Reliance "Ownership Issues"

[deepu 0]

NEW DELHI: Reliance Group Chairman Mukesh Ambani has admitted to differences with his brother Anil over "ownership issues" but said "they are in the private domain."

He, however, discounted fears that these would have any bearing on the functioning of the company saying Reliance is one of the strongest professionally-managed companies.

"Well there are issues which are ownership issues. These are in the private domain, but as far as Reliance is concerned it is a very, very strong professional company," Ambani told CNBC TV 18 when asked about differences between the brothers.

There have been reports of problems between the two brothers on the issue of ownership of Reliance Industries Ltd (RIL) after the demise of their father Dhirubhai Ambani.

Citing an example of General Electric company, Ambani said like GE has moved beyond Jack Welch, the founder of the company, Reliance has also moved beyond one, two or three individuals.

Reliance is India's largest private company with an annual turnover of about Rs 80,000 crore and has presence in various sectors including oil refinery, petrochemicals, power and telecommunication.

[chandramauli 0]

Dhirubhai did not leave a will

BS Corporate Bureau in Mumbai | November 19, 2004 10:14 IST

Rumours that had been circulating for months were finally confirmed on Thursday when Reliance Industries chairman and managing director Mukesh Ambani told business channel CNBC TV18 that he had been having differences with his brother, Reliance Industries vice-chairman and managing director Anil Ambani, over "ownership issues".

These could spring from the late Reliance Industries chairman Dhirubhai Ambani not having left a will. Two independent informed sources told Business Standard that the Reliance group patriarch had died intestate on July 6, 2002.

WHO LOOKS AFTER WHAT 

Mukesh Ambani 

Chairman, Reliance Industries

Chairman, Reliance Infocomm

Chairman, IPCL

Director, Reliance Europe Ltd

Is steering Reliance's initiatives in oil and gas exploration and production. Also the group's research-led life sciences initiative. 

Anil Ambani

Rajya Sabha Member

CMD, Reliance Energy

Vice-Chairman, IPCL

Director, Reliance Europe Ltd

Is spearheading Reliance Energy's biggest initiative: setting up the world's largest gas-based power generating facility in Uttar Pradesh.

"That he died intestate was because he thought the brothers would continue to be united," said one source.

At stake is the Ambani family's 46.67 per cent equity in Reliance Industries, now worth Rs 35,552 crore (Rs 355.52 billion). The family's shares are held through a series of investment firms and other companies. It is not clear who controls which company or how many of the shares.

Under the Hindu law of succession, the personal property of a man who dies without leaving a will has to be divided among his wife and children, but property registered under Hindu Undivided Family law has to be divided among the wife and sons.

Says Anil Galgoli, a lawyer at Karandikar, Bal & Associates, a Mumbai-based law firm: "If property is registered as an HUF, it is to be divided among the wife and sons. Unmarried daughters and widowed daughters, if any, can claim a stake. They can get a share, but not control."

Dhirubhai Ambani left behind two sons, Mukesh and Anil, and two daughters, Nina and Deepti, both married. Neither brother seems to have an issue on who will run Reliance Infocomm, the telecom company that Mukesh Ambani launched and runs and in which Reliance Industries has a 45 per cent stake, and on Reliance Energy, formerly BSES, whose chairman and managing director is Anil Ambani. Reliance Industries holds a 41.03 per cent stake in Reliance Energy.

Separate e-mails sent in the evening to Mukesh Ambani and Anil Ambani, seeking their comments, evoked no response. Both were said to be out of Mumbai.

At the close of trading, Reliance Industries had a market capitalisation of Rs 76,177.57 crore (Rs 761.78 billion). The company reported a gross turnover of Rs 74, 418 crore (Rs 744.18 billion) and a net profit of Rs 5,160.14 crore (Rs 51.60 billion) in March 2004. The total market capitalisation of the eight listed Reliance group companies is Rs 94,820 crore (Rs 948.20 billion).

Mukesh Ambani told the television channel: "Reliance is one of the strongest professionally managed companies, attracts huge talent and has moved beyond any one, two or three individuals, including myself.

"So while there are other issues which are ownership issues those are in the private domain. As far as Reliance is concerned, it is a very strong professional company."

He added, "(Reliance Industries) investors have no cause to worry, as the issues will have no bearing on the functioning of the Reliance group."

Citing the example of General Electric, Mukesh Ambani said, like GE had moved beyond Jack Welch, the chairman who took the company to great heights, Reliance had moved ahead of the individuals. "Reliance has moved on the path that Dhirubhai Ambani set for it, beyond Dhirubhai Ambani," he added.

The Reliance Industries scrip ended flat at Rs 545.55 on Thursday against Wednesday's close of Rs 543.85 on the Bombay Stock Exchange. The share clocked the highest combined turnover of Rs 546.52 crore (Rs 5.46 billion) on Thursday on the BSE and the National Stock Exchange.

Registration under HUF holds key, say lawyers

Control of Reliance Industries could hinge on whether the late Dhirubhai Ambani's investment companies and trusts, which control a 46.67 per cent stake in Reliance Industries, were registered under Hindu Undivided Family law. That's because Dhirubhai Ambani left no will.

