Dhirajlal Hirachand Ambani: 1932-2002

Dhirajlal Hirachand Ambani: 1932-2002

Common touch, uncommon vision Dhirubhai Ambani once said that the secret of success was to have ambition and to know the minds of men. The legendary entrepreneur was being unduly modest. To be sure, he had plenty of ambition. His fellow workers at the petrol station in Aden, Yemen, have said that he dreamt of starting a company like Burmah Shell. In fact, Dhirubhai once confessed that his ambition was to follow the path of the ‘Seven Sisters’, the integrated oil multinationals that first went into oil exploration, then into refining, distribution and finally into petrochemicals. Dhirubhai achieved that dream, albeit in reverse order. His vision for Reliance was a grandiose one, of setting up capacities far beyond the imagination of other industrialists. The finance wizard But perhaps Dhirubhai’s greatest acumen was in understanding finance. He earned the devotion of millions not because he was a great industrialist, but because he treated his shareholders very well. He was the first Indian entrepreneur to understand the importance of the ordinary investor. Dhirubhai realised that he would have no financing headaches if he could earn the trust of investors, and he took care to ensure that the investor earned a decent return. Not only by way of dividends, but by continuous appreciation of the Reliance scrip. Reliance went public in 1977, and Dhirubhai declared a 15 per cent dividend that year. In 1998, the dividend was 27 per cent, despite lower profits. A year later, he announced a 25 per cent dividend and a 3:5 bonus issue. The stock appreciated 450 per cent. Even his schemes of converting his debentures into shares ensured that the investor made money on the deal. The Indian stock markets’ debt to Dhirubhai is beyond doubt, and he can truly be credited with introducing investors spread out in small towns all across the country to the equity cult. Fathering the equity cult He single-handedly boosted the Bombay Stock Exchange’s (BSE) market capitalisation. Today, the combined market capitalisation of Reliance Industries and Reliance Petroleum accounts for about 16 per cent of the BSE sensex companies. He popularised instruments such as the convertible debenture. Recall that he issued Rs 50 crore worth of debentures in 1982, about a third of an entire year’s resource mobilisation by the stock markets? Reliance followed the classic financial strategy of converting debentures into shares — to reduce the interest burden — at a high premium. The premium collected added to cash flow, bolstered reserves and lowered the debt-equity ratio. The Reliance treasury remains a formidable force, with one of its finest hours being the placement of a 100-year bond in the US a few years back. Nor was his trust in the ordinary man limited to the stock market. When he wanted to establish the Vimal brand name, he went retail with a vengeance, opening almost one Vimal franchise a day (indeed, he once opened 100 in a single day), most of them in small towns. His dealers swore by him, because Dhirubhai supported them while making sure that they performed. He tried to extend this paternalism to his workers as well, hosting a lunch for his 12,000 workers when his daughter Dipti got married in 1983. Of course, none of the trust that he earned would have been of any use if he didn’t have a first-class vision. Always dreaming big At a time when capacities were fragmented and small, Dhirubhai dared to dream big. Instead of setting up capacities that would cater to current demand, he set up the capacity and then set about creating the demand. He knew where latent demand existed and decided to supply it. To take one example, he built a 10,000 tonne per annum polyester filament yarn (PFY) plant, with a provision to increase capacity to 15,000 tpa, at a time when the entire PFY market in India was a mere 6,000 tpa. Alone among his peers, he set up world-class capacities and established international performance benchmarks. He made no compromises on quality, insisting that his machinery must be state-of-the-art. As far back as 1975, after visiting a score of textile mills, a World Bank team found Dhirubhai’s to be excellent, while they described the rest as ‘slums’.Added to that was the group’s ability to complete their projects in time, and at the least possible cost. Dhirubhai’s vision was of a completely integrated project, right from the oil in the ground via refineries and polyester to the fully finished fabrics. Huge projects on time Growth for him was a way of life. That vision called for huge, capital-intensive projects. It was imperative that they be completed in time, without cost over-runs. And Reliance managed this feat in a country notorious for delays. In fact, it wasn’t only in projects that Dhirubhai obsessively reduced downtime. In July 1989, flash floods damaged Reliance Patalganga complex, and DuPont engineers who were flown in estimated that it would take at least 90 days to get the plant working. The Reliance management did the job in 29 days flat. Dhirubhai’s management abilities were beyond doubt. He ensured that he picked the best people for the job, often raiding his competitors for the purpose. To take a recent example, the top brains in oil retailing have been poached en masse by the group. He pays his employees generously while making sure that they perform. Last, but not least, Dhirubhai was an expert at managing the environment. His close links with politicians and power brokers are often cited by his detractors as evidence of nefarious activity. The truth, however, is that in the licence-permit raj, there was no other way to grow. To set up new capacities, you needed licences, and to obtain a licence you had to know how to work through the system. Dhirubhai’s ability to get along with people, his bonhomie and his lack of airs all helped him immensely in his life. In the final analysis, it was his common touch, combined with uncommon vision, that was the secret of his success.

For this fighter, life was a big battle


Many years ago, during his celebrated fight with Indian Express proprietor Ramnath Goenka, Dhirubhai Ambani commented, “My success is my worst enemy.” The meteoric rise of Ambani and his challenge to established business houses made him an obvious target for detractors, all the more so since he was a complete outsider, relying on his wits instead of family connections to make his fortune.

His vaulting ambition, his appetite for risk and his swashbuckling larger-than-life image made him a natural target for those who resented his meteoric rise to the top of the business ladder. He wasn’t just the veteran of many battles — his whole life was one big battle.

By inclination and instinct, Dhirubhai was a fighter. What better place for a fight than the stock exchange? Twenty years ago, bear cartels called the shots in a cowboy market.

Throttling the bears

In March 1982, the Reliance scrip was the target of a bear raid organised by a Calcutta based industrialist. They picked the wrong target.

While the share was being hammered down by the bears, Dhirubhai organised a rescue operation, with friendly brokers buying up every share being sold. Then, knowing fully well that the brokers did not have possession of the shares they had sold, he demanded delivery. The bear cartel was thrown into a panic and desperately started buying Reliance shares. When cartel members asked for time to deliver the shares, Dhirubhai asked his friends to refuse. The upshot — the Bombay Stock Exchange had to be shut for three days. But the bears had been taught a lesson — do not meddle in Reliance shares.

It wasn’t long, however, before Dhirubhai’s enemies raised a simple question —where did he, till recently a yarn trader and only a budding industrialist, get hold of the money needed to stop the bears in their tracks?

The answer was delivered by the then finance minister, Pranab Mukherjee, who announced in Parliament that non-resident Indians had invested over Rs 22 crore in Reliance during 1982-83. These investments had also been made by companies with names like Crocodile, Iota and Fiasco.

