Reliance "Ownership Issues"

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Ambani war: Mukesh changes logo

By:

Yassir A Pitalwalla

December 11, 2004

Parent’s logo

Believe it or not, the war of words between the senior and junior Ambani brothers

has now spilled over into the group’s logos.

While the flagship Rs 74,418 crore Reliance Industries has not altered its logo,

the Mukesh Ambani-controlled Reliance Infocomm has effected a major change in its

logo.

The ‘Kar lo duniya muthi mein’ company will now sport a new tagline: A new way of

life. The R in the Infocomm logo, which was white set against a blue background,

has now been replaced by a blue R that has a much closer resemblance to the logo

of its lead investor RIL, which is controlled by Mukesh.

Old Reliance Infocomm logo

Analysts view the logo change by Infocomm as an attempt to closely align itself to

the Mukesh Ambani faction in response to Anil’s Reliance Energy’s, ‘Energy is life’

slogan and ‘A Dhirubhai Ambani enterprise’ branding. “The change is to give the company

a unified group logo.

The change in logo has begun to appear on our literature. Next in the phased logo

change programme, will be the 240 Reliance WebWorlds nationwide,” says an Infocomm

spokesperson.

The war of logos follows the announcement of two more projects in Uttar Pradesh’s

power sector by Anil, chairman and managing director of Reliance Energy, in response

to Reliance Infocomm chairman Mukesh’s announcement that it would invest more in

West Bengal to top up its Rs 1,000-crore investment in the state.

New Reliance Infocomm logo

Mukesh has apparently been told by 10 Janpath that Anil’s proximity to Congress bete

noire Mulayam Singh Yadav and the increased investment in UP is unlikely to lead

to Reliance being seen as a fit case to be aided suitably by government policy formulation.

A Reliance Infocomm spokesperson, however, says the logo change was in the offing

for a while.

Reliance Energy logo

It’s learnt that Mukesh believes the travails of his Infocomm venture with respect

to an unfavorable broadband policy and suits with respect to illegal routing of phone

calls are a direct fall-out of Anil’s proximity to the Samajwadi Party leadership.

REL has, in addition to committing Rs 11,000 crore to the Dadri gas-based power project,

bid for a Rs 4,000-crore thermal power project and for the state government’s majority

stake in the five power distribution companies in UP.

[Arun 795]

New Reliance Infocomm logo

Old Reliance Infocomm logo

Reliance Energy logo

Reliance Industries Limited logo

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Mukesh camp says split inevitable

Joydeep Ray in Ahmedabad | December 11, 2004 10:32 IST (Rediff.com)

Mukesh and Anil Ambani are heading for a formal split, according to sources close to the Mukesh Ambani camp.

The sources said Mukesh Ambani had been trying to settle the issues with his younger brother but a split "now looks inevitable". Legal options were also being explored should the need arise, they said.

"Mukesh has not indulged in a media war so far as he believes the problem with his brother is essentially in the private domain and he feels a public battle will harm the interests of the millions of Reliance Group shareholders," the sources said.

The sources also said Mukesh was deeply hurt by the attempts made by a section in the group to malign him. "The time has perhaps come for him to go on the offensive," they said.

Contrary to media reports that Kokilaben, wife of the late, Dhirubhai Ambani, had been trying to mediate between her two sons, the fact was that "nothing is in her control now", the sources said.

Mukesh Ambani would be presiding over the first convocation of the Dhirubhai Ambani Institute of Information and Communication Technology at Gandhinagar on Saturday. There were speculation that Anil Ambani would also come but company sources later said they had no such information.

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Let mom decide: Mukesh Ambani

December 11, 2004 20:54 IST - Rediff.com

Kokilaben Ambani, widow of the founder of the Reliance empire, on Saturday emerged as the likely arbiter in the battle between her two sons with the elder one Mukesh leaving 'all settlement issues' to her, a path his brother Anil had favoured a few days ago.

In an important turn in the battle for the control of the Rs 90,000-crore group, founded more than a quarter century ago by Dhirubhai Ambani, a spokesperson for Mukesh said on Saturday night that he would abide by whatever decision she takes.

Asked if this has been conveyed to Anil also, he replied in the negative saying there was no communication from the younger brother who had been talking through the media.

"Mukesh Ambani has not sought any legal separation. This is a false propaganda. He has left the entire matter in the hands of his mother (Kokilaben) and whatever she decides he will abide by it," the spokesperson told PTI.

Earlier in the day, sources in the Anil camp had accused Mukesh of turning down the efforts to stay united and seeking a 'formal legal separation'.

This was described by Mukesh's spokesman as 'a figment of imagination, baseless and nonsensical'.

In October 2002, the two brothers and their sisters, Dipti and Neena, along with their mother had signed a 'Deed of Release' leaving the entire property and assets of Dhirubhai, who died without a will, to Kokilaben.

When asked about the ongoing tussle in the Ambani family, spiritual guru Bhai Shri Oza said, "Thakurji ki kripa se sab accha hoga (By the grace of God, everything would be fine).

He did not reveal his role in efforts to solve the dispute between the Ambani brothers.

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Govt should acquire Reliance group: Swamy

Press Trust Of India

Posted online: Saturday, December 11, 2004 at 1740 hours IST

Updated: Saturday, December 11, 2004 at 1751 hours IST

New Delhi, December 11: Janata Party president Subramaniam Swamy on Saturday suggested government should intervene in the affairs of Reliance group and acquire it in "public interest".

Swamy, who has fought a long legal battle against the group, told reporters he was against nationalisation as an economic policy.

However, in the "rarest of rare" cases, a private company could be nationalised. Later, the group could be privatised, he suggested.

