays in fast cars and favours Hermes ties with matching handkerchiefs. Vijay Mallya is said to be trailed in his home by a butler holding a silver tray with a cigar and a Scotch. Adi and Parmeshwar Godrej are famous for soirees that attract Hollywood stars.
Ambani comports himself quite differently. Among family members, he prefers speaking Gujarati to English, friends say. He may ask colleagues to stop at the temple with him during business trips to partake in a ritual Hindu prayer. He loathes Western suits, preferring a white short-sleeved shirt, black trousers and black shoes that resemble sneakers cross-bred with office wingtips.
His idea of entertainment is not ballet but Bollywood; he watches as many as three films a week at home in a private theatre. “You need some amount of escapism in life,” he says. “Those two or three hours give you relief.”
He has a legendary appetite, but mostly for the food of the bustling Mumbai streets. He has been known to walk out of fancy restaurants in search of dosas, south Indian crepes sold by the roadside. And he carries those preferences with him when he travels.
For Ambani, it’s all a matter of comfort food.
“Personally, I still have to eat my dal, roti, chava l,” he says, using the Hindi words for lentil soup, flatbread and rice. “I just have not developed those tastes.”
He recalls “a lot of emulation” of Western ways surrounding him as a child. “My view was: ‘What the hell, man! We can do what we feel like.’ I think what has changed now, and it is changing in multiple generations, is this self-confidence and self-belief.”
His preferences reflect a wider cultural transformation in India, admirers say. “If you look at his interests, they’re very rooted in India,” says Nandan M. Nilekani, co-chairman of Infosys Technologies Ltd, a leading outsourcing company in India. “He’s not trying to impress anyone else. It’s part of a broader shift in self-confidence that is happening, where people are no longer looking at Westernized symbols of having arrived.”
The foundation of the Ambanis’ wealth was laid relatively recently, when Ambani’s father, Dhirubhai, opened Reliance’s doors in 1958, the year after Ambani was born.
The father started the company in a tiny, sparsely furnished trading office in Mumbai, first exporting spices to Yemen, then entering the yarn trade, a business that required special canniness. At that time, the government was severely restricting large-scale manufacturing, so importing yarn required hard-to-get licences and creative manoeuvring around the bureaucracy.
Ambani and his younger brother, Anil, spent their childhoods in the downmarket Bhuleshwar neighbourhood, in a two-bedroom apartment in a humble building that Mumbai residents call a “chawl”: a tenement obscured from major roads by more attractive towers. Metal grates still cover the windows and, in a country where a maid is a hallmark of middle-class life, the neighbourhood’s chores fall to homemakers who flog mattresses clean and scrub dirty clothes in soapy buckets.
It is customary in the chawls to live communally: anyone’s children are everyone’s children, and as a child Ambani would visit a neighbour’s house to feast on puris, small discs of fried wheat. In that house one day, a bathroom door slammed shut and severed half of his left pinky. Times were tight in his youth, and he went without an allowance. Friends say, and Ambani agrees, that growing up as he did gave him an edge over many business peers: While he would go on to enjoy all the privileges of a second-generation billionaire, his early childhood instilled the combative mentality of an outsider typically found among first-generation entrepreneurs.
“All of us, in a sense, struggle continuously all the time, because we never get what we want,” Ambani says. “The important thing which I’ve really learned is how do you not give up, because you never succeed in the first attempt.”
Reliance was thriving by the late 1960s, and the family moved out of the chawls and into one of Mumbai’s best neighbourhoods. But his father, who had never finished high school and worried that his children might grow up too pampered, hired a tutor whose responsibility was to spend three hours a day taking Mukesh, and later his siblings, on working-class field trips: riding public transportation, buying tickets at the rail station. Once a year, the tutor arranged a visit to a village for about two weeks.
It was “one of the best things that happened to me in my life,” Ambani said of the field trips. “We never studied. We went out and learned how to play hockey. And we went by bus, and we went by train, and we said, ‘This is what life looks like.”’