Investigations by journalists revealed that these companies had been registered in the Isle of Man, the tax haven, by several people sporting the surname Shah. Who did these companies belong to? Questions were raised and fingers pointed, but a Reserve bank of India (RBI) enquiry could not find any wrongdoing by Reliance.

The matter died a natural death

One of Dhirubhai’s most celebrated battles was with V P Singh, then finance minister in Rajiv Gandhi’s cabinet. Having built up a cosy relationship with Indira Gandhi, Ambani had no inkling that things would change when she was assassinated on October 31, 1984, and her son Rajiv became prime minister. It wasn’t long, however, before V P Singh took his first pot shot at Reliance. He suddenly shifted purified terephthalic acid (PTA) imports from the open general licence (OGL) category to the limited permissible list in May 1985.

Reliance needed PTA imports to feed its polyester filament yarn plant, and lost no time in tying with up with a host of banks to issue letters of credit for almost a year’s supply of PTA.

Surprisingly, these LCs were opened days before the government notification was announced. The finance minister was obviously miffed, and slapped a 50 per cent import duty on PTA. That little spat was only the beginning of Reliance’s troubles.

The debenture issues

Dhirubhai had always understood finance very well, amply illustrated by the fact that Reliance paid virtually zero tax. In 1984, a cash-strapped Dhirubhai hit upon a brainwave. Reliance had issued plenty of non-convertible debentures, and his standing among investors was God-like. Why not, he reasoned, convert the debentures into equity? That would improve the company’s debt equity ratio, reduce outflow on interest, and allow him to raise funds once again. The trouble was that these debentures were non-convertible.

But Dhirubhai was not one to let a little thing like that stand in his way. He managed to convince the finance ministry and investors lapped up his offer. Unfortunately, V P Singh was not so easily convinced. A day before the Reliance board was to meet to consider another round of conversions in June 1986, V P Singh refused to permit it. All hell broke loose, with Reliance’s debenture prices halving within a matter of hours.

Nor was that the end of the affair. Banks had lent heavily against the security of Reliance shares to about 60 investment companies, which were buying Reliance debentures. The Indian Express alleged that these companies were fronting for Reliance, and the whole operation made sense only if the debentures could be converted to shares. The revelations led to an almighty stink, and, with the conversion not going through, the RBI ordered the banks to call back the loans. The entire episode took a heavy toll on Dhirubhai’s health, and he suffered a paralytic stroke on February 9, 1986.

The Indian Express revelations were part of the campaign being conducted by Ramnath Goenka against Reliance. There are different accounts of what led to the break-up of their friendship, but there’s no doubt that the Indian Express ran a systematic campaign against Reliance, a campaign that alleged all sorts of things, from Reliance building more than the licensed capacity to CBI investigations to the “loan mela” by the banks to Reliance front companies. The government added to the pressure, withdrawing customs duties on imported PFY just as the Reliance PFY unit came on stream. For a while, it seemed like the end of the line for Dhirubhai.

But not for long. In December 1986, in a move dubbed as a referendum on Reliance by the media, a Rs 500 crore convertible debenture issue by Reliance was oversubscribed seven times.

Soon after, VP Singh was shifted from the finance ministry. The early conversion of the debentures into shares was permitted. Pending licences were cleared. In September 1987, there was a nationwide raid on the Express group, and scores of cases were filed against it. Dhirubhai had scored another victory. Dhirubhai’s quarrel with Nusli Wadia was part and parcel of the fight against the Indian Express. During Reliance’s troubles with the Indian Express, Dhirubhai was convinced that Nusli Wadia was behind the campaign.

They were, of course, business competitors, with Wadia manufacturing di-methyl terephthalate (DMT), while Dhirubhai opted for making PTA. Both are raw materials for making polyester yarn and fibre. Wadia had been opposed to Dhirubhai setting up the PTA plant. Matters weren’t helped when Goenka, who had a soft spot for Wadia, sided with him against Reliance.

The one battle lost

One corporate battle which Dhirubhai did not win was the battle for control of Larsen & Toubro (L&T). In 1988, L&T was in bad shape, and the Ambanis thought that the time was ripe for an acquisition. Having secured the support of L&T’s chairman, who saw Dhirubhai as a white knight in the battle against the raider Manu Chhabria, Mukesh and Anil Ambani became directors of L&T. By April 1989, Dhirubhai became chairman of L&T.

Unfortunately, things didn’t go smoothly. In December Reliance’s old bete noire, VP Singh, became prime minister. The Indian Express once again did the muck-raking, and found that the takeover had been effected by financial institutions like the Life Insurance Corporation and the General Insurance Corporation selling their shares.

Since the institutions were not allowed to sell to private parties, the Indian Express alleged that the whole operation was a fraud. The matter moved to the courts. Sensing defeat, the Ambanis reversed the transaction, taking a substantial loss. An extraordinary general meeting was called to decide whether the Ambanis would remain on the L&T board. Dhirubhai resigned.

Eleven years later, Reliance sold its holdings in L&T to Grasim. Even that transaction was not free of controversy, as the Securities and Exchange Board of India (Sebi) felt that Reliance should not have bought L&T shares from the market a few months before deciding to sell its stake. The insider trading charge was settled with Reliance paying a nominal fine.

The share switch hitch

Another battle was the share switch controversy. Here too Ambani did not come off all that well. Apparently, when Unit Trust of India sent some Reliance shares to its registrars for transfer, it received some other shares - with different numbers - in return. The markets jumped to the conclusion that there was something fishy - perhaps even fake shares in play. A Securities and Exchange Board of India (Sebi) investigation into the matter did not find evidence of this, but there were lots of discrepancies in the numbering of shares issued and the share transfer process was found to have many loopholes.

For a man who single-handedly created the equity cult, Ambani was seen as running a less-than-tidy ship in its share transfer operations. Sebi asked Reliance Consultancy Services, the group’s registrar, to shut shop. And the crisis blew over.

In the wireless loop

Reliance also attracted controversy when the telecom sector was being opened up. Initial regulation of the sector involved clear-cut lines of demarcation between cellular and basic operators.

At the same time, wireless in local loop (WiLL) technology offered the possibility of limited mobility. WiLL supporters pointed to its cheapness and called it limited mobility for the masses.

Cellular operators, on the other hand, protested that limited mobility was an infringement on their turf, and unjustified because they had paid hefty licence fees. Reliance critics lost no time in pointing out that since the Reliance group held basic licences in many telecom circles, they would be one of the principal beneficiaries if basic operators were allowed entry to the limited mobility segment.

