The-Polyester-Prince

half-hour of panic just before the close. The bears sold 350000 Reliance shares,causing the price to fall quickly from Rs 131 to Rs 121, before Dhirubhai got hisbrokers to start buying any Reliance shares on offer. The more they sold, thenumber got to 1.1 million shares, the more Dhirubhai picked up, ostensibly on behalfof non-resident Indian (NRI) investors based in West Asian countries. Eventually, thefriendly brokers bought over 800000 of the shares sold by the bears.It was an almighty poker game. The bears had sold short-in other words, they hadsold shares they did not own in the expectation that the price would fall and let thempick up enough shares later at a lower price. Reliance itself could not legally buy itsown shares. So who were the NRI investors who arrived so providently on the scenewith more than Rs 100 million (then over US$10 million) to spend?Six weeks later, after several further spells of bear hammering of Reliance shares,Dhirubhai called his opponents -20 cards. Every second Friday, the Bombay StockExchange stopped new transactions while its members settled the previousfortnight’s trades or arranged badla finance to carry them over. On Friday 30 April,Dhirubhai’s brokers used their right under the badla system to demand delivery ofthe shares they had bought for their offshore clients, failing which a badla charge ofRs 25 a share would be levied. The bear cartel baulked, throwing the exchange into acrisis that shut it down until the following Wednesday. In following days the price ofReliance shares rose to a peak of Rs 201 as the bear brokers desperately locatedshares to fulfill their sales, incurring massive losses.By 10 May, the Reliance price started easing, signifying that deliveries had beenmade. But Dhirubhai and his company had clearly arrived. Reliance was henceforthtreated by major news-papers as a ‘pivotal’s stock in the market, and Dhirubhaihimself began receiving panegyrics in magazine profiles as the ‘messiah’s of thesmall investor. Dhirubhai went on to pick up a further one million Reliance shares byAugust 1982 for the mysterious NRIS, bringing the outlay since March to about Rs260 million. A few years later, in December 1986 at the time of its massive C Seriesdebenture issue, Reliance advertised that Rs 1000 invested in Reliance shares in1977 would have bought an investment worth Rs 1,10,041 in November 1986, anappreciation of 11,000 per cent. Another calculation made by Reliance put the gainat 12,234 per cent.An analysis by S. R. Mohnot in his Reliance study, points out that to obtain the valuequoted in 1986, the investor would have had to top up his initial Rs 1000 outlay bysubscribing to every rights issue and debenture issue offered to him, taking the totalinvestment to nearly Rs 30000 for assets and accumulated earnings (interest anddividends) worth Rs 1,08,278. This was far from thousands of percentage points, butstill equivalent to an annual compound rate of interest of 44.5 per cent. Tellingly,however, Mohnot noted that, had the investor bailed out at the end of 1983 after fiveyears, the annual compounded return would have been a still more impressive 75per cent.By late 1984, Dhirubhai had reached a new plateau of acclamation, and thereafterfrequently featured on the covers of Indian magazines. Over the next year, heannounced plans for a massive expansion of Reliance, by moving further back alongthe raw petrochemical chain to become India’s first producer of purified terephthalicacid (PTA), to make the other main input to polyester, monoethylene glycol (MEC),and to make the associated products linear alkyline benzene (LAB, for use in