Edited December 11, 2004 by Puneet

[Ganesh 0]

Swami is always mad

[Chirag 5]

And the irony is that these duhs run our country!

They cant even manage their own party issues! Forget managing a company. Reliance can only be in his dreams!

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War of words on at Reliance

TIMES NEWS NETWORK[ TUESDAY, DECEMBER 14, 2004 12:21:30 AM ]

MUMBAI / NEW DELHI:

Sources in RIL on Monday said they were surprised by Mukesh Ambani's claim that he received Reliance Infocomm (RIC) shares for Rs 50 crore as part of a June 2000 agreement to grant him sweat equity. When shares were transferred to Mukesh's name, around June, they were worth about Rs 7,000 crore, according to valuations by investment banks.

However, in successive board meetings through October 2002 to late 2003, there was no mention of Mukesh as a shareholder of RIC. The fact that there was an agreement in June 2000, to confer on Mukesh 12.01 per cent of RIC stock was not mentioned during meetings, said a board member.

Sources close to Mukesh, however, said "Pursuant to an agreement between Mukesh and RCIL (a holding company for RIC) in July 2000, he was issued with warrants of RIC, which he exercised in 2004. There's nothing wrong in this and no need to inform shareholders in RIL about the agreement."

"Does Anil have to report his income from Reliance Energy or from the Rajya Sabha to the RIL board?" he asked.

But the Anil camp says it's not that RIC never came up for discussion. During one board meeting in this period, Mukesh is mentioned as "Director of both the company (RIL) and RIC."

In another meeting for finalising the acquisition of undersea cable FLAG, sources say that Mukesh excused himself from the discussions saying "he was a director of RIC," and therefore an interested party to the decisions that would be taken.

He asked Nikhil Meswani to chair the rest of the meeting. As reported by TOI earlier, it was only in June this year that Mukesh's role as a promoter of RIC came to light, in an application to raise $250m of overseas loans to RIC.

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No wrongdoing on IPOs: Reliance

Business India: Mumbai, Dec 13

Reliance Industries, India's largest private sector firm, Monday rubbished reports that its chairman was directly linked to two companies that made huge investments in buying shares of a leading public sector unit.

"During the last few days, a well-orchestrated campaign of disinformation has been unleashed about Reliance Industries, Reliance Infocomm and its chairman and managing director Mukesh Ambani," said a company statement.

Reliance is in the midst of a bitter ownership feud between Mukesh and his younger brother Anil Ambani, the vice chairman of the group.

It was reported Monday that the two companies which made huge investments in the initial public offering of energy giant Oil and Natural Gas Corp (ONGC) were linked to Mukesh Ambani.

The statement said the attempt to describe the two companies as belonging to Mukesh Ambani are "baseless and an exercise in misinterpretation and distortion of facts".

"Smart Entrepreneur Solutions Private Limited and Smart Infosolutions Private Limited, which applied for the IPO, are not unknown companies," said the statement.

"Smart Entrepreneur Solutions employed over 1,000 people and Smart Infosolutions around 3,000 people. By no stretch of imagination can these be described as little or unknown.

"These companies do not belong to Mukesh Ambani," the statement maintained.

Reliance said there was no mystery about the sources from which these companies obtained funds to subscribe to the ONGC public issue.

According to the statement, Reliance Communications Infrastructure Limited (RCIL), a Reliance group subsidiary, owns the two companies.

"RCIL did not borrow from any banks or financial institutions to provide funds to two of its companies for subscribing to the IPO," it said.

"In fact, RCIL provided funds from its own sources. It is libellous to say that the money was diverted from Reliance Infocomm to these companies."

The statement said there was no loss to Reliance Industries or its shareholders. In fact, both of them will be benefited from these investments, it added.

"Various innuendos, invectives and allegations camouflaged in the news report as questions are irrelevant and tendentious, because these two companies are not owned by Mukesh Ambani.

"There is no private gain for Mukesh Ambani, as insinuated in the newspaper reports."

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Anil Ambani calls for RIL board meet

December 15, 2004 20:15 IST

Escalating tensions with his elder brother Mukesh Ambani in the battle over the Reliance empire, Anil has sought a meeting of the board of directors of Reliance Industries Limited to discuss the 'recent developments,' including RIL's investment of Rs 12,000 crore (Rs 120 billion) in Reliance Infocomm.

Anil, in his letter, has also sought discussion on the resignation of 'our most esteemed' M L Bhakta, one of the closest friends and associates of their late father Dhirubhai Ambani (who had quit the RIL board), and the recent letter from the board of directors of Reliance Energy Ltd headed by him to the RIL board.

Acting on the letter written by Anil on December 6, Vinod Ambani, RIL company secretary, has written to all the members of the board of directors seeking a suitable date for convening the meeting.

Anil said in his letter that it was with 'great sadness and anguish' that he had witnessed the events of the last three weeks which had affected the image of 'our company' and the interests of over 30 lakh (3 million) shareholders and all other stakeholders.

"Dhirubhai, to most of us, was not just the chairman of the board, but more importantly a close personal friend, a confidante, a teacher, a guru and a guide. Dhirubhai, the father of the Indian capital markets, wished, above all else, to maximise value for his first, last and only constituency -- Dhirubhai's real family of over 30 lakh shareholders," he said.

"In the absence of his guiding hand and in pursuance of what I am sure he would have wished us to do, I thought I could do no better than bring to your attention the following matters that need our collective wisdom," he said in the letter to the RIL board of directors listing the three issues.

He also recalled that he had visited the Shreenathji temple in Rajasthan and Balaji temple in Tirupati to pray for peace and tranquility for the entire Reliance family and for God to provide "courage and strength to protect, preserve and enhance Papa's legacy."

