RELIANCE INITIAL PUBLIC OFFERING, 1977 - The Emperor of Equities

With his novel idea of raising funds from the public in the late '70s, Dhirubhai Ambani awoke the sleeping giant that was India's capital market, giving the ordinary investor a chance to own a small piece of big business and be part of an equity revolution

- BY M.G. ARUN

Until the late '70s, India's capital markets were anything but an exciting place. Imported into India by British capitalism, the country's stock exchanges were run by cliques of brokers who set their own rules of trading. When they started going bust periodically, the public began to lose their trust in them. Large firms went to banks for their finance rather than raising it from the markets. Between 1949 and 1979, the average money Indian companies raised annually from capital markets was only Rs 58 crore ($71 million at 1979 exchange rates). It was around this time that Dhirubhai Ambani, an enterprising textile entrepreneur whose ambition was to make his business world class, made an entry, promising the public that they could get rich if they invested in him. In 1977, Reliance Textile Industries went public, offering 2.8 million equity shares of Rs 10 and raised a whopping Rs 2.8 crore. Riding this wave of public confidence that Ambani created, especially among the rising middle class, the annual amount invested in equities surged to Rs 100 crore in 1983