Years later, when Ambani enrolled in an MBA program at Stanford, his father clung to the belief that real learning came in the trenches, not in academic enclaves like Palo Alto. He summoned Ambani home in 1980, halfway through the two-year program, to take charge of a yarn manufacturing project.
Working in an Indian village, he won high praise from some of those around him. He slept in a trailer on site and juggled an attention to detail with big dreams. “I found him an extremely receptive listener who was learning all the time,” said Kamath, a lender to the Ambanis at the time.
Friends of Ambani say the plant’s completion, on schedule, marked his emergence as his own man in his father’s burgeoning corporate empire. By then, Reliance was already one of India’s boldest companies, combining a heady vision for the future with the brass-knuckle tactics required to get there.
In setting up the yarn factory, Ambani also displayed the first glimmers of his management style. The close friend who had spoken on the condition of anonymity compared Ambani to the mom-and-pop traders who populated his Gujarati caste ancestry: “He’s a guy who likes to get his hands dirty,” he says. “He is a shopkeeper in many ways. He wants to sit at the till. He wants to see what’s going on.”
As Ambani grew older, Reliance entered a raft of new businesses, gaining more power and placing ever bigger bets on nascent industries. As the eldest son in a traditional Indian family, he helped oversee the company’s diversification into petrochemicals, then energy, then cell phones. His father made him a board member at the age of 17 or 18, he says; and because he was involved with Reliance when it was “just a textile company,” he says, he has always felt that he built it with his father, rather than simply inheriting it.
“My big advantage was to have my father accept me as first-generation,” he says. “He treated me like a partner, saying, ‘OK, let’s go do this.’ And more than that, he gave me the full freedom, the ability to bet the house. So in 1980, he was saying, ‘Here, take Rs80 crore”’ —about $100 million then —“‘and build a polyester plant.”’
Over the years, Reliance morphed from a small family business into a publicly traded empire, adopting new standards of corporate governance, publishing glossy annual reports and signing up shareholders across the nation. By the time the elder Ambani died, in 2002, he had become a legend, mourned by throngs of ordinary Indians winding through Mumbai's streets. The socialist, Gandhian regime he challenged had yielded, beginning in the 1990s, to the kind of bare-knuckles capitalism he had zealously advocated.
Arun Shourie, a politician and former cabinet minister who in his younger days as a journalist had publicly crusaded against Reliance and what he considered to be its heavy-handed business practices, acknowledged a year after the elder Ambani's death that he had made a “180-degree turn” in his view of the company. “They set up world-class companies and facilities in spite of those regulations,” he said in a speech in 2003. “By exceeding the limits and restrictions, they created the case for scrapping those regulations. They made a case for reforms.”
In 2004, two years after the elder Ambani died, his sons began battling each other for control of Reliance. Their mother, Kokilaben, also a major shareholder, ended the squabble in 2005 by giving younger brother Anil control of Reliance’s newer service businesses like telecommunications, electric power and banking. Mukesh got the portfolio of industrial businesses.
Today, both brothers are respected chief executives, though they are said by friends to speak to each other rarely, if ever. Neither of the brothers publicly discusses the relationship.
Anil Ambani, who friends say struggled to be taken seriously as Ambani’s younger brother, has emerged on his own as a business leader, taking the cellphone business, in particular, to new heights. But it is his older brother, with his gargantuan, quasi-public projects in energy, retailing and urban renewal, who has become the most visible symbol of India’s visceral transformation.
Ticking off one Indian problem at a time, Ambani has proposed for each a Reliance solution. While India was once largely self-sufficient in oil and gas, a swelling middle class is burning ever more energy, forcing India to become an energy importer and straining the country’s development. So he is building a world-class oil refining and petrochemical complex in Jamnagar, in the western state of Gujarat.
The $6 billion facility can already process 660,000 barrels a day, and it has helped India to become self-sufficient in producing finished gasoline —though it still must import crude oil. It is one of the most profitable refineries in the world, and Ambani plans to double its capacity.