It's not clear whether Dhirubhai Ambani registered his investment companies and trusts under HUF law.

A Kolkata-based lawyer, who is associated with the Birla-Lodha feud over the Priyamvada Birla will, said if Dhirubhai Ambani died without leaving a will and his property is not registered under HUF law, it has to be divided among all five members of his immediate family, namely, his wife, two sons and two daughters.

This won't be the case if the property is registered under HUF law. Married daughters and widowed daughters can't claim any property registered under HUF, he said. So his two daughters can't claim a share in the family's stake in Reliance Industries --- only his wife and sons can.

"Merely because a person (Hindu) dies intestate, it would not be correct to state the estate left behind by such a Hindu person would automatically become HUF property. The Hindu Succession Act will come into play and the division of the estate will be under the provision of the Succession Act," notes Kanu Doshi, partner at Kanu Doshi Associates, the legal firm. The property has to be registered under HUF law for the Hindu Succession Act not to come into play.

i saw this article/news clip on rediff.com . just thought to put it in here ...

i hope things get well ASAP without any disputes ... i feel they should stay together and do not to bring these issues to media & public notice. When we were small we use to hear this story alot. when do two ppl are fighting for a piece of bread/chapati , a third person comes in and takes away the bread/chapati. I feel the same has happened in the Birla case too .

Edited November 19, 2004 by chandramauli

[Arun 795]

Reliance Shares Drop on Rumor of Ambani Family Split - Nov. 19 (Bloomberg)

Shares of Reliance Industries Ltd. fell as much as 2.8 percent to a three-week low amid speculation about a split in the Ambani family that controls 46.67 percent of India's biggest private company.

The ``ownership issues'' are ``private'' and won't affect the business, Reliance's Chairman Mukesh Ambani told CNBC-TV18 television on Nov. 17, without giving further details. The Times of India, Business Standard and other local newspapers published the comments today, prompting some retail investors to sell the shares, analysts including Jaspreet Singh said.

``There might be some reaction from retail investors but I don't expect the big investors to react too much,'' said Singh, an analyst with Prabhudas Liladher Securities Pvt., a stockbroker in Mumbai. ``Rumors of a split have been around for two years.''

Dhirubhai Ambani, who built Reliance into India's biggest non-state company from a synthetic-yarn trader in three decades, died in July 2002. His eldest son Mukesh, 47, succeeded him as chairman and Anil, 45, became vice chairman. Details on any division of the family's stake worth $7.8 billion have never been disclosed.

Officials in Mukesh and Anil Ambani's offices wouldn't comment. There was no immediate response to e-mailed questions submitted to the Ambanis. Mukesh Ambani is traveling overseas and can't be reached, Amit Khanna, spokesman at group company, Reliance Infocomm Ltd., said last night. Anil Ambani is traveling and can't be reached either, Yogesh Desai, a Reliance Group spokesman, said last night.

[Saurav 22]

WHO WILL BE THE OWNER OF RELIANCE INFOCOMM

Ambani brothers on fight . they call it personal but admits on TV.

Dhirubhai left no will.

share price of Reliance falls down.

If Mukesh become CEO of RIM will quality of service improve.

[rahulmalik_81 1]

from the news n general info i think RELIANCE INFOCOMM will go to Mukesh

[Puneet 0]

WHO WILL BE THE OWNER OF RELIANCE INFOCOMM

Ambani brothers on fight . they call it personal but admits on TV.

Dhirubhai left no will.

share price of Reliance falls down.

If  Mukesh become CEO of RIM will quality of service improve.

19539[/snapback]

from the news n general info i think RELIANCE INFOCOMM will go to Mukesh

19553[/snapback]

As far as I know Reliance Infocomm is managed by only by Mukesh and not Anil. Almost all directives that come to RIM emplyees are from Mukesh's office. So there willnot be much change as far as we as RIM users are concerned.

puneet

..

[Ashokjp 15]

I dont think it will affect the customers in any serious way...

Let the have fight or anything

[Basant 0]

but if the fight intensifies, growth plans may be affected. so also the day to day management and quality of sevice. but it is too early to predict.

[Ashokjp 15]

Na i dont think they are small kids to behave so.. they got good brains as proved till now, with their business strategy.

They would manage these kinda things easily

[vb86 0]

what about the infocomm IPO next year?

[deepu 0]

It is often remarked that few, if any, family-dominated and family-promoted business enterprises last beyond the second generation of entrepreneurs.

Typically, a pioneering individual establishes an industrial empire from scratch after displaying considerable effort and perseverance. He then bequeaths his assets to his children who squabble and go their own ways. By the time the third generation in the family arrives at the helm, the corporate group is a pale shadow of what it once was.

It would be completely foolhardy at this juncture to begin writing the obituary of the vast business conglomerate that was set up by the late Dhirajlal -- better known as Dhirubhai -- Hirachand Ambani from 1958 onwards after he returned from Aden where he had spent eight years having begun his career working as an attendant at an outlet for petroleum products.

The corporate empire that Dhirubhai Ambani left behind after his death on July 6, 2002, had a gross annual turnover in the region of Rs 75,000 crore (Rs 750 billion) or nearly $15 billion -- since his demise this figure would have risen by around a quarter.