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Sebi focus on Reliance Cap

Anindita Dey & Janaki Krishnan in Mumbai | December 16, 2004 08:58 IST

The Securities and Exchange Board of India, in consultation with the Reserve Bank of India, has called for financial details of Reliance Capital, the Reliance group's non-banking finance company, in the wake of the ongoing feud between the Ambani brothers.

As joint regulators of Systemically Important Financial Institutions, capital market watchdog Sebi and banking industry regulator RBI had already identified Reliance Capital as one of the important financial conglomerates, banking sources said.

The Reliance spokesman was not available for comments on Sebi asking the Reliance group for the financial details of Reliance Capital. Sebi sources said the capital market regulator had asked for "some data" in the first week of December but downplayed the whole matter.

While officials described it as a "routine development", sources at both the regulators said they needed to examine certain financial details "over and above the existing data which have been provided earlier".

Reliance Capital is a listed NBFC and operates a mutual fund under its subsidiary, Reliance Asset Management Company.

Banking sources said the regulators had specifically sought data on Reliance Capital's exposure to companies within and outside the Reliance group and high-value transactions with such companies.

According to these sources, an analysis of the data is important as regulators feel that the family feud could lead to delays in or postponement of projects or the group's commercial ventures, which ultimately may have a bearing on the cash flow of banks.

Most banks have a large exposure to the Reliance group as most of the group companies are triple A-rated companies with sound economic fundamentals. The banks recently reviewed their exposure to the Reliance group but found that the family feud had not affected the group's loan-servicing ability.

Meanwhile, the inter-regulatory committee for special monitoring of financial conglomerates is understood to have identified various corporate groups like the Tatas, the Birlas, the Bajajs and NBFCs like GE Capital and Sahara as SIFI.

The committee consists of nominees of the three market regulators -- Sebi , RBI and the Insurance Regulatory Development Authority . The objective is to monitor entities that are deemed to be "too big to fail".

S&P may review RIL rating

The rift between the Ambani brothers has the potential to weaken the Reliance group's businesses, except oil and petrochemicals, according to Standard & Poor's.

The change in strategic direction and business plans as a consequence of the differences between the two brothers would warrant a review of RIL's ratings, S&P said on Wednesday. The impact on the group companies would be particularly on its "day-to-day operations", the agency said.

However, the outlook on Reliance's local currency rating is stable. On the liquidity of the Reliance group, S&P said it was "weak". "In the event of a default by Reliance, recovery prospects on its debt are low in the near- to medium-term."

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Ambani feud worries CLSA, Merrill Lynch

BS Markets Bureau in Mumbai | December 16, 2004 09:22 IST

Foreign brokerages are clearly getting worried about the long drawn out spat within the Ambani family. In a recent report to clients, foreign brokerage CLSA said: "The energy of the owner-family may get dissipated in resolving the dispute."

Further, it says, "If resolution of this issue gets out of the realm of the family (either through a politicisation of the dispute, or through a court battle or otherwise), the repercussions could well be many-fold."

In much the same tone, DSPMerrill Lynch has said that a prolonged family dispute may delay upcoming projects in the Reliance group. "A prolonged dispute over asset division could harm the company," it said.

Reliance has strong growth potential in its refining and infocomm businesses, it said. Arguing that the Reliance Industries stock has been a major underperformer among Sensex stocks in the last three months, CLSA says: "The overwhelming factors that will drive Reliance's stock performance in the near-term will not necessarily be related to business fundamentals."

CLSA says: "There is no denying the fact that Reliance offers good value at current levels, especially with both refining and petrochemical cycles being in a sweet spot."

Among the key issues to be resolved, CLSA says, the foremost relates to the ownership of the web of investment companies listed as "Persons acting in concert."

Commenting on speculation on the division of assets within the Reliance group, CLSA notes: "In our view, Reliance Industries as a single entity can create more value to its shareholders (given the synergies it has), and thus any re-organisation will have to be carefully evaluated.

"The best case scenario is an obvious one -- the family amicably resolves the issue and the entities are left as they are. The worst case scenario is a prolonged legal dispute, as this could well sap a lot of familial energy that has been a key force for the success of the group."

Further CLSA says corporate governance issues in the company are an issue, especially, "issues relating to how independent the board is and whether the interests of the minority shareholders have been compromised."

The brokerage says "Reliance's corporate governance rankings have always been on the lower quartile, and lack of transparency and doubts about board independence have always been known."

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Infocomm parked dues with group company

BS Corporate Bureau in Mumbai | December 17, 2004 09:20 IST

Reliance Infocomm parked almost Rs 3,500 crore (Rs 35 billion) in receivables in an off-balance sheet deal at the end of March 31, 2004, with Smart Entrepreneur Solutions Pvt Ltd, a Reliance Communications Infrastructure Ltd subsidiary.

This had the effect of freeing Reliance Infocomm's books of receivables to that extent. Had this not been done, Reliance Infocomm would have had to make provision for bad debts to that extent.

Around March or April this year, Reliance Infocomm was negotiating with the government of Singapore and Temasek Holdings for them to take a stake in the company, a source said, but the deal did not fructify.

Last financial year Reliance Industries Ltd entered into an arrangement with Reliance Infocomm to buy and sell mobile handsets, maintain accounts, bill subscribers and collect the money due to Reliance Infocomm.

But in the process, RIL accumulated receivables amounting to almost Rs 3,500 crore. RIL vice-chairman and managing director Anil Ambani declined to sign the RIL balance sheet, arguing that RIL should not take this on its books. It was then decided that the receivables should go on Reliance Infocomm's books.

Reliance Infocomm had internally estimated that 20 per cent of the revenues from subscribers (that is, receivables) would not be paid and had kept aside Rs 470 crore (Rs 4.7 billion) for this {implying thereby that its revenues would be Rs 2,350 crore (Rs 23.5 billion)}.