Two-thirds of India’s 1.1 billion people still live off the land, and to combat the cycle of poverty that ensnares rural dwellers—while presumably making a handsome profit for his company—Ambani also wants to foment an agricultural revolution.
He has begun building a nationwide network of hundreds of Western-style supermarkets and other retail outlets, hoping to connect them directly with farmers who have traditionally sold to middlemen, many of whom pay less than market prices and are widely regarded as deceitful and usurious.
In some regions, Reliance’s supermarket push has caused grateful farmers to change their habits and become more productive. But in other areas, landowners have protested Reliance’s acquisition of their property; elsewhere, shopkeepers have staged violent rallies against a supermarket chain that they fear will decimate them.
However these challenges are resolved, some businessmen say Ambani has already established himself as India’s great transformer, with a legacy that has much in common with American industrialists of the 19th century.
“When we talk about Rockefeller and Carnegie and all these guys, they really each changed one industry,” said Nilekani, the Infosys co-chairman. “But, if you look at what he’s doing, he’s really changing three or four industries.”
Like Rockefeller and Carnegie, however, Ambani has also gone to great lengths—and, critics say, used tough-minded, combative tactics—to secure his company’s fortunes, as well as its social and political influence.
Drive past the Makers Chambers IV building in Mumbai on a Saturday night, where Reliance’s headquarters are housed, and you often see the lights blazing inside. Ambani routinely enters the office after 11am and stays as late as midnight—even on Saturdays. Employees, eager to follow their leader, usually do the same.
Reliance, like many of its peers, is something of a hierarchical, old-style Indian enterprise, despite its accomplishments. Companies like these are typically run by a big family, whose word is law and whose patriarch's photo, garlanded with flowers, is everywhere. They tend to have a layer of courtiers below the ruling family who are valued for loyalty as much as merit. Playful disagreements are tolerated, but the boss is often insulated from actual criticism.
In addition to keeping a tight rein on employees, the old-style companies tend to work hard at “managing government,” as their executives call it. Sometimes that involves outright bribery of government officials; sometimes it might involve paying the American college tuition of a bureaucrat’s child.
Although rumours that it actively engages in bribery swirl around Reliance, Ambani says it has never paid a bribe or broken a rule. “These are all fables,” he says, dismissing the rumours.
But, he concedes that there are indirect ways for Reliance to curry favour. Although he says Reliance “never” pays the tuitions of bureaucrats’ children, he also acknowledges that foundations controlled by or affiliated with Reliance sometimes have. “Some foundation would have given some scholarship maybe, but that’s all out in the public domain,” he says.
In interviews, two former Reliance employees and other close associates of Ambani, all of whom requested anonymity because they were afraid of jeopardizing relationships with him, say the company also routinely engages in political lobbying and covert monitoring to gain a leg up on its rivals.
To be sure, such practices are hardly uncommon in India. But people in the Indian business scene say few companies match Reliance’s record of having laws changed in its favour and of protecting itself from extensive outside scrutiny. “Everyone is trying to bend the rules,” said Deepak Talwar, a New Delhi lobbyist who has never worked for Reliance but described Ambani as a friend. “They just do it better, with a combination of understanding, relationships and a bit of cash.”
Ambani, however, disagrees with at least one element of Talwar’s calculus. “I don’t think that payments per se work,” he says. “I personally think that money can do very little. And, this has been my experience all across.”
Ambani doesn’t dispute that Reliance tries to exert its influence when necessary, but says that influence-peddling is unimportant relative to its other strengths. “I still think that’s not a critical success factor,” he says. What is a factor is “relationships,” a word that Ambani and his acolytes relish. “We believe in relationships,” he says. If someone helpful to Reliance needs an introduction, consider it done. If they need to use the private jet or gain access to a coveted temple to pray, consider it done.
