franchises to shareholders.

Dhirubhai promised that Reliance would provide financial and advertising support. In his
search for high volumes, Dhirubhai identified a new market - the non-metro urban segment.
By 1980, Reliance fabrics were available all over India through 20 company owned retail
outlets, over 1000 franchised outlets, and over 20,000 retail stores.

Backward Integration
To strengthen his position further, Dhirubhai decided to integrate backwards and produce
fibers. He planned to set up a polyester filament yarn (PFY) manufacturing plant at
Patalganga3. Dhirubhai started work on the plant in 1981. He wanted to make it a world-
class plant equipped with the best machinery and having the best faculties. The technology
for the production of PFY was sourced from USA's Du Pont De Nemours. 4 However,
Dhirubhai did not want to make Du Pont an equity partner. He felt that when technology
was easily available in the international markets, it was not necessary to enter into a 51 %
equity partnership with a foreign company.

In 1984, Dhirubhai got the license to manufacture purified terephthalic acid (PTA), one of
the chemicals from which PFY and polyester staple fiber (PSF) can be manufactured. He
then integrated sideways manufacturing linear alkyl benzene (LAB) used by detergent
manufacturers, thermoplastics like poly vinyl chloride (PVC), high density poly ethylene
(HDPE) and low density poly ethylene (LDPE) used by plastic processors.

The Stock Market Adventure

Dhirubhai's biggest contribution to the nation was the development of an equity culture.
Having understood the psychology of the Indian capital markets and the mindset of Indian
investors, he was instrumental in introducing the equity culture in India. Dhirubhai gave
importance to the small investor and his contributions, and by doing so, he involved millions
of middle class investors. Reliance went public in 1977 and had its first annual general
meeting (AGM) in 1977. Reliance Industries had 58000 investors in 1977. So large was
Reliance's investor base that at times executives had to go to small cities, with the share
certificates, annual reports and other such correspondence, as personal luggage, and post
them locally.

The 1979 issue of Reliance introduced an innovative financial instrument, the partially
convertible debentures. However Dhirubhai found it difficult to get permission from the
controller of special issues. Dhirubhai argued that this instrument would give investors a
guaranteed return and capital appreciation. He lobbied the government until it accepted the
concept. This issue was over subscribed 6 times and soon convertible debentures (both
partial and whole) became instruments of choice.

The 1982 issue generated Rs 500 million. It was the biggest issue in those days. In 1982,
Dhirubhai faced threat from a Calcutta based bear syndicate. The bear syndicate sold 1.1