After Anil Ambani raised objections to the receivables being put on RIL's balance sheet, they were passed on to Smart Entrepreneur Solutions Pvt Ltd. RCIL gave a loan of Rs 3,426 crore (Rs 34.26 billion) to Smart Entrepreneur to finance this. RCIL is Reliance Infocomm's holding company.

Asked about all this, a senior Reliance group executive said RIL transferred the receivables to Smart Entrepreneur Solutions. "It was a routine commercial transaction, in the nature of a securitisation transaction. RIL was fully paid."

He also said, "There is no proof that Anil Ambani opposed the move to retain the receivables on RIL's balance sheet."

On the negotiations with the government of Singapore and Temasek Holdings, he added: "Financial institutions from all over the country have shown interest in picking up a stake in the company. The process is on. However, Reliance Infocomm has not taken any decision on this."

RIL holds a 45 per cent stake in RCIL, which in turn has a 65 per cent stake in Reliance Infocomm. RIL also holds a 7.5 per cent stake directly in Reliance Infocomm.

RIL chairman and managing director Mukesh Ambani and others hold a 55 per cent stake in RCIL and a direct 27.5 per cent stake in Reliance Infocomm.

Unwrapping a deal

In March Reliance Industries entered into an arrangement with Reliance Infocomm to buy and sell mobile handsets, maintain accounts, and bill subscribers for Reliance Infocomm

But in the process Reliance Industries accumulated receivables amounting to almost Rs 3,500 crore

Anil Ambani declined to sign the Reliance Industries balance sheet, arguing Reliance Industries should not take this on its books

The receivables were then passed on to Smart Entrepreneur Solutions, a subsidiary of Reliance Communications Infrastructure Ltd

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Infocomm receivables 29% of gross revenue

BS Bureau in New Delhi | December 20, 2004 09:08 IST

Reliance Infocomm Ltd's level of receivables is extremely high. Its balance sheet shows that its receivables on March 31, 2004, amounted to Rs 837.86 crore (Rs 8.38 billion), as much as 29 per cent of its gross revenues for the year.

What is more, this was the level of receivables after making a provision of Rs 436.26 crore (Rs 4.36 billion) for bad debts. This high level of receivables has also led the company to assign its sundry creditors to an associate company, and the balance sheet says an amount of Rs 2,045.94 crore (Rs 20.46 billion) was paid to an associate company for assignment of sundry creditors.

That, in effect, means Reliance Infocomm's debts were transferred to an associate company. Since Reliance Infocomm remains ultimately liable to its creditors, a sum of Rs 1,547.72 crore (Rs 15.48 billion) appears as a contingent liability in its books.

The maze of transactions with related parties does not end here. The company's expenditure for financial year 2004 shows that as much as Rs 389.11 crore (Rs 3.89 billion) was paid to associate companies for items such as maintenance and marketing charges.

For instance, "marketing service charges" amounted to Rs 237 crore (Rs 2.37 billion), probably for the services provided by Reliance Industries to Reliance Infocomm.

A large chunk of the payment for the company's capital expenditure also went to an associate company. Of a total addition of Rs 10,534.59 crore (Rs 105.35 billion) to its gross block during the year, Rs 3,101.41 crore (Rs 31.01 billion) was on account of "indefeasible rights of connectivity".

Sources in the group say this amount was probably paid to associate company Reliance Communications Infrastructure Ltd as a lump sum payment for making long-term use of its backbone.

During the year, Reliance Infocomm made a loan of Rs 970.08 crore (Rs 9.7 billion) to one of its subsidiary companies, Reliance Gateway Net Ltd, for investment in Flag Telecom.

And finally, even in the very early stages of its existence, Reliance Infocomm has invested Rs 2 crore (Rs 20 million) in a company called Reliance Infoinvestments Ltd, the details of which are unavailable to investors.

When asked to clarify these entries in Reliance Infocomm's balance sheet, a Reliance group spokesperson referred Business Standard to another senior group executive.

However, an e-mail sent to the executive was not responded to. In the financial year 2004, Reliance Infocomm made a net loss of Rs 390.31 crore (Rs 3.9 billion) on total income of Rs 2,706.96 crore (Rs 27.07 billion). Operating profits before amortisation and depreciation amounted to Rs 159.81 crore (Rs 1.6 billion). Diluted earnings per share for financial year 2004 were a negative Rs 1.03.

The company's net worth amounted to a huge Rs 11,697.34 crore (Rs 116.97 billion), thanks largely to the massive premium on the issue of preference shares, which was Rs 8,480.43 crore (Rs 84.8 billion).

Equity capital amounted to Rs 416.35 crore (Rs 4.16 billion) while preference capital was Rs 181.24 crore (Rs 1.81 billion). Loans from banks and financial institutions amounted to Rs 2,442.36 crore (Rs 24.42 billion). Practically all the money raised from share issues and loans was used to fund capital expenditure.

[deepu 0]

Mukesh took Macronet route to sweat equity in Infocomm

BS Corporate Bureau in Mumbai | December 22, 2004 08:55 IST

The 12 per cent sweat equity that Reliance Industries' chairman and managing director Mukesh Ambani acquired in Reliance Infocomm in March/April this year resulted from an option given to him nearly four years earlier by an entirely different company, called Macronet Private Limited.

Reliance Infocomm did not exist when the sweat equity option was given; nor did Reliance Industries have any investment in Macronet at the time.

Further, the value of the sweat equity option, at the time it was given, was Rs 360,000(12 per cent of Macronet's capital base of Rs 30 lakh). By the time the option was exercised in 2004, this became Rs 50 crore (Rs 500 million) at face value.