The telecom regulator, however, did allow limited mobility, albeit with restrictions limiting the area in which it could be used. The matter continues to be dogged by controversy, with the parties taking recourse to the courts. There have been other battles and controversies, the most recent one being the alleged infringement of the Official Secrets Act by Reliance employees.

Dhirubhai’s position as an outsider in India’s business world meant that he has had to deal with more than the normal share of jealousy and animosity. But that did not dim his zest for battle or derail his dream of making Reliance the largest private sector company in India.

From Rs 70 crore to Rs 58026 crore in 25 years


Dhirubhai Ambani had led Reliance Industries from a paltry Rs 70 crore group in 1976-77 to India's largest private corporate giant with sales of Rs 58,026 crore today.

The net profit of the group soared from Rs 1.28 crore in 1976-77 to Rs 4,604 crore in 2001-02. Total assets jumped manifold from Rs 33 crore in 1976-77 to Rs 54,912 crore.

The markets cheered the Reliance group's bold forays and the group's market cap increased from Rs 78 crore in 1979-80 to Rs 43,761 crore today. And, this phoenix-like rise was led by the group flagship -- Reliance Industries Ltd (RIL). Reliance Petroleum, which was established in 1993, only started commercial production in June 2000.

RIL has grown at a compound annual growth rate (CAGR) of over 26 per cent in the last 25 years. Its sales income increased at a CAGR of 26.61 per cent from Rs 68.72 crore in 1976-77 to Rs 28,008 crore in 2001-02. Net profit soared over 2200 times or at a CAGR of 36.05 per cent from Rs 1.28 crore to Rs 2,814 crore.

RIL's total assets shot up from Rs 32.89 crore in 1976-77 to Rs 29,875 crore in 2000-01. Its net worth moved up from Rs 9.54 crore to Rs 14,765 crore in this period.

From a tiny market capitalisation of Rs 78 crore in 1979-80, RIL's market cap jumped to Rs 29,870 crore as of yesterday.

The company has so far paid Rs 28,500 crore to the national exchequer by way of direct and indirect taxes. RIL employs around 16,000 people and is today the 4th largest producer of polyester filament yarn and the 5th largest producer of polyester staple fibre in the world.

The company is the 3rd largest player in paraxylene, 6th largest in purified terephthalic acid and polypropylene, and the 10th largest producer of polyethylene in the world.

Shareholders have reason to cheer, too. RIL has had a history of uninterrupted dividends for the last 22 years. The dividend record goes from 15 per cent in 1976-77 to 42.50 per cent in 2000-01.

The dividend paid in 2000-01 has been on the higher equity capital bloated by the bonus and rights issues made between 1985-1997 period. RIL's equity capital, in fact, rose to Rs 1,054 crore in 2001-02 from Rs 5.95 crore in 1976-77.

Reliance Petroleum, the second largest company in the group, has been merged with RIL. The merger is, however, still awaiting regulatory approvals. Established in 1993, RPL went public in September 1993 with an issue of triple-option convertible debentures, amounting to Rs 2,172 crore. The company commenced commercial production in 2000-01 and that year it
became the largest private sector company in India with sales of Rs 30,963 crore. The net profit in 2000-01 was placed at Rs 1,464 crore.

During the year ended March 2002, the company's sales were at Rs 33,117 crore and net profit of Rs 1,674 crore.

Reliance Capital is the third largest company in the group. Its total revenues from financial operations grew from a modest Rs 6 crore in 1990-91 to Rs 542 crore in 2001-02. Its net profit increased from Rs 4 crore in 1990-91 to Rs 101 crore in 2001-02. Reliance Infrastructure, a little known group company, has sales of Rs 80.29 crore and a net profit of Rs 14.90 crore as on March 31, 2002.

A smooth succession ensured


The visionary that he was, it was only natural that Dhirubhai Ambani planned out the succession in his group companies well in advance.

His two sons, Mukesh and Anil, have been working with the senior Ambani for almost a decade, and both have been in decision-making positions for quite some time now.

Older son Mukesh is currently designated vice-chairman and managing director of Reliance Industries, and the vice-chairman of Reliance Petroleum, while younger son Anil is the managing director of both the companies. The Ambanis at present are awaiting regulatory approvals for the merger of Reliance Industries with Reliance Petroleum.

Mukesh is also the chairman of the group’s latest acquisition, Indian Petrochemicals Corpora-tion Ltd (IPCL), the significance of which is not lost upon the industry.

Industry observers expect Mukesh to slip into the shoes of the group chairman, while Anil is widely expected to play the role of the chief executive.

Observers tracking the company from Dhirubhai’s heydays said the father had always banked upon Mukesh to be the visionary of the family, while Anil, who, with his flamboyant ways effortlessly became the public face of the group, has emerged as the nuts-and-bolts man. As CEO, Anil will be in charge of the day-to-day operations of the company, which fits in nicely with his nature, they said.In addition, the Meswani scions (Dhirubhai’s sister Trilochanaben is married into the Meswani family), Nikhil and Hital, cousins of the Ambanis, are also directors on the boards of the main group companies.

The two Meswanis, sources say, have played a considerable role in the growth of the Reliance group. The two families are known to be very close and live in the same residence in south Mumbai.

Trilochanaben’s husband, the late Lallubhai Meswani, was Dhirubhai’s closest aide in his earlier years. Of late, there has been speculation that the functioning of the group companies could be split between the two Ambani brothers. But Reliance insiders roundly reject such possibilities.

“The two brothers understand each other’s strengths. They have, in fact, taken turns to bring their own expertise at different times in the company’s history,” a top RIL executive told Business Standard on the condition of anonymity.

“They are a seamless combination,” the executive said, adding that “each brother is perfectly capable of completing a sentence started by the other.”

Asked specifically if Anil was being groomed to handle the group’s core oil & gas business whereas Mukesh would be in charge of the ‘new economy’ initiatives, this RIL executive said, “It is just a misconception that Anil is not involved in telecom and other new economy businesses. It is true that Mukesh is more hands-on in the telecom project, but Anil is equally involved. And, when the senior Ambani is not around (in routine meetings), Mukesh still has the last word on the group’s oil and gas issues.”

“Mukesh is the quiet type. As you would have seen, he didn’t even come out once inside the Breach Candy Hospital (during the period Dhirubhai was admitted). But that doesn’t mean he is out of the loop on anything. People have started suspecting a rift between the brothers as Mukesh is concentrating on rolling out the group’s infocom project,” this executive said.

Industry observers, reflecting on Dhirubhai’s working style, said there was definitely a pattern in the way the group had inducted some high-flying professionals in recent years.