What most distinguishes Reliance from its rivals is what Ambani’s friends and associates describe as his “intelligence agency,” a network of lobbyists and spies in New Delhi who they say collect data about the vulnerabilities of the powerful, about the minutiae of bureaucrats’ schedules, about the activities of their competitors.
Ambani said in the interview that all such activities were overseen by his brother before they split, and had since been expunged from his tranche of the company. “We demerged all of that,” he says, breaking out in a belly laugh. A spokesman for Anil Ambani declined to comment.
Nonetheless, Reliance, some observers say, still manages to stay very well informed. “Their intelligence on government is very strong,” Talwar says. “If a meeting were to be held and the subject was affecting their business, they would know about it.”
Critics say Reliance has been especially effective at managing the press. Both former Reliance executives, who requested anonymity for fear of angering Ambani, say the company has actively curried favour with journalists to help it track the progress of negative articles. A prominent Indian editor, formerly of The Times of India, who requested anonymity because of concerns about upsetting Ambani, says Reliance maintains good relationships with newspaper owners; editors, in turn, fear investigating it too closely.
“I don’t think anyone else comes close to it,” the editor said of Reliance’s sway. “I don’t think anyone is able to work the system as they can.”
And the net result is plain: although India’s raucous news media have brought down many a powerful person and institution, Ambani and Reliance are rarely the subjects of hard-hitting Indian reporting.
Reliance disagrees, regarding itself as the target of relentless media attacks. “There is malicious and negative stuff being written all the time. So where is the influence?” the Reliance spokesman said. “Ambani has told me that he will never pick up the phone and talk to the owner of a publication to say, ‘Write positive stuff’ or, ‘Stop writing negative stuff.”’
In the old days, if Ambani had anything to tell his father, it was done in the quiet, diplomatic way that an older generation expected. Now a father himself, he has found his own three children blunter. His teenage daughter, for example, questions her father’s environmental record.
“I think that all this is great,” he remembers her saying of his vast empire. “But you know, you should be careful. You are in the plastics business. It’s not one of the greatest. It pollutes a lot. I’d like you to re-evaluate your portfolio.”
Recounting the episode, he laughs, because, with billions of dollars in that business, it may be a little too late.
But, Ambani is indeed thinking beyond his current portfolio. One of the more intriguing ideas swishing around is a quixotic plan for making India a rival to China in manufacturing. The Chinese model consists of large factories in urban areas, populated by millions of migrant labourers who produce goods at cheap prices. Similar efforts have lagged in India, because it remains difficult to acquire land from farmers here, because corruption hinders large infrastructure projects, and because red tape remains so sticky.
Ambani’s vision is to turn India’s weakness on its head. If manufacturing remains small-scale and fragmented, let it stay that way, he says. “The next big thing is how do you create manufacturing with decentralized employment,” he says. “The Chinese have got very disciplined top-down systems. We have our bottom-up creative systems.”
He mentions products like handmade leather sandals from the Sugar Belt a few hours south of Mumbai, tie-dyed Bandhani saris from Gujarat, artisanal pottery, clothes, jewellery and the like. These wares would be produced in rural areas, sometimes in a villager’s own home.
Reliance would forgo manufacturing them and instead teach residents what to make, gather the wares from disparate villages, oversee quality and market and distribute the products.
This is yet another sense in which Ambani, the most unlikely of Gandhians, is vaguely Gandhian. Gandhi was famous for his passion for small-scale rural production, symbolized by the spinning wheel. (It is, of course, unlikely that Gandhi would have endorsed Ambani’s plan to profit on such goods.)
“How do you really bring about, in a country of a billion people, the individuality of every single individual?” Ambani asks. “How do you make sure that you create systems that empower everybody and bring them to their true potential? This is what actually Gandhi taught us.”
“The optimistic part to me,” he adds, “is that now these goals look achievable.”
Given such passions, why not enter the political arena?
“I think I can do much, much more in my particular job,” he replies.
©The New York Times/2008
Comment E-mail Print Share
First Published: Sun, Jun 15 2008. 09 48 PM IST