Out in the open

Less than two years after the demise of one of India's best known -- and controversial -- entrepreneurs, not too many could have imagined that the tussle between his two sons, Mukesh (47) and Anil (45) would come out into the open.

A reporter from the CNBC-TV18 television channel had thrust a microphone at Mukesh Ambani when he was leaving the venue of a function in Mumbai where the main speaker was the visiting CEO of Microsoft, Steve Ballmer, and asked him where there was a likelihood of a split between the brothers.

While emphasising that the Reliance group separated ownership from management and that the group had 'moved beyond' a few individuals, Mukesh nevertheless acknowledged that there were certain 'ownership issues' that were in the 'private domain.'

While he did not elaborate on what these 'ownership issues' were that have presumably not been resolved in a 'very, very strong professional company,' the cat was out of the bag. For many months, speculation was rife in corporate circles that relations between the two Ambani brothers (and even their wives) were not exactly the most cordial.

However, such rumours were confined to gossip-mongers at cocktail parties. What was, however, evident to even the junior-most employees of Reliance group companies was that the two brothers had effectively carved out their personal domains of control and were, for all intents and purposes, working autonomously.

True, the two would show up on special occasions. But such bonhomie was evidently for public consumption.

Now that Mukesh's off-the-cuff remark has stirred a hornet's next, not too many will be surprised if the brothers come together again on a public platform and hug each other to scotch speculation to the effect that the industrial empire built so assiduously by their father was in some danger of coming apart.

Who controls what

For some time now, Mukesh has been focusing on the following businesses of the group: telecommunications, petroleum refining and marketing, petrochemicals, oil and gas exploration and life sciences.

Anil, on the other hand, oversees the electricity generation and financial sector activities of the group (including insurance, asset management and share transactions). He also heads the operations of the group that intend setting up what is being touted as the world's largest gas-based power project in Uttar Pradesh.

Unlike his elder brother, Anil is perceived to be close to Samajwadi Party leader Amar Singh and UP Chief Minister Mulayam Singh Yadav. It was rumoured that Mukesh did not approve of Anil's proximity to these politicians nor his decision to become a member of the Rajya Sabha.

Certain industries, notably the synthetic fibres and textiles part of the Reliance conglomerate, were reportedly being looked at by both brothers. In other sectors, there is an apparent overlap in the activities of the two areas overseen by the two brothers, notably the energy sector (that includes oil refining, gas exploration and power generation).

The cross-holdings of the major, widely held companies in the group are publicly known. For instance, the group flagship Reliance Industries holds a little over 41 per cent of the equity capital of Reliance Energy (formerly BSES or Bombay Suburban Electric Supply), while 45 per cent of Reliance Infocomm is held by Reliance Industries.

What is also known is the stake of the promoter group in a company like Reliance Industries -- members of the Ambani family and their close associates control nearly 47 per cent of the group's flagship concern.

However, what is not known to most is the exact manner in which the promoter group controls the large corporate entities in the group through complex holdings by hundreds of investment firms, closely-held companies and, perhaps, partnership firms, proprietary concerns, trusts and HUF (Hindu Undivided Family) entities.

Only insiders would know who controls which corporate body and how -- namely, knowledge about the 'family tree' of specific corporate bodies.

The problem

The problem is simple. Dhirubhai Ambani died intestate -- namely, he did not leave behind a will bequeathing his assets to specific members of his family, including his two married daughters, Deepti Salgaonkar and Nina Kothari.

What complicates matters is that under the regular laws of succession in the country the property of a person who dies intestate is divided between his widow and all his children; under the laws governing HUFs, daughters are not automatically eligible for a share in the property of a deceased father. According to the HUF laws, unmarried and widowed daughters can stake a claim to their late father's properties.

Meteoric rise

Dhirubhai Ambani had achieved what many would consider impossible. In a life spanning 69 years, he built from scratch India's largest privately controlled corporate empire.

He would often say that success was his biggest enemy. He was a man who aroused extreme responses in others. Either you loved him or you hated him. There was just no way you could have been indifferent to this amazing entrepreneur who thought big, acted tough, knew how to bend rules or have rules bent for him.

He was a visionary as well as a manipulator, a man who communicated with the rich and the poor with equal felicity, who was generous beyond the call of duty with those whom he liked and utterly ruthless with his rivals -- a man of many parts, of irreconcilable contrasts and paradoxes galore.

He died from a second cardiovascular stroke that hit him on the evening of June 24, 2002: the first had occurred more than sixteen years earlier, in February 1986, leaving the right side of his body partially paralysed. At his cremation, the well-heeled rubbed shoulders with the ordinary. No Indian businessman ever attracted the kind of crowd that Dhirubhai did on his last journey.

After his cremation on the evening of July 7 that year, Mukesh reminded a gathering of well-wishers that when Dhirubhai had arrived in Mumbai from Aden in Yemen in 1957, he had only Rs 500 in his pocket.