The directors of Macronet in July 2000, when the sweat equity option was given to Ambani, were Ajeet Verma (a former Bank of India official who now works for Reliance Energy) and Ashok Jain (an accountant in a Reliance group firm).

Mukesh Ambani joined the board as managing director in July 2000. Around the same time, Manoj Modi, a close associate of Mukesh Ambani, also joined the company as a director.

The two companies involved went through a series of transformations. Macronet was renamed Reliance Infocom (spelt with a single 'm') in November 2000, and then Reliance Communications Infrastructure Ltd (RCIL) in March 2002, by which time it was investing in the hardware backbone for the Reliance telecom venture.

Along the way, Reliance Industries invested over Rs 2,330 crore (Rs 23.3 billion) in RCIL, but Mukesh Ambani never exercised in this firm the stock option that had been given to him in July 2000.

On a separate corporate track, there existed a firm called Reliance Infocomm (with two 'm's), which was merged into another firm called Reliance Information Communications, which was immediately renamed Reliance Infocomm.

Both Reliance Industries and RCIL have invested in Infocomm, which now handles the telecom business. It is this firm, in which the original Macronet (now RCIL) holds the majority stock, which eventually gave Mukesh Ambani his sweat equity.

Asked why Ambani had taken sweat equity in one company when it had been offered to him in another, a senior Reliance group executive said, "The sweat equity arrangement was such that Mukesh Ambani would be offered 12 per cent sweat equity in the company which would run the voice business. Since Reliance Infocomm now runs the voice business, the offering of sweat equity in Infocomm to Mukesh Ambani was in line with the arrangements arrived at between him and Macronet."

Asked whether the existence of Mukesh Ambani's sweat equity option had been disclosed to RIL when it invested first in RCIL and then in Infocomm, the executive said: "Reliance Industries had invested in the Infocomm business three or four months after the sweat equity arrangement was arrived at. Reliance Industries knew about the arrangement from the very beginning of its investment. The allegation that Reliance was kept uninformed about the sweat equity arrangement is baseless."

He also maintained that since Reliance Industries had been informed, no corporate governance norms had been violated.

[deepu 0]

FAQ: Why are the Ambanis at war?

Sheela Bhatt | December 21, 2004

Do you find it difficult to understand what the Ambani brothers are fighting over?

An easy way out would be to ignore it totally as not more than 5 per cent Indians invest in the stockmarkets.

But if you are still interested in the power that Reliance wields and the unmatched glamour of the Ambanis, here is a look at some of the most debated questions and their answers.

Why are Mukesh and Anil Ambani fighting? Most people felt they have not been on good terms for a long time, but what provoked Mukesh?

Mukesh and Anil did not get along very well even when Reliance group founder Dhirubhai Ambani was alive.

Insiders suggest that there has been a lack of camaraderie between Mukesh's wife Nita and Anil's wife, former Bollywood star Tina Munim. Sources say the body language of the two Ambani bahus when they appeared in public spoke louder than the buzz about their 'envy' for each other.

But things were not bad enough for the brothers to bring their squabble into the open. Sources in the Mukesh camp told rediff.com that Anil joined politics -- without informing elder brother Mukesh or the Reliance board -- with the help of Samajwadi Party leaders Amar Singh and Mulayam Singh Yadav.

Sources in the Mukesh camp claim Anil also committed a huge amount of money in Uttar Pradesh. Later, they claim he tried to change Reliance Energy's articles of association. As chairman, he wanted the power to nominate Reliance Energy's board of directors. He was, these sources claim, trying to get control of Reliance Energy to curtail Mukesh's hold over the company by virtue of being chairman of the parent Reliance Industries Limited.

The younger Ambani, sources in the Mukesh camp claim, also wanted to buy a huge hospital in Mumbai to hand over to his wife Tina. He also showed an interest in the modernisation contract for the Mumbai and Delhi airports.

All these things were being done without the Reliance chairman's consent or without discussion within the Reliance board of directors, sources in the Mukesh camp claimed.

The investment plans and Anil's 'politically incorrect' alliance with the Samajwadi Party provoked Mukesh to assert himself, the sources say.

Why such an ugly fight in the open?

One simplistic answer is money. But an intriguing factor abutting the Ambani rift is the battle for Uttar Pradesh between the Samajwadi Party and the Congress.

Since the United Progressive Alliance government has come into power, Mulayam Singh Yadav and Amar Singh are trying to form a Third Front comprising anti-Congress and anti-Bharatiya Janata Party forces.

Reports suggest that Anil took an active part in the deliberations over the possible formation of a Third Front in national politics.

Now that is not done, thinks Mukesh.

After all, the Reliance brand is too big to be mired by the Samajwadi Party's Lucknavi politics.

Also, the Sonia Gandhi camp has an interest in neutralising the personal rapport between Anil and Defence Minister Pranab Mukherjee. Mukherjee has been a friend of Dhirubhai and his family since the early 1970s and his goodwill for the Ambanis remains intact.

Mukherjee -- who Sonia apparently does not trust fully -- now had a direct and reliable contact in Mulayam Singh Yadav's camp. The Sonia group considered the indirect link a risk.

Congress leaders are the most experienced, wily and insecure lot in Indian politics. They started sending signals to Reliance. The finance ministry delayed the extension of the Central Tax Benefit Scheme to the earthquake-hit Kutch region which was to largely benefit Reliance through sales tax and excise exemptions.

Reliance was toying with an expansion of the Jamnagar refinery project. Even though Mukesh did all the things he can to convince the Congress leadership to ensure the continuity of old ties, the party tightened the noose in many ways.

When Anil announced his candidature for a Rajya Sabha seat in Lucknow, the Congress leadership in New Delhi was caught unawares.

Anil, it is said, kept his Congress contacts in New Delhi in the dark about his political intentions.