These include K G Ramanathan, former chairman and managing director of IPCL, who now heads Reliance Power; B D Khurana, formerly of the Bharti group, who is now vice-chairman of Reliance Infocom, Alok Agarwal, formerly of Bank of America, who has been the group treasurer for some time now, and Firuza Parikh, who heads the biotech initiative.

IPCL catapults RIL to global top 10 in petrochemicals


Thanks to the recent acquisition of the 26 per cent stake in state-run Indian Petrochemicals Corporation (IPCL), Reliance Industries (RIL) is now part of the top 10 petrochemicals companies in the world. Others on the list include Dow Chemicals, Borealis, Basell, Solvay and BP.

The strategic stake in IPCL gives Reliance a near-monopoly status in polypropylene (PP) and poly vinyl chloride (PVC) and to some extent in polyethylene (PE).

It also has some firsts to its credit. RIL already operates the world’s largest grassroots, multi-feed cracker at its Hazira petrochemicals complex in Gujarat. The company houses the world’s largest capacities— the second largest capacities of partially oriented yarn (POY)/polyester staple fibre (PSF), the largest paraxylene plant with a capacity of 1.4 million tonne per annum, making it the world’s third largest producer. It is also the fourth largest producer of purified terephthalic acid (PTA) and the sixth largest producer of PP, at one million tonne per annum.

Back home, it is the largest manufacturer of polyester filament yarn (PFY), polyester stable fibre (PSF) and PET, with a market share of over 50 per cent. It also continues to dominate PX, PTA and mono ethylene glycol manufacturing with a 78 per cent market share. It has a 49 per cent share in polymers and is the largest producer of PP, PE and PVC.

Vaulting to top spot among pvt Indian groups

With a sales turnover of Rs 60,000 crore, Reliance is the largest Indian private sector group, followed by the Tatas (sales: Rs 40,000 crore). It tops in asset rankings as well, with assets of over Rs 55,000 crore.

Likewise, by recording a net profit of Rs 4,600 crore in 2001-02, it tops in net profit rankings too. The flagship firm Reliance Industries, with aggregated sales of over Rs 58,000 crore (after the merger of Reliance Petroleum), is the second-largest company in the Indian corporate sector after the public sector behemoth Indian Oil Corporation (sales: over Rs 1,00,000 crore). The merged Reliance entity will rank second in terms of net profit (ONGC ranks first with a net profit of Rs 6,198 crore) and third in terms of capitalisation.

Around 1993-1994, the Reliance group ranked behind the Tatas and the Birlas.

The net sales of the two companies — Reliance Industries and Reliance Infrastructure — was Rs 4,330 crore in 1993-94 versus the Tata group’s Rs 15,550 crore from 37 companies. In assets, the Tatas in 1993-94 (Rs 22,700 crore) were well ahead of the Ambanis (Rs 8,725 crore).

The Tata group’s lead over the Reliance in terms of sales and assets continued till 2000. But after Reliance Petroleum commenced commercial production in June 2000, the Ambanis displaced the Tatas from the number one slot, with the Reliance group’s sales zooming to Rs 60,000 crore (by March 2001).

It implemented the world’s largest grassroots multi-feed cracker with an ethylene capacity of 750,000 tonne. It enhanced its competitive position in the petrochemicals by putting up a 1.4 million tonne per annum paraxylene plant and a 6 lakh tonne per annum polypropylene plant. After completing its planned vertical integration in petrochemicals, RIL is now on course for rolling out plans of such big dimension in the telecom and broadband sectors too.

Turning out to be an intrepid oil & gas player


Reliance Industries has emerged as the most adventurous private player in the domestic oil and gas sector.

True to the group’s vision of an integrated business model, it set up the world’s largest grassroots refinery, which is also the seventh largest refinery in the world at any single site, with a capacity of 27 million tonne per annum.

The refinery at Jamnagar in Gujarat, built at a cost of more than Rs 14,000 crore, was the first one to go onstream after government policy allowed refineries in the private sector. Chairman Dhirubhai Ambani did not live long enough to see oil being dispensed from retail outlets carrying the Reliance logo.

The company has already received government approval to set up its own distribution network. It intends to set up 5,849 retail outlets and 8,768 petrol dispensing pumps and 15,007 diesel dispensing pumps. The outlets are supposed to sell Reliance’s 10 million tonne annual production of diesel and 2.4 million tonne output of petrol. However, it has not ruled out inorganic growth in the downstream market and intends to bid for the big-ticket disinvestments of HPCL and BPCL.

Considering its vision to create unique and unbeatable brand value, Reliance is expected to aggressively on this acquisition.

Reliance has also been the most ambitious private player in the oil and gas exploration sector having acreage of more than 150,000 sq km on both the east and the west coasts.

The group has about 23 exploration blocks in consortium with various international companies.

Reliance in consortium with Niko Resources of Canada bagged 12 new exploration blocks under the New Exploration Licensing Policy-I in 2000, while in subsequent year, it, in consortium with Hardy Exploration and Production India, was awarded four exploration blocks under NELP-II.

Recently it received government approvals to acquire five oil and gas blocks from Ireland’s Tullow Oil plc with an acreage of more than 20,000 sq km.

Besides exploration and production, Reliance is also a 30 per cent stakeholder in the proven Panna and Mukta oil and gas fields as well as the Tapti gas fields.

It was a ‘natural, peaceful’ death

Dhirubhai Ambani, the chairman of the Rs 65,000 crore Reliance group of companies, died ‘a natural death’ on Saturday night at 11.50 p.m. at the Breach Candy hospital in Mumbai, doctors at the hospital said.

He was 69 years old.

Ambani was admitted to the hospital on June 24, 2002, after he suffered a major ‘brain stroke’.

Doctors at the hospital explained that a stroke, sometimes called a ‘brain attack’, occurs when blood flow to an area in the brain is cut off. The brain cells, deprived of the oxygen and glucose, die.

If the blood supply is cut off for more than a minute, permanent brain damage can result. The most common type of stroke is due to a blockage, which may be the result of a clot forming in the brain, or one that has travelled from another part of the body, such as the neck or the heart, to arteries in the brain.

A medical source at the Breach Candy hospital said, “Ambani’s illness dates back almost three months ago when he suffered a major heart attack. He was then flown to Cleveland Hospital in the US where he had surgery. They did a ‘carotid artery stenting’ or angioplasty.”

The medical source said, “While being brought to the hospital, Ambani suffered two major heart attacks. His heart was beating in an uncontrolled fashion which is equal in medical terms to the heart not beating at all. The doctors then revived his heart by giving him shock treatment and a cardiac massage. After this he was put on the life support systems and he survived on those systems for 13 days in the intensive coronary care unit .”