The second son of a poorly paid schoolteacher from Chorwad village in Gujarat, Dhirubhai Ambani had stopped studying after the tenth standard and decided to join his elder brother, Ramniklal, who was working in Aden at that time. Not surprisingly, the late entrepreneur ensured that his two sons went to premier educational institutions in the United States -- Mukesh was educated at Stanford University and Anil at the Wharton School of Business.

Having worked as an attendant in a gas station, half a century later, he would become chairman of a company that owned the largest oil refinery in India and the fifth largest refinery in the world, that is, Reliance Petroleum Limited which owns the refinery at Jamnagar that has an annual capacity to refine up to 27 million tonnes of crude oil.

In 1976-1977, the Reliance group had an annual turnover of Rs 70 crore (Rs 700 million). Fifteen years later, this figure had jumped to Rs 3,000 crore (Rs 30 billion) and by the turn of the century, the amount had skyrocketed to Rs 60,000 crore (Rs 600 billion).

In a period of a quarter of a century, the value of the Reliance group's assets had jumped from Rs 33 crore (Rs 330 million) to Rs 30,000 crore (Rs 300 billion).

Using the 'system'

The textile tycoon's meteoric rise was not without its fair share of controversy. In India and in most countries of the world, there exists a close nexus between business and politics.

In the days of the licence-control raj, Dhirubhai more than many of his fellow industrialists understood and appreciated the importance of 'managing the environment,' a euphemism for keeping politicians and bureaucrats happy. He made no secret of the fact that he did not have an ego when it came to paying obeisance before government officials -- be they of the rank of Secretary to the Government of India or a lowly peon.

Long before Dhirubhai entered the scene, Indian politicians were known to curry favour with businessmen -- licences and permits would be farmed out in return for handsome donations during election campaigns.

The crucial difference in the business-politics nexus lay in the fact that by the time the Reliance group's fortunes were on the rise, the Indian economy had become much more competitive. Hence, it was insufficient for those in power to merely promote the interests of a particular business group; competitors had to simultaneously be put down.

Who remembers Swan Mills? Or Kapal Mehra of Orkay? Even Nusli Wadia of Bombay Dyeing is some distance away from where he would certainly have liked to be. The undivided Goenka family that used to control the Indian Express chain of newspapers -- which carried on a campaign against the Reliance group in 1986-1987 -- got broken into three independent sections.

Whereas the multi-edition newspaper has not entirely lost its feisty character, it is yet to fulfill its late founder Ramnath Goenka's cherished dream of becoming a market leader in at least one of its many publishing centres.

The power of Reliance

A popular joke starts with a question: Which is the most powerful political party in India? Answer: The Reliance Party of India. Others divide the country's politicians into two groups: a very large 'R-positive' group and a very small 'R-negative' section.

It is hardly a secret that Dhirubhai's support base would cut easily across political lines. Very few politicians have had the gumption to oppose the Ambanis, just as the overwhelming majority of journalists in the country preferred not to be critical of the Reliance group.

The Indian media, most of the time, has chosen to lap up whatever has been doled out by the group's public relations executives. The bureaucracy too has, by and large, favoured the Ambanis.

While Dhirubhai may not have too many scruples when it came to currying favour with politicians and bureaucrats, what cannot be denied is the fact that perhaps no businessman in India attracted the kind of adulation he did.

He was more than just a legend in his lifetime. He successfully convinced close to four million citizens, most of them belonging to the middle-class, to invest their hard-earned savings in Reliance group companies.

He was fond of describing Reliance shareholders as 'family members' and the group's annual general meetings acquired the atmosphere of large melas attended by hordes.

Can his sons live up to his awesome reputation? Time alone can tell.

[Basant 0]

By and large both Mukesh and Anil inherit all sr. ambani qualities. I am sure they will come out of this crisis. stakes are too high for them.

[Saurav 22]

My remarks were torn out of context: Mukesh Ambani

A Correspondent in Mumbai | November 22, 2004 15:19 IST

Reliance Industries Chairman Mukesh Ambani has finally broken his silence over the 'ownership issue' at the petrochemicals-to-telecom giant.

In a statement issued on Monday, he said that his remark on 'ownership issues' was torn out of context and that Dhirubhai Ambani has settled all ownership issues pertaining to Reliance within his lifetime.

Special: The Ambani rift

"On my return last evening from the United States, I was shocked to find that my response to a question pertaining to the way our businesses are going to go in the future has been torn out of context. Obviously, it was an attempt to build a sensational story around the phrase 'ownership issues' leading to a spate of speculations and misrepresentation," said Mukesh Ambani.

"I am sensitive to the concerns that would have naturally arisen in the minds of our shareholders, various stakeholders and numerous well-wishers at the media blitz during the last few days. It is necessary to remove confusion caused by deliberate misinterpretation or genuine misunderstanding. Therefore, I would like to set the record straight," he said.

"As I was leaving a function, a TV journalist said: 'There have been a lot of rumours about the Reliance group and the way the businesses are going to go in the future.' In response I made two points, namely, that the question itself, does not recognise that 'Reliance is one of the strongest, professionally managed company,' and that 'there are other issues, which are ownership issues, those are in the private domain,'" said Ambani in the statement.

"This question-answer context makes it clear that I was responding to the query about the future businesses," he said.

