Reliance Industries Goes Public in 1977

The year 1977 was a turning point in the fortunes of Reliance. The textile mill was doing well. After contemplating success with its textile business, Shri Dhirubhai Ambani shifted his focus to the objective of expanding the market of Reliance Industries at a global scale. This expansion plan required a considerable amount of funds. Banks and other financial institutions involve lengthy and complex processes for raising funds. Thus, Shri Dhirubhai Ambani decided that Reliance would go public.

After the decision to go public, Shri Dhirubhai provided an opportunity for the Indian middle-class population to invest in the expansion plans of Reliance and thus become a partner in the company's growth. People, even from small towns, started investing in the dreams of Shri Dhirubhai. His persuasiveness brought an overwhelming response to the first public issue of Reliance, which got oversubscribed seven times. Many small investors became the backbone of the company. With the help of a large shareholder base, Shri Dhirubhai and Reliance could raise a quantum of funds from the Indian masses. On the other hand, the management of Reliance was skeptical about its decision to go public and thus bought only ten shares after agreeing to buy around 100 shares. By the end of the first year, there were 58,000 shareholders.

Around 4 million Indians invested in the dreams of Shri Dhirubhai Ambani and formed the Reliance family. These investors, including first-time investors, were rewarded for their belief and faith in Reliance Industries with a bonus in a ratio of 1:1 in the 1990s. It was also the era of an 'Open Outcry System' in the stock market, where at the time of trading, shouting out the company names was a practice. Reliance shares were traded as 'Dhirubhai' in the market. A jobber interested in buying 50,000 Reliance shares would shout, "Pachaas hazaar Dhirubhai lao! (Bring me 50,000 Dhirubhais!)." These events helped Shri Dhirubhai earn the nickname 'King of the Stock Market' for delivering against all odds. Even the servants of the Ambani family were encouraged to buy their shares. An amount of Rs. 5000 was lent to them and reinvested into the company by Shri Dhirubhai. One of the family retainers, Mr. Surabhai, was assured of turning his investment of Rs. 5000 into Rs. 50,000.

Reliance Industries was able to issue around 2.8 million equity shares of Rs. 10 each in its first equity sale to public investors in November 1977. Reliance founder Shri Dhirubhai Ambani introduced the 'Equity Cult' in India. In 1982, a Calcutta-based cartel tried to obliterate the Reliance company and brought down the prices of shares in the stock market. But Shri Dhirubhai strategized a plan, and he ensured that close to a million shares were bought and demanded physical delivery, a requirement the cartel could not meet. He also denied the demand for time forwarded by the cartel. Thus, they started buying Reliance stocks, baffling the stock market. An outcome of this act was that the Bombay Stock Exchange had to shut down for three days, for the first time in its 100 years history. This incident reinforced the confidence of the shareholders in Reliance company.

To garner more funds and enhance the Reliance network amongst the Indian masses, Shri Dhirubhai Ambani organized several roadshows to motivate people to invest in the company. The results of these roadshows saw an increase in the total shareholder base from 1 million to 4 million in just five to six years between 1980 and 1985. One in every four investors now belonged to Reliance. Today the company has a large shareholder base in the country and probably many parts of the world. The Reliance share, which started its journey at Rs. 10, now commands a price of more than Rs. 2000.