Ambani also had a very unstable blood pressure condition in the ICCU. The hemorrhage had done all the damage within the first half an hour. The CT scan that was done on June 25 also showed that there were two huge clots in the brain. The electro encephalogram (EEG) was conducted on that day to check the level of activity in the brain. Last night, however, at around 7 p.m., his condition started deteriorating and his heart also gave way. He finally passed away peacefully at around 11.50 p.m.

Reliance always had a nose for opportunities


It has an uncanny knack of spotting opportunities and conceiving projects. Despite being a powerhouse in petrochemicals, the last couple of years saw the Dhirubhai Ambani-promoted Reliance group foray into sunrise sectors like telecommunications, insurance and life sciences.

With the group’s legendary competence in setting up and implementing mega projects, it is using old economy parameters while evaluating and executing new economy businesses. Like there had to be parity between the old and new in terms of capital employed, cash flow and internal rate of return. Armed with this blueprint, one of its big ticket businesses is Reliance Infocom, in which Reliance Industries has a 45 per cent stake.

It is the vehicle for wireline telecom while Reliance Telecom is the wireless face of the business. It has already embarked on setting up a national footprint for fixed line, mobile, national long distance, and international long distance telephony. It also intends to offer a bouquet of data, image and value-added services for subscribers in India.

Reliance is building an international scale broadband, IP backbone, connecting India’s top 115 cities with 60,000 route kilometers of fibre. A major part of its optic fibre cable network is being deployed and many of the fibre links are under test.

Reliance Telecom has licenses for cellular mobile telephone services in seven circles spanning 15 states. With a subscriber base of 1,87,000 on March 31, 2001, Reliance Telecom operates in 86 towns. The basic service operations in Gujarat are at an initial stage of development.

Again, when biotechnology became the rage a couple of years ago, the privately held Reliance Life Sciences invested $5 million in stem cell research in 2001 at the Harkisondas Narrotamdas Hospital in Mumbai, which it acquired in 2000. Overnight, the biotechnology arm shot to fame when it figured on the list of 10 laboratories worldwide that met US President Bush’s eligibility guidelines for becoming a source of stem cells and eligible for federal funding. With an investment of $25 million over the next three to four years, the biotech arm plans to set up skin banks to help burn patients.

The various mega projects, Reliance figured, would require a huge quantum of power. It also figured out that generating power from a captive plant would be more economical than buying it from the state electricity boards.

Besides it also realised that power was a business that fitted into Reliance’s core competencies - raising large resources, implementing projects on schedule, besides yielding attractive returns.

In fact, Reliance’s power plans crystallised almost a decade ago when it picked up a 10 per stake in Mumbai-based power utility BSES.

With its current 36.5 per cent holding, there are plans to route its power projects through BSES and it has decided in principle to route a 48 mw power project at Goa and a 500 mw project at its Jamnagar complex in Gujarat.

When the insurance sector was thrown open to private players, Reliance became the only player to enter the field without a foreign escort. It has set up two subsidiaries — Reliance General Insurance Company and Reliance Life Insurance Company.

The final nod from the Insurance Regulatory and Development Authority (IRDA) for Reliance Life Insurance Company to commence operations hinges on its infotech plan. This follows its proposal to tap the masses and sell insurance policies online.

Reliance General Insurance, on the other hand, has been faring well, since the company got its license on October 23, 2000.

Focusing on the corporate sector, it booked a total premium income in excess of Rs 60 crore in fiscal 2002. The company aims to become powerful in the industry through the insurance of power plants, as it sees these as good investments.

It has booked a premium income of around Rs 18 crore by co-insuring seven power projects in the country, including BSES in Kochi and Mumbai, Karnataka Power Corporation, Calcutta State Electricity Board, Gujarat Industries Power Corporation, as well as other projects in Andhra Pradesh.

Reliance General also participated in the country’s first barged-based power plant — the Rs 900-crore Tanvir Bawa, as well as GMR’s first power plant — Vasant Bridge.

If all goes well, it wants to tap the retail sector this year. There are plans to offer motor and health insurance products.

An outstanding industrialist

By BK Birla

Dhirubhai Ambani had an ambitious plan of converting the deserts of Rajasthan into fertile lands. This was one of the dream project plans he narrated to me two years ago in great detail when my wife and I called upon him at his Mumbai residence.

When I asked him about his future plans, he gave me a half-an-hour lecture on how sea water could be used to generate steam and then after use conveyed to Rajasthan through a pipeline to make it a fertile land.

Considering his outstanding ability of enterprise, I am sure that, given a chance, he would have transformed his dream into reality.

I rate him one of the most outstanding industrialists of the nation, for his ability to complete projects within time as well as cost schedules. His credit was praiseworthy, especially because he was probably the first one to install world-class factories and plants within a predetermined timeframe.

My last meeting with the Ambani family was preceded by news that Akzo Nobel, the foreign partner in my company Century Enka, was about to sell its stake to Dhirubhai. An official of the foreign company informed me that the Ambanis sent representatives to Akzo’s London office to discuss the sale.

This piece of news upset me. I was not averse to the Ambanis taking a stake in a group company. What disturbed me was that Dhirubhai was going to do so without informing me. So I asked Kumar Mangalam (Birla) to call up Dhirubhai’s son Mukesh on my behalf. The latter passed it on to his father.

As soon as Dhirubhai came to know that I was enquiring about him taking a stake in Century Enka, he called my Kolkata residence. By that time, I had left for Darjeeling on holiday. Dhirubhai called me up at Darjeeling and said, “‘Babuji’ (he used to call me that) who told you this? I am not going to take Akzo’s stake and this is final.”

I was charmed by his gesture. He invited me and my wife to his home in Mumbai. We visited his family on our next trip to the city and that was when he told us about his dream Rajasthan project.

I cannot recollect correctly the date of our first meeting. But it was certainly well before he launched his company, Reliance Industries, in 1977. He was a trader of yarn at that time and one of my officers fixed a meeting with a gentleman called Dhirajlal Hirachand Ambani as he was a big dealer in our product and wanted to meet me.

From that meeting onwards, Dhirubhai started calling me ‘Babuji’ and I was embarrassed by the salutation. I told him, “Dhirubhai, either call me B K Babu or Basant Kumarji”, but he refused to drop it. And through every conversation, he would grasp my hand, make a statement and ask, “Don’t you agree I was right?” Most of the time, I thought he was, but even when I told him I disagreed, our relationship was not ruffled.

To Dhirubhai, large was beautiful. During the initial stage of Century Enka, he used to tease me on why I was setting up an experimental plant with a capacity of only 90 tonne a month. Everybody else said it was the right size 20 years ago but to him it was an ‘experimental’ plant.