"It is well known that in the process of its growth and expansion, Reliance is engaged in diversification, acquisition of running businesses and creation of new assets," said Mukesh Ambani.

"In such a rapid growth phase all big companies have to deal with several issues concerning corporate ownership of future initiatives. Reliance is no exception. I will like to restate that all such ownership issues are in the private domain. Placed in the context of the question put to me, it is obvious that my reply has nothing to do with the family ownership in Reliance," Ambani clarified.

"I will also like to take this opportunity to strongly deplore some totally unjustified and tendentious comments in a section of the media about our father Dhirubhai Ambani."

"Reliance is an eloquent testimony of Dhirubhai's farsighted vision, unflinching dynamism, and unparalleled wisdom. In keeping with the worldwide trend of transformation of family owned businesses, Dhirubhai took, within his lifetime, all necessary steps to separate ownership from management and made Reliance a world-class professionally managed company."

"With his extraordinary foresight, he has also settled all ownership issues pertaining to Reliance within his lifetime. I wish to assure all stakeholders that I am committed to uphold the steps taken by him and that the foundation of Reliance is and will remain very, very strong.

"I hope all speculation on this issue will come to rest with this clarification."

[Greens 21]

Media has blown up things too much and too far.....they need something controversial which they add additional flaovour to boost their viewership. Leaving apart the rest.

[deepu 0]

The Reliance Group on Monday said the ongoing 'ownership' controversy will be resolved soon to the satisfaction of all concerned.

"The controversy (ownership) will be resolved to the satisfaction of shareholders and the country in the next few weeks," a Reliance spokesperson said when asked about the ownership issue of the Rs 80,000 crore (Rs 800 billion) Ambani empire.

"Mukesh Ambani was made successor by late Dhirubhai Ambani," the spokesperson said when asked whether Dhirubahi Ambani had left any will.

"From that moment he is committed to realising Dhirubhai's dream," he said.

The two sisters -- Deepti Salgaoncar and Neena Kothari -- who were believed to have come to Mumbai to attend the family meeting have left.

Earlier, Mukesh Ambani said in a statement he was quoted out of context on the ownership issue and had said that Reliance is a strong professionally-managed company.

Mukesh Ambani was quoted by CNBC last week saying, "There are ownership issues but they are in the private domain."

Anil Ambani could not be contacted for his comments on the ongoing controversy.

"Well there are issues which are ownership issues. These are in the private domain, but as far as Reliance is concerned, it is a very, very strong professional company," Mukesh Ambani said.

Reliance is India's largest private company with an annual turnover of about Rs 80,000 crore and has presence in various sectors including oil refinery, petrochemicals, power and telecommunications.

As per the information of Centre for Monitoring Indian Economy, the promoters (Ambanis) hold 46.67 per cent of the stake in Reliance Industries Ltd, while 13.48 per cent is held by the public and FIIs own 22.85 per cent equity.

As per the work allocation, Mukesh looks after oil, petrochemicals and infocomm, while younger brother Anil looks after power, besides Reliance Capital.

[deepu 0]

MUMBAI: Reliance Industries chairman Mukesh Ambani on Monday said his father Dhirubhai had "settled all ownership issues pertaining to Reliance within his lifetime". That Ambani should choose to make such a definite statement is considered significant in light of reports that Dhirubhai Ambani had died intestate, that is, without a will.

Five days after Mukesh told a TV channel that there were "ownership issues" in Reliance — which was widely interpreted as admission of a rift with his younger brother Anil — he put out a written statement on his return from the US on Sunday evening, saying he was "shocked" to find that his response to a question had been "torn out of context in an attempt to build a sensational story around the phrase 'ownership issues' leading to a spate of speculation and misrepresentation". He claimed that his remarks had nothing to do with "the family ownership in Reliance".

Contrary to reports that the two brothers, or their representatives, might issue a joint statement to calm the markets, Mukesh took the unilateral route.

[deepu 0]

A long-standing director on the Reliance Industries board resigned today fuelling further speculation on the goings-on in the country's largest corporate house in the wake of differences between the two brothers, Mukesh and Anil Ambani.

M L Bhakta, said to be a legal expert, quit the board of which he was a member since 1977 but there was no authentic word on why he took the step.

That has triggered speculation that Chairman and Managing Director Mukesh Ambani may recast the board.

Asked about the reasons that prompted Bhakta to leave, Reliance spokesperson Amit Khanna responded with a cryptic, "It is for Mr Bhakta to explain."

Meanwhile, Vice Chairman Anil Ambani continued to remain silent and is yet to respond to his elder brother's statement issued on Monday that father Dhirubhai Ambani had settled all 'ownership issues' during his lifetime.

The possibility of his (Anil) doing so this week is not ruled out.

Sources said some more members may also quit to give Mukesh a free hand for the recast.

A day after going public with his statement on 'ownership differences' in the Reliance Industries, Mukesh on Tuesday said in a communication to all its employees that he as the chairman and managing director is the 'final authority' on all matters concerning the company.

He also sought to clarify that there would be no impact on the functioning of the group by the ongoing controversy.

"There is no question of any effect on the integrity of Reliance. Reliance will continue to grow in strength," sources quoted Mukesh as having said.

