M A I N   N E W S

Ambanis reach accord
Brothers agree to split empire
Shiv Kumar
Tribune News Service

Mumbai, June 18
India’s biggest industrial conglomerate, Reliance Industries Ltd, will finally be split up between Mukesh Ambani and his younger brother, Anil, thereby ending a seven-month war between the two.

Kokilaben Ambani, their mother and widow of Reliance Industries Ltd founder Dhirubhai, announced the broad contours of the settlement in a statement released here today.

“I have today amicably resolved the issues between my two sons, Mukesh and Anil, keeping in mind the proud legacy of my husband Dhirubhai Ambani,” she said.

Under the agreement carved up with the help of prominent mediators including K.V. Kamath of the ICICI and stockbroker Nimesh Kampani, Mukesh will retain flagship company RIL and its petrochemical venture IPCL while Anil will get Reliance Infocomm, Reliance Energy and Reliance Capital.

“Mukesh will have responsibility for RIL and IPCL while Anil will have responsibility for Reliance Infocomm, Reliance Energy and Reliance Capital,” Kokilaben’s statement said.

There was much hectic activity at the Seawind apartment where Mukesh Ambani lives with his wife and children. All through Friday night till the wee hours of Saturday, mediators, accountants and others associated with the Reliance empire queued up as the brothers and their advisors hammered out a settlement.

Sources said the marathon meeting resulted in broad contours of the split being drawn up just hours before today’s board meeting.

Jain quits

The agreement came into effect immediately with Anil Ambani stepping down as Vice-Chairman and Managing Director of RIL. Anil did not attend today’s board meeting, which was chaired by his brother.

The settlement also resulted in Anand Jain, a close associate of Mukesh, quitting the board of IPCL. Anil is said to have insisted on Jain’s removal. Earlier, Anil had accused Jain of driving a rift between the two brothers.

The decision to carve up the empire will however have to be formally ratified by shareholders and the Security Exchange Board of India (SEBI).

SEBI Chief M. Damodaran did not comment on the settlement. However, the market watchdog will continue to probe the allegations levelled by Anil Ambani against the company till further orders, the sources said.

Dividing the companies

Meanwhile, the sources here said the Ambani brothers have formed multiple matrixes of holding companies to carve up their holding in Reliance. Most of the family’s holdings in the group are held by a network of companies that are intertwined in a maze that makes the actual ownership of shares difficult to unravel.

However, both brothers will not carve up control of the holding companies. In addition, Mukesh who controls the cash-rich RIL, will pay a handsome amount to his brother to run Reliance Infocomm according to sources.

The figure is rumoured to run in excess of Rs 10,000 crore though the actual amount is unlikely to be made public.

Of the total 39 per cent of shareholding with the family, both brothers own 30 per cent each while the mother holds 40 per cent of this stake.

In effect, Mukesh will now control 60 per cent of the family’s share in Reliance Industries.

On the other hand, Mukesh’s personal stake of 55 per cent in Reliance Infocomm would be bought by Anil.

RIL’s holdings in Reliance Energy, Reliance Infocomm and Reliance Capital too would be demerged and made way to companies controlled by Anil Ambani.

RIL controls 50 per cent in Reliance Energy and Reliance Capital and 45 per cent in Reliance Infocomm.

Among other options yet to be made public include creation of Special Public Vehicle in which RIL’s holding in the three companies will be transferred. Anil Ambani may then take control of the SPV.

RIL shareholders may be given shares in the Anil Ambani group as well, according to reports.

Reliance Industries Ltd is valued at over Rs 99,000 crore.

Chidambaram happy

Finance Minister P Chidambaram lauded the settlement. “I think they have kept the larger interest of the company and millions of shareholders in mind. I am very happy,” said Chidambaram from New Delhi, reacting to the settlement announcement.

He ruled out the need for any government probe. “I am happy that settlement has been reached. Where is the need for other issues?” he said.

According to market analysts here, the stock markets will see a big bullish surge as RIL scrip soars on news of the settlement.

The stock, which is hovering at around Rs 600, is expected to rise to above Rs 700.

The group claims to contribute nearly 10 per cent of the country’s indirect tax revenues and over six percent of India’s exports, and accounts for 17 per cent the Indian private sector’s profits.

Its activities span exploration, production, refining and marketing of oil and natural gas, petrochemicals, textiles, financial services, insurance, power and telecom. The family also has interests in advertising agency and life sciences.

The pending news of a settlement has already seen RIL’s value rise by more than Rs 10,000 crore during the past several trading sessions.