In the past 25 years, my association with the Ambani family has been cordial but our meetings became irregular as we stayed in different cities and we had become a lot busier. I was shocked to hear he had been admitted to hospital after suffering a stroke. Last Monday, my wife and I visited the hospital. Anil’s wife and other members of the Ambani family greeted us at the reception of the hospital. I did not enter his room — he was fighting for his survival.

We all prayed for his expeditious recovery but knew recovery would be difficult. My eyes filled with tears and my heart sank at the thought that on my next visit to Mumbai I may not have a friend to visit. It has been a great loss.

Man who revelled in adversity


By N Vaghul

I first came to know Dhirubhai Ambani in 1978 when I was the executive director of the Central Bank of India but I knew him intimately only when I became the chairman of ICICI in 1985. What struck me most about Dhirubhai was that he could see into the future and was a person who came into his own during adversity. Indeed, he revelled in adversity.

In 1985-90, when Rajiv Gandhi had just come in as prime minister, a lot of businessmen wrote him off. V P Singh was the finance minister, and a lot of prominent businessmen in Mumbai said that the Reliance story was over.

There was talk that Reliance had come so far only because the Indian government had been benevolent to it. Most people said that Reliance was a bubble about to burst and this kind of thing continued right until 1990.

Dhirubhai had to live with this and it was not easy for him, but each time he came back stronger. I knew that the Reliance story was far from over. Being with ICICI, I had access to business data and I knew what they were doing and that they would become a business house to contend with. When he came to Mumbai, business houses were conservative in their world view and Dhirubhai did not fit in. He brought in an entirely different world view.

If today Reliance is what it is, he is the only person who can be credited with dreaming big. He was a man who had mastered the art of handling New Delhi.

This was a skill one had to develop because the government was far more involved in business matters during those years. One can view the New Delhi factor negatively or positisvely and I tend to view it positively purely because of what Reliance has come to be today.

He knew what he wanted and he got it. Also, he came from the second generation of businessmen who thought that business would grow on its own and also through goodwill.

In all my years as chairman of ICICI, Dhirubhai telephoned me only twice with requests. Once it was for attending a brokers’ conference just after Reliance’s IPO in the late 1980s.

At that time Reliance was going through lot of public perception problems and Dhirubhai wanted me to attend so as to convey the message that the company’s bankers were with Reliance and were backing it. My admiration for Dhirubhai was, one can say, conditioned.

He was the one who once told me that one should be as respectful to the despatch clerk or peon as to anyone else in the organisation.

I believe he had God’s gift


By Rama Prasad Goenka

I first met Dhirubhai Ambani in the early 1980s, though I had heard about him earlier. It was a meeting that happened quite by chance in New Delhi. To be honest, we were both waiting for T A Pai with whom we had separate appointments.

I was very impressed by his analytical mind and clear vision and also overwhelmed by his charm and behaviour. I took an instant liking for him and I felt it was reciprocated.

We used to meet quite often at various places, mostly in Delhi and Mumbai, and as a rule we got on very well together. We never let our short meetings be hijacked by our business interests. In fact, we never discussed business.

What did we discuss? That will be our secret. But when two like-minded gentlemen meet they have many things to discuss. There was also a lot of friendly banter involved.

I used to visit his residence in Mumbai quite often and enjoyed visiting the family. I have pleasant memories of these visits to the Ambani home and my last meeting with his was about two years ago when he called me over and I spent quite some time with him at his residence.

Dhirubhai Ambani was a man without parallel. There is no other way I can describe him and I think this assessment is beyond discussion. For many years, people have discussed his achievements in the world of Indian business and I am sure this will be so for many years in the future.

The successes he attained in one lifetime will astound and confound businessmen and young people for the next 100 years. Even economic writers will find yourself describing the rise of Dhirubhai Ambani with a sense of awe and wonder to the next generation.

I firmly believe what he had was God’s gift. Others will mention his initiative or his vision but all these were but parts of the gift he received from God. Indian business is poorer by the loss of its star performer. Generations to come will find it difficult to believe that so much could be achieved by one man in one life.

The shareholder was his chief deity


By Murli Deora

I met him just a week before he suffered a stroke. He was fit as ever, and showed little evidence of any health problem. In fact, we were to lunch together on the day after he suffered the stroke. I remember the several occasions when we had no money. I traded in yarn then and we used to go to New Delhi. Dhirubhai and I negotiated an arrangement with the bell captain or somebody at Ashoka Hotel in New Delhi.

In return for a tip, this person allowed us to keep our baggage in one room. In the evening we would return to the hotel, pick up our luggage and return to Mumbai. We’d tell people that we were staying at the Ashoka. The bell captain took telephone messages for us. We “stayed” at the Ashoka in this manner several times.

I remember how he began in a small office at Bhuleshwar building at Jaihind Estate near Opera House in Mumbai. From here he moved to an office at Fort Chamber in Dhobi Talao where he was conducting a yarn brokerage business for the Vimal textile plant in Ahmedabad. Then he moved to supplying raw materials to firms in Patalganga and then branched out into the plastics industry.

In the earlier days he used to talk to me very often, almost daily. I remember the time when a spate of articles critical of Dhirubhai was appearing in the media. I used to express my concern about this but he would respond and say: “I have to swim the English Channel every day and even that against unfavourable currents.”

He had a temper too. Once at an annual general meeting at the Bombay Cricket Association stadium someone asked him a silly and deliberately planted question. Dhirubhai recognised the man on sight and lost his temper. “I know you have come from Calcutta,” he thundered and asked the gentleman to sit down.

Ambani was a great visionary. He felt if some other nation was able to do something, we should be able to do it too. He was very shrewd in business. However, it was his ability to handle the downsides of business that I observed. If he suffered a loss in business, he would take it coolly. But immediately thereafter he would change his strategy. He was a true entrepreneur and always took risks.

He said: “True entrepreneurship comes only from risk-taking.” He was committed to his stockholders. To him they were living Gods. He always said: “I will never let down my stockholders.” He loved them. This is one of the prime reasons Reliance Industries is the number one company in India. Dhirubhai brought the equity culture to India. The stock market used to operate like a satta bazaar till his time. He converted it into an investment opportunity. I have met several families who tell me that they are not at all worried about marrying off their daughters as they hold Reliance Industries shares.


Vignettes from an action-packed life


In Aden, Dhirubhai Ambani worked at the Shell products division of A Besse & Co. He quickly made an impression on his colleagues by taking almost impossible bets. Once he bet that while helping bunker a ship in the harbour he could dive and swim to shore. The prize for winning the bet was an ice-cream party. Dhirubhai won the bet, even though it meant swimming through shark-infested waters.

