The-Polyester-Prince

By the end of 1986, Dhirubhai was to raise an unprecedented Rs 9.4 billion from thepublic over eight years, including Rs 5 billion from one debenture issue alone. ‘In factthis one company, Reliance,’ wrote Sen Gupta, ‘made significant contributions to thegrowth of the debenture market in the country through its successive issues ofconvertible debentures, a new experiment in running a big business undertakingentirelyon the resources drawn from the public at large without being backed by anymultinational, large industrial houses, or without taking term- loans from financialinstitutions on a significant scale.It was not entirely true that Dhirubhai did not tap the banks, as we shall see, but hisheyday in the capital markets did coincide with the rise of what Indian businessmagazines came to call the, ‘equity cult’s and Dhirubhai can rightly claim some ofthe credit for it.Between 1980 and 1985, the number of Indians owning shares increased from lessthan one million to four million. Among those, the number of shareholders inReliance rose to more than one million by the end of 1985. It was by far the widestshareholder base of any Indian company - and, until the privatisation of majorutilities like British Telecom or Nippon Telephone & Telegraph, probably in the world.It was evidence of a popular following that made many politicians, especially inGuiarat where Dhirubhai had earned local hero status-think twice before denying himanything.Sen Gupta put the sharemarket craze down to the entry of three non-traditionalclasses of investors. One was the Indian middle class, who had forgotten about theirmisadventure in the stockmarket in the Second World War. Another was theexpatriate Indian communities, prospering rapidly in Britain, North America andSoutheast Asia after their miserable expulsion from East Africa in the 1960s, andaugmented by direct migrants qualifying for professional and skilled entry toadvanced economics. Since Pranab Mukherjee’s 1982 budget, these non-residentIndians or NRIs and their companies had been able to invest directly into Indianequities. The third class was the larger landowning farmers, prosperous after thehuge crop-yield increases of the Green Revolution during the 1960s and 1970s, whocontinued to enjoy tax exemption on their income.The equity cult spread from nearly 20 major exchanges. The premier bourse was thecentury-old Bombay Stock Exchange located in Dalal Street, one of the teemingnarrow streets of the city’s Old Fort district where brokers, businessmen,accountants and lawyers crammed into tiny offices in old stone buildings with theremnants of charming wooden and wrought-iron balconies.Although surmounted by a 28-storey office tower of cement, steel and glass, thetrading floor in the podium operated until the mid-1990s much as it had done in the19th century. Some computer monitors flickered on the periphery but no oneexpected them to keep up with the frenetic trading done by brawling, shouting,gesticulating ‘robbers’ in blue jackets, or with the thriving after-hours kerb marketwhere shares were traded informally.The paperwork was also miles behind the action. Share transactions were recordedon scraps of paper at brokers’ offices, but transfers were not necessarily lodged withcompany registrars immediately. Settlements came every second Friday, causing a