Asked as to how long it would take to settle all issues, Reliance spokesperson Khanna said: "Everything will be Okay in the next few days."

[deepu 0]

I'm the boss, Mukesh writes to employees

MUMBAI: A day after going public with his statement on "ownership differences" in the Reliance Industries, Group Chairman and Managing Director Mukesh Ambani said he is the "final authority" on all matters concerning the company.

"There is no ambiguity in his (late father Dhirubhai Ambani) legacy that C and MD is the final authority on all matters concerning Reliance," he said in an e-mail message to over 80,000 employees of the Group.

"Our founder-chairman late Dhirubhai Ambani had taken all necessary steps to separate ownership from management and had settled all issues during his lifetime," Mukesh said in the message.

He also sought to clarify that there would be no impact on the functioning of the Group by the ongoing controversy over reported differences with his brother Anil.

"There is no question of any effect on the integrity of Reliance... Reliance will continue to grow in strength," sources quoted Mukesh as having said.

Reliance's commitment to break new grounds in global leadership in various initiatives stands firm, he added.

Anil Ambani, who was said to be planning to respond to Mukesh's statement, could not be contacted despite several attempts.

In a bid to quell a raging controversy in the market and corporate world, Mukesh had issued a statement on Monday saying that his remarks on a private TV Channel last week were "torn out of context" and that their father had "settled all issues pertaining to Reliance within his lifetime."

Mukesh also complimented the professional capabilities of the Group saying "professional resource base of Reliance is one of the strongest in the world."

"Had it not been for the professional strength, Reliance would not have emerged as a 23 billion dollar (Rs 1,00,000 crore) enterprise in a span of just 27 years," he said.

[city02 63]

Full text of letter:

Dear Colleagues,

Certain statements made by me, in response to a question on the way our businesses are heading in the future, have been distorted out of context, leading to a flurry of speculative and misrepresentative stories in the media.  These stories have also gone to the extent of casting aspersions on the legacy of our Founder Chairman as well as on the professional management of our company.

While I have issued a clarification by way of a press statement today, which I am sure you have gone through, I thought I must address all employees of Reliance through this communication, in order to present the correct perspectives:

· First of all, there is no question of any effect on the integrity of Reliance.  Reliance continues and will continue to grow from strength to strength in several initiatives in the energy value chain as well as new economy businesses.  Reliance’s commitment to break new grounds in its quest for global leadership in all major initiatives is unambiguous and resolute.

· Secondly, our Founder Chairman, Shri Dhirubhai Ambani had taken all necessary steps to separate ownership from management and has settled all of them within his lifetime.  There is no ambiguity in his legacy that the Chairman and Managing Director is the final authority on all matters concerning Reliance.

· Thirdly, the professional resource base of Reliance is one of the strongest in the world, both in terms of diversity of disciplines as well as depth in each discipline. Had it not been for the professional strength, Reliance could not have emerged as a USD 23 billion (Rs.100,000 crore) enterprise in a span of just 27 years.  Reliance has always believed in building business around people and this fundamental tenet of Reliance’s evolution is timeless.  No comment from any quarter of media or society can take away the performance that the 80,000 strong employees of Reliance have delivered and won worldwide acclaim.  The best way, in which such aspersions on professional management of Reliance can be addressed, is through renewed efforts to achieve the goals that we have set out for our company.

· Finally, in the evolution of Reliance, there have been some incidences of this type, where the organisation has been subject to speculation, sensationalism and misrepresentation.  Each time we have faced the challenge head on and have emerged stronger and more resolute than ever before.

I would like to request each one of you to go beyond issues that are distorted out of context and continue to work diligently and purposefully as you have always done before.

With best wishes,

Sincerely,

Mukesh Ambani

[Chirag 5]

'No govt role in Ambani issue'

November 25, 2004 14:13 IST

Rediff.com

Union Company Affairs Minister P C Gupta said on Thursday that the government has no role to play in the "ownership differences" in Reliance Industries Ltd as the management of the company is in perfect order.

"There can be problems between partners and there are ways to solve it. There is no role for the Centre in this (ownership issue)," Gupta said responding to queries of newspersons in Mumbai on the sidelines of National Accounting Convention.

The minister said the government role would come only if there are problems with the management.

On a query on disclosure of holdings by promoters, he said, "Promoters do disclose their holdings and it must have been done in this case (RIL) also."

Promotors are free to invest directly or through investment companies, he added.

6 Reliance Energy directors resign

November 25, 2004 14:55 IST

Last Updated: November 25, 2004 15:13 IST

Rediff.com

Six directors of Reliance Energy Ltd resigned on Thursday as differences between the Ambani brothers showed no signs of abating.

Those who resigned from the Board of Directors of Reliance Energy, handled by Anil Ambani, the younger of the two, are Satish Seth, executive chairman, S C Gupta, J P Chalsani, K M Mankad, J Ramachandran, an independent director, and Amitabh Jhunjhunwala.

No reasons were given for their resignation.

Since it is a listed company, the resignation has been intimated to the Bombay Stock Exchange, company officials said.

Mankad, Gupta and Chalasani are whole-time directors in charge of finance, operations and business development respectively. Jhunjhunwala represents the Reliance Industries Ltd on the board.