Dhirubhai Ambani was not one to let an opportunity slip by. One story — which may be apocryphal — runs as follows. During the 1950s the Yemeni administration discovered that the main unit of its currency, the rial, was disappearing from the market. The administration traced the shortage to Aden, a port in Yemen and found to its surprise that a young Indian in his twenties had placed an unlimited buy order for rials.

The rial was a solid silver coin and what this young man did was to simply buy rials, melt them into silver ingots and sell them to bullion dealers in London. This was a profitable venture as the silver in the rial was valued higher by bullion dealers in London. The name of the young man? Dhirubhai Ambani.

Later, Ambani is believed to have told an interviewer: “The margins were small but it was money for jam. After three months, it was stopped. But I made a few lakh of rupees. I don’t believe in not taking opportunities.”

Chambaklal and Dhirubhai had completely opposite temperaments — Chambaklal was a cautious trader while Dhirubhai believed in taking risks. Chambaklal was opposed to building a yarn inventory. Dhirubhai believed in taking the risk of anticipating a price rise and making some profit. In 1965, they parted ways.

Dhirubhai was known for his practical jokes. Once he was invited by a friend to dine at his house. The friend’s wife offered some mango juice and insisted on refilling Dhirubha-i’s glass. So he decided to play a prank. He kept asking for more mango juice, till the hosts ran out of mangoes and the servant was sent out to buy some more from the market.

In 1968, Dhirubhai moved out of the chawl in Mumbai where he lived, to a more
comfortable flat on Altamount Road, in Mumbai’s first high-rise residential tower. Dhirubhai had a penchant for driving fast cars. He first owned a modest Fiat and later acquired a Mercedes-Benz. In the seventies, he got a white Cadillac for himself.

On his return from Aden, Dhirubhai set up a trading business in 1957 in partnership with Chambaklal Damani, his second cousin who had also been in Aden around the same time. The name of their business: Reliance Commercial Corp. Their first office was a 350 sq ft room on Narsinathan Street in the crowded Masjid Bunder area of Mumbai. The room had a telephone, one table and three chairs. If both the partners and the first two recruits were present in the office, one of them had no place to sit.

Making sense of the Sensex

Making sense of the Sensex

Vivek Patil

Sensex is the most popular and precise barometer of the Indian stock markets. As such it has to keep itself in tune with the constantly changing scenario. It is, after all, a matter of great responsibility to represent a market of more than 6,300 stocks through a 30-stock composite.

The Bombay Stock Exchange, or BSE, authorities have to, therefore, keep a close watch on its composition, so that the Sensex always represents the maximum market capitalisation and the maximum number of sectors.

However, every once in a while there is a need to revamp the Sensex's composition. And this raises numerous queries regarding the implication of any such alteration. Debates rage over whether a particular sector is getting more weightage or otherwise. Then there is talk of Sensex heavyweights that can be used to 'manipulate' the Sensex value.

Since billions of rupees are at stake, these are valid questions. However, they require detailed understanding of the mechanics of Sensex calculation. Let us try to understand this aspect.

Basics of Sensex

1. "Sensex" is the popular name for the Bombay Stock Exchange Sensitive Index.

2. It is the oldest stock market index currently in use.

3. Sensex is the index of market capitalisation.

4. The base value is 100 on April 1, 1979.

5. Sensex consists of only 30 representative stocks.

6. These 30 are the most active and representative stocks selected from over 6,300 scrips that are listed on the BSE.

7. The total market capitalisation of these 30 stocks accounts for more than 38 per cent of the aggregate market capitalisation of all BSE stocks.

8. The Sensex composition is modified by the BSE authorities at irregular intervals, to keep it in tune with the latest realities of the market.

9. A major reshuffle took place in the Sensex on August 19, 1996, when 15 stocks were replaced.

10. Recently, on April 10, 2000, four stocks were replaced. Satyam Computer, Zee Telefims, Dr. Reddy's Labs, and Reliance Petroleum have been included in place of Indian Hotels, Tata Power, Tata Chemicals and IDBI.

Basics of Sensex calculation

1. Market capitalisation is the market value of equity shares, (i.e. market price multiplied by the number of shares). For instance: if ACC has an equity capital of Rs 1.72 billion with each share having a face value of Rs 10 and its closing price on BSE on April 10, 2000 was Rs 166, then ACC's market capitalisation on that date is 17.234*166/10 = Rs 28.61 billion.

2. Calculate market capitalisation of all 30 Sensex stocks on a particular date in the same manner and add this up to get the total market capitalisation of Sensex stocks.

3. Assume that this total market capitalisation is equal to the closing Sensex value on that particular date. The Sensex of any future date can be calculated as a proportion of market capitalisation applied to this Sensex value.

4. An example below shows that the total market capitalisation on April 10, 2000 was Rs 3,731.38 billion, when the Sensex value was 5442.86. If, the total market capitalisation on April 17, 2000 was Rs 3,346.18 billion, then the Sensex for April 17, 2000 is calculated as:

5442.86 * 334617.19 / 373137.82 = 4880.97

NAME FV (Rs) Equity (Rs.Crs) Price 10-04-00 Mkt cap 10-04-00 Price 17-04-00 Mkt cap 17-04-00 ACC 10.00 172.34 166.00 2860.86 155.00 2671.29 BAJAJ A. 10.00 119.39 378.00 4512.97 373.60 4460.44 BHEL 10.00 244.76 125.90 3081.52 117.00 2863.69 BSES 10.00 137.76 256.50 3533.76 222.00 3058.45 CASTROL 10.00 123.50 312.00 3853.30 300.00 3705.10 COLGATE 10.00 135.99 158.30 2152.76 151.10 2054.85 DR.REDDY 10.00 26.49 1627.00 4310.24 1433.00 3796.30 GLAXO 10.00 59.77 445.00 2659.99 403.00 2408.93 GRASIM 10.00 91.66 388.45 3560.90 355.00 3254.26 GUJ.AMBUJA 10.00 147.14 230.50 3391.80 207.70 3056.30 HINDALCO 10.00 74.47 750.00 5585.40 707.00 5265.17 HIND.LEVER 10.00 219.54 2727.00 59869.04 2476.00 54358.54 HPCL 10.00 339.33 141.80 4811.70 132.25 4487.63 ICICI 10.00 769.52 146.40 11265.89 125.65 9669.12 INFOSYS 5.00 33.10 9839.00 65146.62 8521.00 56419.80 ITC 10.00 245.53 734.00 18021.91 630.25 15474.54 L & T 10.00 248.94 316.00 7866.74 259.45 6458.94 M & M 10.00 108.53 355.60 3859.58 284.20 3084.62 MTNL 10.00 630.00 251.75 15860.25 220.40 13885.20 NESTLE 10.00 96.41 363.00 3499.88 345.00 3326.33 NIIT 10.00 38.64 1720.00 6647.39 1975.00 7632.90 NOVARTIS 10.00 31.86 915.00 2915.33 846.00 2695.49 RANBAXY 10.00 115.93 748.00 8671.75 669.00 7755.88 RELIANCE 10.00 933.75 363.00 33895.37 296.85 27718.57 REL.PETRO 10.00 2141.11 62.50 13381.99 54.10 11583.45 SATYAM 10.00 52.03 3907.00 20331.44 3759.00 19561.27 SBI 10.00 526.88 219.00 11538.88 197.00 10379.73 TELCO 10.00 255.93 140.00 3583.07 132.05 3379.60 TISCO 10.00 368.16 119.50 4399.52 113.55 4180.47 ZEE TELE 1.00 38.84 980.00 38067.83 926.00 35970.21 TOTAL MC 373137.82 334617.19 SENSEX 5442.86 4880.97