How could the Congress ignore the fact that the vice- chairman of India's biggest private sector conglomerate and one of the richest men in India was trying to be a part of a political group that has been wanting to depose the Manmohan Singh government?

It became one of the major reasons that fuelled and fast-forwarded Mukesh and Anil's fight into the open to lay claim to Dhirubhai's legacy.

The fight that started with Mukesh's remarks on there being 'ownership issues' in the Reliance group gathered more colour when he met Congress president Sonia Gandhi on December 4.

The first round of the battle seemed like it was over, but Anil fired a salvo at his elder brother. In a statement on December 7, he said that Reliance Industries had been kept fully informed about the investment plans of Reliance Energy, the power firm that Anil heads.

On December 8, he wrote another letter to Mukesh questioning his ownership assertion, asking how was it that neither the stock exchanges nor the market regulator -- SEBI -- were not informed about Dhirubhai's plan.

The battle for the Dhirubhai's legacy has just begun.

Why can't they settle their differences amicably or legally?

The slicing of the Reliance empire into two (Mukesh and Anil), or five parts (Mukesh, Anil, mother Kokilaben, and two sisters -- Deepti Salgaocar and Nina Kothari) is extremely difficult.

Sources say it is just not possible to slice the family without damaging the broader interests of the companies they manage.

Second, the two brothers are like the North Pole and the South Pole, according to a senior Reliance executive who joined Dhirubhai's businesses some 30 years ago.

If Mukesh, being the chairman and managing director of Reliance Industries, is the boss, Anil is no less ambitious.

Mukesh has kept the top executives on his side and reporters covering the Ambani battle know it is difficult to find many Anil men amongst Reliance's top managers.

The Mukesh camp goes to the extent of claiming that out of the group's 80,000-odd employees Anil has only a couple of media advisors on his side.

They also add that Anil, a very fine human being, has the sympathy of many of Reliance's big shots.

But even the sympathisers Anil has within the group cannot stomach the fact that Reliance is being dragged into the muddy waters of Delhi politics. In his time Dhirubhai was known as the power behind the throne. Today they feel that Anil's foray into politics has reversed the situation.

Where do matters stand now?

The investment pattern of the Reliance group is very complex. Mukesh is said to have the actual hold on the group's investment companies.

It has been reported that Dhirubhai did not divide his wealth when he was alive. He died without leaving a will, thereby making things more confusing.

It sounds almost incredible that a man known for his vision did not visualise a situation inside his home -- a likely feud for his legacy.

According to sources close to the family, after Dhirubhai's death, both brothers have been claiming contrary things about Dhirubhai's 'last wishes.'

Anil is said to have said it was Dhirubhai's dream that he (Anil) join politics. By entering the political arena, he is simply fulfilling his father's dream. He took his mother Kokilaben's permission to do so, his sympathisers say.

Kokilaben is said to support Anil's political ambitions but Mukesh disagrees with this.

Also, sources say, Dhirubhai 'divided' the family assets orally in the presence of his children and wife. But again, Anil and Mukesh are in complete disagreement over what Papa said and how much each of them was to get. So now, whatever is on paper -- meaning the actual shares in each individual's name -- will become crucial.

It is believed that Mukesh is richer than Anil. And that is why the Reliance board and the people with a keen interest in the company's profits salute him.

But all is not lost for Anil because Kokilaben's heart is in the right place. She is fully aware of her position and the value of her opinion. Also, Anil knows the sympathy factor working for him will give him some mileage.

Another factor is that Mukesh, shrewd as he is, would not want the family tussle to gain unmanageable proportions, thereby exposing RIL's financial-investment secrets in the media.

So what next?

The first fallout of the Ambani battle is that it is now official -- both brothers are fighting for their father's legacy. In the conservative Ambani family, Lakshman is trying to become Ram.

Many believe Mukesh deserves a bigger slice of the pie on merit, but Anil may be in a position to say one day that 'Mere paas Ma hai.'

And that makes this story dramatic.

The drama has also demonstrated that Reliance has tremendous goodwill and the enviable support of small and big investors who have expressed themselves in the media well, asking both brothers to cool down. One investor said the trust of the people is more valuable than the value of the khazana (treasure) that both brothers are fighting over.

To do some damage control and keep his Congress channels alive, Anil may have to curtail his political ambitions. Mukesh will need to set things right if he wants the image of the leader with a human face. He stands to lose much if Anil successfully portrays himself as a victim of a wily elder brother's Chanakya tactics.

Mukesh probably would also not like to see Anil growing strong politically. Right now, there is some convergence of interest between the Congress and Mukesh.

One media report suggested that the Congress may offer Mukesh a Rajya Sabha seat.

Meanwhile, the Ambani battle continues to rage.

[Arun 795]

Mukesh Ambani gives up 500 mn shares of Reliance Infocomm

Mumbai, Dec 23 : In a fresh twist to the Reliance Industries ownership feud, chairman Mukesh Ambani Thursday announced he would give up his 12 percent stake or 500 million shares in the group firm Reliance Infocomm.

"For the last few weeks, a sustained campaign is being carried out about the acquisition of 500 million Reliance Infocomm shares at face value by Mukesh Ambani," said a company statement issued here.

Mukesh has sought annulment of the transaction and the board of Reliance Communication Infrastructure Ltd., the holding company of Reliance Infocomm, has accepted his request, said the statement.

Reliance Communication Infrastructure has informed the parent Reliance Industries of this decision. The detailed communication sent on this will be placed at the business conglomerate's board meeting Monday, it said.

Mukesh had acquired 12 percent stake in the telecom services company Reliance Infocomm as sweat equity.

Though Reliance Industries is the largest investor in Infocomm, the parent company's board was apparently not informed of the sweat equity given to Mukesh.

