How Dhirubhai Ambani had a historic defeat against Larsen & Toubro
1 min read
The Story:
In 1987, a sense of apprehension broke out in L&T, when a Dubai-based businessman named Manu Chhabria bought a 1% stake in the company. Afraid of Manu’s hostile takeovers, NM Desai, the former chairman of L&T, approached business tycoon Dhirubhai Ambani for help
Dhirubhai saved L&T by acquiring an 18.5% stake for approx Rs. 190 Cr over the next 2 years. Both young Mukesh and Anil were given Board seats at L&T.
However, Dhirubhai’s true intentions showed up when he got elected as the chairman, and N M Desai got kicked out from his own company. L&T was a cash-rich entity & so he used a line of credit to buy huge chunks of RIL shares for L&T
When V P Singh became the Prime Minister in 1989, he brought back govt control in L&T via LIC, obstructing every move the Ambanis made. Dhirubhai had no option but to eventually leave his chairmanship Despite Congress’s return in 1991, Dhirubhai couldn’t make a comeback because of the indirect hindrance caused by then Finance Minister Dr. Manmohan Singh via LIC.
In 2001, Reliance exited from L&T by selling its stake to K.M. Birla’s Grasim industries, and for the first time, Dhirubhai lost a business battle.
