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Ambani rift: Moves to corner Anil
BS Bureaus in New Delhi/Mumbai | November 22, 2004 09:15 IST
Informed observers do not expect much by way of a patch-up when the Ambani family meets together over the next couple of days in Mumbai.
The most that sympathetic observers hope for is a joint statement that will try and calm an anxious stock market and worried institutional investors (domestic and foreign).
The scepticism about the outcome is because recent moves by Mukesh Ambani, Chairman and Managing Director of Reliance Industries, point to an attempt to sideline younger brother Anil Ambani, who is the Managing Director of the company.
In the company's last board meeting, Reliance's directors gave Mukesh Ambani single-point responsibility for all financial and investment decisions. This was significant because in the past it was Anil Ambani who was seen as the company's financial brain and fund-raiser.
The younger Ambani is believed to have protested at the board's move, but was told that he remained a member of the investment committee.
The board's decision may have been prompted, according to informed sources, by the fact that Anil Ambani had been raising questions about the extent to which Reliance Industries has been funding Reliance Infocomm, the ambitious telecom venture which is run by Mukesh Ambani and in which Reliance Industries owns 45 per cent of the shares (the balance is believed to be owned by the two brothers).
The extent of such funding is not known, but one unconfirmed figure mentioned in this context is $3 billion, or close to Rs 14,000 crore (Rs 140 billion).
A director of the company confirmed that the board had taken a decision, but said this was only by way of reiterating the chairman's powers and that it was not something new that was done.
In a second recent move calculated to hurt Anil Ambani's interests, Mukesh Ambani has decided to postpone by two years the supply of gas to Reliance Energy (which is managed by Anil Ambani) for its proposed power projects in Uttar Pradesh and elsewhere.
Reliance Industries had earlier said in its corporate documents that the gas would be supplied in 2006, but the senior Ambani recently told Petrowatch, a website, that the gas would be supplied only in 2008. This means that Anil Ambani's plans for rapidly expanding Reliance Energy have to be put on hold.
These signals of conflict notwithstanding, the Ambani family is due to be together in its Sea Wind mansion in downtown Mumbai over the next few days, and parleys are widely expected.
Mukesh Ambani, who was on a brief holiday with his family after dropping the brick about he and Anil having 'issues of ownership' in Reliance, was due to arrive back in Mumbai late on Sunday night. Their two sisters have also arrived in Mumbai and will be in the city for a few days.
While some sources claimed that no formal meeting has been scheduled between the two brothers and their mother, Kokilaben Ambani, it is reliably understood that Anil Ambani has told his mother that whatever she decides in the dispute between the two brothers will be acceptable to him.
Some observers commented that the patch-up moves may be limited to an attempt to calm the stock market, which was jittery after the story broke on Friday as the Reliance share price fell. Given the possibility of a further fall on Monday, it was felt that some patch-up moves were essential.
An old friend of the Ambani family was reported to be working on the idea of getting the two brothers to issue a joint statement that would aim to put a cap on the burst of media attention that has followed Mukesh Ambani's brief and headline-hitting interview with a TV channel last Wednesday.