The issue is one of the major points of differences in the ongoing bitter ownership feud between Mukesh and his younger sibling Anil Ambani.

Earlier on Thursday, Anil, vice chairman of Reliance Industries, called for a detailed discussion on the shareholding pattern of Reliance Infocomm in the upcoming board meeting.

In a letter written to board members of Reliance Industries, Anil said despite Reliance being the largest stakeholder in Reliance Infocomm, the changes in equity pattern were not brought before its board.

Demanding a full discussion on the issue in Monday's board meeting, Anil has reportedly written that changes in Reliance Infocomm's holding made by Reliance Industries had neither been discussed nor approved.

Reliance Industries' board of directors will meet here Monday to discuss the buy back of company's shares.

It will be the group's first board meeting after differences over the control of the mammoth business empire between the Ambani brothers, who run Reliance Industries, became public.

Reliance Industries had earlier said the board would "consider, inter alia, proposal for purchase of company's own equity shares, that is buy back of shares".

The notification for the board meeting came a few days after Anil reportedly called for a meeting of the company board to discuss "recent developments".

Anil, locked in a bitter ownership feud with Mukesh, said he had witnessed the events of recent weeks after the family rift came out in the open with "great sadness and anguish".

[Arun 795]

Anil declares war on Mukesh

December 27, 2004 12:04 IST

Declaring a war against elder brother Mukesh, Reliance Industries Ltd Vice-Chairman and Managing Director Anil Ambani on Monday lashed out at the proposed buyback of shares, ahead of the crucial board meeting, questioning the intentions of the move.

"There is more than what meets the eye," Anil said in a surprise move before entering the flagship company's headquarters at Maker Chambers here to participate in the 12-member board meeting.

Severely criticising the decision to hold the board meeting for the buyback, Anil said: "I was not consulted or informed about the decision before they informed the stock exchanges."

This is for the first time that Anil has launched a direct attack on the happenings in RIL ever since the proxy war between the Ambani siblings started more than a month back after Mukesh said there were some 'ownership issues' in the Reliance Group founded by his father, late Dhirubhai Ambani.

Reacting strongly, the Mukesh Ambani camp termed as "selfish" the statement of Anil, saying: "The buyback scheme was appreciated widely as a move to boost investors confidence and protect the rights of shareholders."

Sources close to Mukesh Ambani said Anil's opposition to the buyback is a proof that his interests are in complete variance with those of the shareholders. He wants his personal issues to be settled first at the cost of shareholders, they added

Taken aback by Anil's criticism a day before the late Dhirubhai's birth anniversary, they said the RIL headquarters was being flooded by telephone calls from shareholders subsequent to the younger Ambani's opposition to the buyback of shares.

Driving his Land Rover, Anil stepped out before the waiting mediapersons at the company headquarters and questioned the appropriateness of the buyback proposal at a time when several other serious issues need to be addressed.

Justifying his move, he quoted a Chinese philosopher to say the 'objective of a war is peace.'

"And to this I would add two more elements -- dignity and above all self-respect."

Commenting on the company's scrip on the bourses, Anil said: "If you look at the recent run up at the stock prices after the announcement of buyback, I believe there is more than that meets the eye in terms of what is happening in the market place."

It is for the first time in the history of corporate India that a vice chairman and managing director of a company is questioning the buyback proposal of the firm just before the board meeting and after the announcement of the proposal in terms of appropriateness, while hinting at some behind the curtain moves.

According to market analysts, market regulator Securities and Exchange Board of India would have to look into the entire gamut of RIL buyback, including in terms of insider trading and price manipulation.

Anil said: "I believe considering a buyback at this stage is completely inappropriate as there are several serious issues that the company faces which need to be looked at."

Invoking the legacy of Dhirubhai, Anil said: "The Reliance group was a dream of my father and is a tribute to India and it is people and I would endeavour to protect and enhance his legacy."

[Arun 795]

RIL board okays buyback @ Rs 570; Anil abstains

December 27, 2004 13:54 IST

The Reliance Industries Ltd board, under the chairmanship of Mukesh Ambani, on Monday fully supported the buyback of shares brushing aside the criticism and objections raised by vice-chairman Anil Ambani.

The RIL board approved the buyback at Rs 570 per share, sources said.

Meanwhile, Anil Ambani, Vice Chairman and Managing Director of Reliance Industries Ltd, abstained from voting and left immediately after the board meeting of the company.

Anil is likely to make a comment on why he abstained from voting on the crucial issue.

The maximum buyback price represents 11 per cent premium over the average one year trading price range and 9 per cent over the last closing price of 524 on Friday, December 25.

The board approved the proposal of the company's fully paid up equity shares of Rs 10 each at a price not exceeding Rs 570 per equity share, payable in cash, up to an aggregate amount not exceeding Rs 2,999 crore (Rs 29.99 billion), the statement said.

"This represents the largest ever equity share buyback in India," an RIL statement said. The RIL board approved the provision for the buyback scheme from its reserves of Rs 30,000 crore (Rs 300 billion).

After the approval of RIL share-buyback, discussions started on more contentious issues relating to the equity pattern and investment in Reliance Infocomm and the future of Reliance Energy Ltd, sources in the company said.

In a statement earlier, Anil Ambani said: "If you look at the recent run up at the stock prices after the announcement of buyback, I believe there is more than what meets the eye in terms of what is happening in the market place."

It is for the first time in the history of corporate India that a vice chairman and managing director of a company is questioning the buyback proposal of his firm just before the board meeting and after the announcement of the proposal in terms of appropriateness while hinting at some behind the curtain moves.

