Dhirubhai Ambani and Reliance- Leadership Essay Example

time when most companies in India were owned by the government, and the private players were given step-motherly treatment by the government while offering licenses and permits. Similarly, when most Indian business houses depended on government – owned financial institutions for funds, Dhirubhai raised capital from the public by offering shares of his companies.

Building Reliance Dhirubhai was born on December 28, 1932, to Hirachand Govardhandas Ambani and Jamunaben Hirachand Ambani. He was the middle of five children, three boys and two girls (Refer Exhibit II for the Dhirubhai family tree). His father was a local school teacher in a village called Chorwad in the Junagadh district of Gujarat. After his matriculation in 1949, Dhirubhai left for Aden, (now in Yemen) at the young age of 17. His first job was to fill gas and collect money at a Shell petrol station, earning Rs 300 a month.

Within a few years, he rose to the position of a sales manager (Refer Exhibit III for Chronology of Events) in the same company. [pic][pic][pic][pic][pic][pic]After working for eight years in Aden, Dhirubhai decided to come back to India and start something on his own. On December 31, 1958, he came back to Mumbai and started the Reliance Commercial Corporation (RCC) with a borrowed capital of Rs. 15,000. RCC was mainly involved in exporting commodities like ginger, cardamom, pepper, turmeric, and cashewnut. Using his connections in Aden, he exported a wide range of commodities to Aden.

Aden, being a free port attracted lot of exports. In the mid 1960s, the Government of India (GoI) introduced an export promotion scheme under which the earnings from the export of rayon fabrics

could be used for the import of nylon fiber. This attracted Dhirubhai's attention and he decided to switch from spices to textiles. In 1966, he set up a spinning mill at Naroda 20 kms from Ahmedabad with borrowed funds of Rs 2,80,000 and registered it (Reliance Textile Industries) as a powerloom unit with a paid up capital of Rs 150,000.

Another program, the High Unit Value Scheme introduced by the GoI in 1971 gave tremendous boost to Reliance textiles. The scheme allowed the import of polyester filament yarn against the export of nylon fabrics. RCC was benefited the most from this scheme and its exports constituted more than 60% of exports under this scheme. There were rumors that the scheme was solely devised for Dhirubhai. Dhirubhai strongly denied the allegations saying that Reliance cannot be blamed for taking advantage of the scheme 'when others kept their eyes shut. He said "I do not consider myself cleverer than my colleagues in the industry. If there was a very large margin of profit, why did they not take advantage of it? "1 When the High Unit Value scheme ended in 1978, Dhirubhai focused his attention on the domestic market. During this time, Reliance Textiles was not a very well known name in the domestic market. His first priority was to establish the Vimal2 brand, under which Reliance Textiles sold its fabrics in India.

An advertising programme was launched to facilitate its entry into the domestic market. [pic][pic][pic][pic][pic][pic]Dhirubhai knew that a strong brand image was crucial for winning the consumer's confidence. To achieve this objective, Reliance tried to emphasize the superior quality of its fabric in all its

advertisements. Besides this, Dhirubhai also took steps to develop an efficient distribution system for Vimal as he found that the existing marketing channels were inadequate and inefficient. However, things were not that easy.