The resignations come in the midst of reports of serious differences between the brothers. Three days ago Mukesh had issued a statement that there were no "ownership issues" which he said had been settled during the lifetime of their late father Dhirubhai Ambani.

He followed it up with an e-mail message to 80,000 employees of the group that he -- the chairman and managing director -- was the final authority in all matters concerning Reliance.

Anil was expected to make a public statement but has so far chosen not to do it.

[deepu 0]

Ambani row: Kokilaben won't intervene

Indiatimes.com

AGENCIES[ THURSDAY, NOVEMBER 25, 2004 02:29:10 PM]

NEW DELHI: According to a news channel report, six directors on Thursday resigned from the Reliance Energy Board.

The names of the directors are SC Gupta, (Director Operations), Prof Ramachandran, Amitabh Jhunjhunwala, KH Mankad from Reliance Energy, Satish Seth and JP Chalssani

A Reliance Energy spokesman did not give any reason for the departure of the six board members

In another latest development, Dhirubhai Ambani's widow has declined to intervene in the ownership quarrel in the Reliance group, sources close to the family have said.

Efforts by well-wishers to settle the differences between Mukesh Ambani, the chairman and managing director of India's biggest industrial house, and Anil Ambani, vice-chairman and managing director, failed simply because Mukesh refused to sign a draft joint statement saying that all was well with the group.

Mukesh was apparently insisting that he was unwilling to go into any "family discussion" over ownership, control and management of the group as it had been settled in his favour by his late father who died two years ago, the sources, speaking strictly on condition of anonymity, told IANS.

However, sources claiming closeness to the family, quoted Dhirubhai's wife Kokilaben as saying that she did not want to mediate simply because she did not know enough about the family business that had been built by her late husband from scratch.

On the other hand, Reliance vice chairman Anil Ambani continued his public silence over differences with his elder brother Mukesh, but the two siblings are believed to be consulting their legal experts.

Sources in the two camps said that the brothers were separately consulting legal experts, which indicate that the battle may reach the courts.

The much-anticipated statement from Anil in response to the public declaration by Mukesh that as chairman and managing director he was the group's boss, did not materialise.

There has been no meeting between the brothers ever since Mukesh returned from US on Monday, the sources said.

In another development, Mukesh met ML Bhakta, who had expressed his desire to quit as member of the Reliance's Board of Directors on Tuesday, and asked him to reconsider his decision.

Despite rumours to the contrary, sources close to Mukesh Ambani insist he has no wish to force his younger brother out of the RIL board.

"There was a board meeting on July 27 where the powers of the chairman - as hitherto exercised - were formally restated and recorded. These are nameplate powers that any CEO would have. It's not as if Anil's powers were reduced. He did not raise any objection. But when the minutes of July 27 were being reconfirmed at the next board meeting three months later, Anil protested saying they were not a true reflection of what was discussed and that the resolution should be kept in abeyance. The rest of the board felt everything was in order. Anil's protest was noted."

Anil's people have also suggested that since the time of Dhirubhai's death, Mukesh has quietly been changing "ownership" such that he now controls the voting rights to the entire Ambani block of shares.

Dismissing the charge, a source close to Mukesh said, "Ownership of not a single share has changed hands in this time." The Ambani family, directly and indirectly, controls about 46% of flagship RIL's shares: 5% is held by individuals and promoter companies (owned by the Ambani family), 29% is controlled through an intricate web of investment companies, while the remaining 12% is with Reliance trusts and associates.

Even if one were to discount the charges made by Anil's people, the decks seem to be stacked in favour of Mukesh, by virtue of his being chairman. Sources said voting rights to the 29% held through investment companies rested with the "seat of the chairman", that is Mukesh.

The Mukesh camp also denied there was a move to make his wife Nita V-C of RIL. "The question doesn't arise," said a trusted confidante.

[unwantedmails 0]

Stop fighting like kids anil & mukesh. Shhhhhhh!!!!! Take your toys and go to your rooms. If Reliance is such an headache I willingly sacrifice myself for you two and am willing to be the chairman of RIL. Let me know if you need my help.

Regards,

PCOGuy

[madhumnair 0]

As far as I know Reliance Infocomm is managed by only by Mukesh and not Anil. Almost all directives that come to RIM emplyees are from Mukesh's office. So there willnot be much change as far as we as RIM users are concerned.

19556[/snapback]

You are right.. Shri MDA had even send personal mails to all employees rgd this issue saying theres nothing to worry........... Edited November 26, 2004 by Chirag

[Chirag 5]

Things are getting quite mucky with this...

I was kept in the dark: Anil

BS Bureau in New Delhi | November 26, 2004 11:12 IST

Rediff.com

Anil Ambani has written to his brother Mukesh, saying his powers as vice-chairman and managing director of Reliance Industries have been diluted by "keeping him completely in the dark".

The four-page letter to Mukesh Ambani on October 25 came three weeks before the Reliance Industries chairman and managing director admitted to a TV channel that there were ownership issues in the company.

Anil Ambani's letter also raised issues of corporate governance over the introduction and clearance of a supplementary agenda during the company's board meeting on July 27.