If on a panicky day, the Sensex falls by 8 per cent (the maximum permissible fall for each of the constituent stock) from the level of say 4880 points, it would mean a fall of 390-odd points. And this would be calculated as follows:

GROUP No. of Stocks in the Group Contribution to Sensex Circuit FMCG stocks (Colgate, Lever, ITC, Nestle) 4 88 New Economy stocks (Infosys, NIIT, Satyam, Zee) 4 140 Pharma stocks (Dr.Reddy, Glaxo, Novartis, Ranbaxy) 4 19 Cement stocks (ACC, Guj.Ambuja) 2 6 Bank stocks (ICICI, SBI) 2 23 Auto stocks (Bajaj, M&M, Telco) 3 13 Reliance Group stocks (Reliance, Rel. Petro.) 2 46 Other stocks 9 55 TOTAL 30 390

Now consider the fall in Sensex from 5541.54 on April 11, 2000 to 4657.42 on April 20, 2000. It's a drop of 884.12 points. During this fall, Infosys came down from Rs 10,626 to Rs 7,556, i.e. by Rs 3,070. Every Rs 100 of Infosys contributes 9.66 Sensex points. Therefore, the contribution of Infosys to the Sensex fall can be calculated as:

3070/100*9.66 = 297 Sensex points

Similar calculations will show that the new economy stocks were the major contributors to the fall. Infosys, NIIT, Satyam and Zee together contributed about 531 points out of the total Sensex fall of 884 points, which is about 60 per cent by just by these four stocks.

If the Sensex moves wildly, investors can now pin-point the exact reason and take appropriate action.

The author is a Bombay-based technical analyst and creator of the software package ASA.

P/E scoreboard: 104 firms crack centuries

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P/E scoreboard: 104 firms crack centuries
ARNAV PANDYA

TIMES NEWS NETWORK [ FRIDAY, JUNE 03, 2005 12:11:52 AM]


A bull market sees rising valuations as share prices remain buoyant. However, investors need to be cautious enough to ensure they are not buying into grossly over-valued shares. One of the common ratios considered while arriving at some conclusion about valuation is the price/earnings (P/E) ratio.

An analysis of the P/E ratios of more than 2,600 companies by the ET Intelligence Group shows about 104 had a P/E of more than 100 as on May 31, '05. The P/E ratio is calculated by dividing the market price per share by the earnings per share of the company.

There are several ways in which the P/E can be calculated, depending on how the EPS is calculated. Here, the ratio is calculated by taking the earnings of the previous four rolling quarters into consideration. Many companies across sectors have a figure of over 1,000.

The busy stretch of the P/E road is in the 201-300 range and lower. In the 201-300 range, a record 22 companies find place. These include Remsons, IQ Infotech, Supriya Phar, Essar Oil, Cosco (I), La Mere App and Rich Capital. u Investors need to watch out for overvaluation: P 4

The next batch, which is in the 101-200 P/E range, includes Mukta Arts with a P/E ratio of 172. Shringar Cinema also belongs to this list with a P/E ratio of 162. Bhansali Engineering, Kale Consultants, Baffin Engg, Bharat Imm, Hatsun Agro and HMT and Birla Ericsson are some of the other names in this category.


Some of the other companies with high P/E ratios include Hind Bio-Science (P/E 850), SWIL (P/E 734), Uniroyal Textile Industries (P/E 697), BlueChip (India) (P/E 669) and Rockwool (P/E 648). There are four companies in the P/E range of 501-600 and 7 in the P/E range of 401-500.

Two known companies that have P/E ratios in the high 300s are Vindhya Tele and Patel Roadways. Vindhya Tele recorded a profit of Rs 0.4 crore on a turnover of Rs 90 crore, while Patel Roadways registered a profit of Rs 0.1 crore on a turnover of Rs 121 crore. Videocon Industries and Bhagwati Gas also fall in the 300 plus P/E range.

Companies that are expected to perform quite well usually get a slightly higher P/E than their industry counterparts. At the same time, too high a P/E may indicate that there is an element of over-valuation in the market. One must note that looking at P/Es across companies is not strictly comparable and hence, the data presented here should not be considered in isolation to determine the valuation of the company.

Among the 1000 plus P/E companies, Agro Tech Foods, for example, has a P/E of 2140. The share price of the company is around the Rs 85, but the main reason for the very high P/E is that it has a marginal profit of Rs 0.1 crore due to which the ratio is very high. The company's P/E shot up as the latest results brought down the earnings per share. Earlier, the P/E of the company was 118.

Another well-known company with a high P/E is the Aditya Birla Group-controlled UltraTech Cement. It has a P/E of 1413, mainly on account of the fact that the net profit of the company is very low.

Other companies that find themselves in the 1000 plus P/E range are Osian LPG Bottling with 1383, followed by Tanfac Industries at 1340. Osian LPG Bottling has a small profit and its price has been in the Rs 15-17 mark over the last month.

Many of the companies in the list would be unknown to many investors. The list includes Mega Corporation (P/E 1288), Gujarat Terce Laboratories (P/E 1285), Fast Track Entertainment (P/E 1257) and Artillegence Bioinnovations (P/E 1018).

Most of them show a very high P/E because of their marginal profits. There also exist several companies with no P/E ratio in the technical sense because they have experienced losses for the last four trailing quarters. Some of the companies in this category are Jagatjit Industries, TTK Healthcare, Goodricke, Ceat, Swan Mills, Petronet LNG and EIH Associated Hotels.