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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 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.

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Number of User Comments: 11

Sub: its an absolute eye wash

These guys wanted to increase their family share in reliance group. They found out a method by which they can reduce raising price of reliance ...

Posted by leo

Sub: Indian Politics Can Spoil Every Thing

Indian Politics Can Spoil Every Thing. It has spoiled all good things that India possessed; - -the culture the values the education the ethics the ...

Posted by Arindam Sengupta

Sub: comments

This is the land of tradition - salute the big brother, do what he say! Younger brothers of Ram have done so, so are of ...

Posted by t chandra shekar

Sub: Well abridged story

This piece is well abridged and well told. It covers the entire gamut of issues surrounding the Reliance' ownership tussel. Why read hundred articles; read ...

Posted by Dayanand

Sub: Ambanis at war

At the end of the day, the Indian concept of Sethji or Lalaji management does not work in modern enterprises. It is time the common ...

Posted by Krishna


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