The agenda sought to curtail Anil Ambani's powers by stating that he "will carry out orders and directions given by the board and his functions will be under the overall authority of the chairman and managing director".

The letter says such "redefinition of powers of the managing directors is not in accordance with the law, and is in conflict with the provisions of the Companies Act, 1956, the memorandum and articles of association of our company, and the agreements approved by the shareholders for appointment of managing directors".

When contacted, a Reliance Industries spokesperson said he had no comments to offer on the issue and was "in no position to help". The spokesperson suggested that the question be directed to K Sethuraman, senior vice-president and company secretary.

But repeated phone calls to Sethuraman's office yielded no response. "He is out of his cabin and would call back, if required," his secretary said.

That the tension between the brothers has been building for quite some time is evident from an e-mail sent by Anil Ambani to his brother on July 30, three days after the board meeting.

"There appears to be more than meets the eye... (The) undue haste with which the draft minutes were prepared is causing me concern that there may be an ulterior motive and design," the e-mail says.

In his letter, Anil Ambani asked his brother to keep the supplementary agenda (item no 17 of the draft minutes) in abeyance till a final decision was taken on "a mutually agreed basis".

"However, if this is not acceptable to the chairman, my views may kindly be placed on record and taken into consideration by the board," the letter adds.

Anil Ambani's letter says the supplementary agenda was introduced without the vice-chairman and managing director's knowledge even though some of the other directors on the Reliance Industries board, and several employees, were aware of the move.

The agenda, Anil Ambani said, had a misleading title suggesting it was essentially concerned with the formation of a health, safety and environment committee.

"The clubbing together of a very substantive proposal on redefinition of the powers of the MDs with this unrelated subject obscured its real purpose and prevented a proper appreciation of its consequences," he said.

The letter also says the board did not discuss the issue of redefinition of the powers of the MDs, as "incorrectly stated in the minutes". The discussions, lasting barely two minutes, were only in relation to the composition of the health committee, it adds.

Specifically, the proposed redefinition of the powers of the MDs "reflected a substantial variation of the equation as had existed in Reliance for the past two decades, and this clearly required intensive discussion in the board", the letter says.

Anil Ambani also pointed out that contrary to claims, the directors did not unanimously approve the resolution. "The fact is there were no discussions, and there was no vote. The incorrectness of the minutes is evident from the fact that even I am supposed to have voted in favour of the proposed resolution. Clearly, I as VC & MD, would not vote for the prejudicial variation of my existing authorities and powers," he said.

The letter has sharply criticised the "unseemly and unprecedented haste" shown in the preparation of the draft minutes, and in obtaining confirmation from other directors on the date of the board meeting, before even showing them to the vice-chairman of the company. Besides, the minutes were not sent to him till two days after the board meeting, Anil Ambani's letter says.

Under the practice followed by Reliance Industries for over 10 years, draft minutes of board meetings are prepared 20-30 days after the meetings, circulated to the two managing directors for confirmation, and then sent to the other directors, the letter says.

Anil Ambani said he had expressed his concern at the turn of events to a few directors on July 30. The letter adds that the episode is a "sad reflection... of how we are seeking to preserve and carry forward the legacy and past traditions of Dhirubhai Ambani".

Anil Ambani's letter says almost 90 days after his e-mails to Mukesh he had received no acknowledgement from his brother. "Instead, it has been communicated to me on the CMD's behalf that the matter is final and cannot be altered," the letter says.

'Many long days ahead'

Reliance Energy Chairman and Managing Director Anil Ambani said on Thursday he would "continue to maintain his silence on the issue till an appropriate time".

"If there is a need and it arises, I shall speak at an appropriate time," he told the waiting media at the Reliance Centre in Mumbai.

On the mass resignations from the Reliance Energy board, Anil Ambani said, "I have received the resignations and the (Reliance Energy) board will consider the resignations."

Ambani refused to be drawn into any discussion on the "ownership issue", saying grimly, "This has been a long day and there will be many long hours and days."

[deepu 0]

SEBI to protect investors in Reliance case

PTI[ THURSDAY, NOVEMBER 25, 2004 09:42:32 PM]

MUMBAI: Securities and Exchange Board of India (SEBI) would take up the issue of Reliance group enities' corporate governance and disclosure practices with the stock exchanges to decide on future course of action for investor protection.

The capital market watchdog was monitoring developments concerning listed companies of the Reliance group, including Reliance Energy whose six directors resigned today, said a senior SEBI official.

SEBI would get in touch with The Stock Exchange, Mumbai (BSE) and National Stock Exchange (NSE), to discuss the disclosures and governance standards followed by Reliance group entities, he said.

The developments have huge implications for stakeholders including millions of shareholders of the Reliance group, he said.

The regulator is yet to decide "on course of action on the recent developments", which impacted the trading of the Reliance group scrips, as SEBI chairman G N Bajpai was currently out of the country, he said.

Meanwhile, a BSE official said the bourse has not sent any communication to any Reliance group entity to seek their version on developments, including the reported differences over ownership and exodus of directors from REL board.

An NSE official said, the exchange has not sent any notice to RIL since its chairman has clarified the status of ownership.