Bhakta attends board meet

M L Bhakta, one of the directors on the board of Reliance Industries Ltd, who had tendered his resignation and later withdrawn it, attended Monday's meeting called to consider buyback of RIL shares.

The withdrawal of Bhakta's resignation, which was understood to have been accepted by the board, was the first item on the agenda followed by the buyback.

Within days of the spat between the two Ambani brothers, Bhakta had announced his resignation following which Mukesh visited his residence asking him to reconsider it.

SEBI assessing legal provisions

Market regulator Securities and Exchange Board of India today started assessing the legal provisions of the buyback in the wake of Anil Ambani's comments before the RIL board meeting.

SEBI Chairman G N Bajpai and Director Anantharamnan are believed to have started discussions on it within minutes of Anil Ambani's statement that "there is more than that meets the eye," in relation to the buyback.

Senior SEBI officials said there was enough scope to look into the entire issue. BSE officials, however, declined to comment on the issue.

[chandramauli 0]

hi ..all ...

it would be nice if u all post your view/opinions on the news article too rather than just cut copying paste ...!!

[deepu 0]

Anil Ambani quits as IPCL vice chairman

January 03, 2005 14:22 IST

Anil Ambani on Monday resigned as vice chairman and director of the Reliance group company India Petro Chemicals Ltd.

When contacted a spokesperson for Anil Ambani, who is engaged in a battle with elder brother Mukesh over control of Reliance empire, confirmed the news.

The Reliance Industries had acquired erstwhile public sector petrochemicals company in 2002 by successfully bidding for government equity and become a strategic partner in IPCL.

RIL Chairman Mukesh Ambani heads the petrochemicals company.

Reliance Industries Ltd, India's largest petrochemicals company, outbid Indian Oil Corp to gain a 26 per cent share and management control of ICPL in May 2002.

While Mukesh Ambani assumed the chairmanship of IPCL, younger brother Anil Ambani was appointed vice-chairman.

It paid Rs 1,490.86 crore (Rs 14.908 billion) for acquiring the government's 26 per cent stake and than made an open offer for additional 20 per cent stake. Reliance holds 46 per cent stake in IPCL, the control of which gives it two-thirds of India's 2.4 million tonnes of ethylene capacity.

The government sold its residual stake of 33.95 per cent in IPCL in March this year. Currently public holding in IPCL is 18.79 per cent.

[deepu 0]

Ambani brothers to split: Report

The Ambani brothers, engaged in a battle for ownership of the Reliance Group, have decided to split, a television channel reported on Thursday.

Aaj Tak said the decision was taken when the entire family, including mother Kokilaben Ambani and sisters Dipti Salgaocar and Nina Kothari, gathered at their residence in south Mumbai on December 28 to mark RIL founder late Dhirubhai Ambani's birth anniversary.

Kokilaben Ambani and ICICI Bank chief K V Kamath helped settle the issue, the channel said. The group's flagship company, Reliance Industries Limited, would not be split but restructured in a manner that will keep the brothers from stepping on each other's toes.

When contacted, a RIL spokesperson said that the report is pure speculation and the company would not like to comment. He was not aware of any restructuring in the company and also pointed out that he represents the company, not the Ambani brothers.

Reports of differences between the brothers had been the doing the rounds for some time but gained credibility in November 2004 when elder brother Mukesh admitted to the same while talking to CNBC TV 18 channel.

Since then, the issue has received extensive media coverage.

On Wednesday January 5, the Ambani brothers traded fresh accusations, in the name of the company's shareholders numbering about three million.

Anil Ambani, vice-chairman of RIL, made public yet another instalment of the proposals he had mooted at the December 27 board meeting, which had solidly backed his brother and RIL chairman, Mukesh Ambani.

Anil, through his spokesman, said that in a presentation to the board, he had proposed that 12% equity of RIL held by the company's Petroleum Trust and four companies, whom he did not name, be distributed free among the shareholders.

Ignoring this, the board had, instead, approved Mukesh's proposal for buyback of shares.

Sources close to Mukesh responded by saying it was Anil who had suggested, when the merger of RIL and Reliance Petroleum Limited took place in 2002, that the 12% stock be kept as treasury stock.

Anil had suggested at the December 27 board meeting that the maximum price for the buyback of shares should be only Rs 450 against the chairman's figure of Rs 570, which was approved by the board, they said.

Revelations like these have drawn intense scrutiny - from investors, business associates/rivals and regulatory bodies - to the working of the company.

The Securities and Exchange Board of India has asked RIL for a detailed briefing of the decisions taken at various board meetings in the last couple of years and specifically to classify the various decisions the company thinks are of a price-sensitive nature.

On Thursday December 6, Anil Ambani met Finance Minister P Chidambaram in Delhi. It was not immediately known as to what they discussed.

He had then met Prime Minister Manmohan Singh and handed over a donation of Rs one crore to the PM's Relief Fund, for tsunami affected persons.

The brothers have avoided speaking to the media directly about their ongoing battle.

What will happen to Reliance Infocomm

Edited January 7, 2005 by deepu

[chandramauli 0]

will it (reliance) reamin india's largest pvt managed company .....?

Edited January 7, 2005 by chandramauli

[deepu 0]

Anil wants 3hrs with Mukesh minus cronies

----------------------------------------------------

I love my brother and if I get three hours alone with him, we will settle our differences, says Anil Ambani, quoted a business TV channel. Alone he says, meant no cronies should be with him.

This was a pointed hint at Anand Jain, who had been one of the main bones of contention between the brothers. And Anil said there was no question of taking back his resignation from the IPCL board until Jain was thrown out of it.

"Lets hope the issue gets resolved soon"

[Chirag 5]

A poor, ill-educated man created 20 billion dollar Reliance industry.

Two business graduates from Stanford etc, busy breaking it up.

That 's education.