Trial By Fire In Patalganga
December 31, 2012 Leave a comment
The Indira Gandhi administration threw open the doors of PFY (polyester filament yarn) manufacturing to the private sector in early 1980. Dhirubhai Ambani applied for a license to set up PFY manufacturing plant. In spite of stiff competition from Tatas, Birlas and 43 others, Dhirubhai was awarded the licence.To help him build the PFY plant, Dhirubhai pulled his eldest son Mukesh out of Stanford where he was studying for his MBA and dropped the untried, untested twenty-four year-old chemical engineer from Bombay University into the deep end.
“My father told me: “You will take this over and I will only give you one person from Reliance.Everybody else has to be new,” recalls Mukesh. “So a team had to be established, we had to select the right technology. The first thing that happened was that I came to the office and found there was only one person with whom I would work fourteen or fifteen years.Gradually we got the other people. We are a very professional setup.When we started the plant, everybody was recruited on merit. We advertised and we were very proud. The credit for this decision should go to my father. I told him that it’s a Rs 100 crore project and shouldn’t he hire a guy who has worked twenty-five years in the polyester industry and maybe pay him Rs 20,000 per month. He said:’No, you do it. If you think you’re going wrong you come back to me but go ahead and do it.”
“Initially everybody was pessimistic, everybody I talked to said it was difficult. But we went in with an open mind and tried our very best. We were on stream in forty-eight hours.”
On November 1, 1982 Mukesh Ambani won his spurs.
To meet Dhirubhai’s deadlines, Mukesh’s young project team discarded several established business practices in favour of unconventional methods which have now become part of Reliance’s corporate culture.
One of these was letter writing and paper shuffling, which Mukesh sought to abolish totally. “Problems were discussed at face-to-face meetings with contractors and decisions were communicated directly. If each contractor were to write to the other and then to us, we would have wasted valuable time,” says Mukesh.
Another tenet dispensed with was that of choosing the lowest bid in a tender. “Sometimes we accepted tenders which were two and a half times higher than the lowest bid,” he recalls. Reliance’s criterion was whether the contractor could deliver on time.
Mukesh also adopted careful planning to quantify tasks and then proceeded saturating the tasks with resources. He put in the largest amount of resource that each task could absorb, without people tripping over each other.His take was that if I had all the time in the world, I would optimize. But given the opportunity cost of lost production, it did not matter how much it cost because,if he could get the production going earlier, he would come out ahead .
Finally, the team followed the dictum: coordinate [operations]horizontally, when in trouble go vertical.