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Tue, Dec 28, 2004 - Page 12 News List

Ambani brothers' feud grips India

FAMILY SPAT The long battle between the two brothers for control of the Reliance Empire was set to come to a head at a board meeting yesterday

AP , NEW DELHI

The vice chairman of India's Reliance Industries, Anil Ambani, follows the proceedings at the release of a Gujarati writer's book in Bombay earlier this month. Ambani is locked in a battle with his elder brother Mukesh for control of the Reliance empire.

PHOTO: AFP

It has become India's most famous sibling rivalry.

The public feud between the Ambani brothers, two of India's richest businessmen, has the country enthralled. After all, at stake is a multibillion dollar Fortune 500 business empire that their father, a former gas station attendant, built up from scratch before dying without leaving a will.

The family drama at Reliance Industries Ltd, India's biggest private company, headed for a showdown as Mukesh Ambani, 47, and Anil Ambani, 45, prepared to slug it out at a board meeting yesterday.

"As I reflect on the events of the last many weeks, I am reminded of the Chinese philosopher who said that the objective of war is peace," Anil, the vice chairman of Reliance, told reporters before entering the meeting.

Mukesh, the Reliance chair-man, did not make any comments. The meeting was expected to last several hours.

Watching from the sidelines are millions of nervous investors who have seen Reliance's stock drop 12 percent in the last month because of the feud, despite the 6.3 percent gain in the Sensex, the Bombay Stock Exchange's 30-share index.

In a bid to boost the stock price, Reliance Industries announced last week that it plans to buy back equity from its shareholders.

Anil said he wasn't consulted or informed about the plan, calling it "completely inappropriate."

"There are several other issues that the group faces and those need to be addressed," he said in a veiled reference to his tussle with Mukesh.

Reliance, a conglomerate of petroleum, petrochemicals, telecom and electricity businesses, has annual revenues of nearly 1 trillion rupees (US$22 billion). Its value is 12 percent of the Sensex's total.

"It is not just India's biggest private sector entity, but the burnished showpiece of Indian enterprise," said India Today magazine in a cover story this month. "Reliance is, in almost every which way, a corporate fairy-tale."

Well almost.

The fairy tale began to sour after the death in July 2002 of patriarch Dhirubhai Ambani, who once worked at a gas station before starting a small-time textile trading company called Reliance in 1967 in the western state of Gujarat.

Dhirubhai died without leaving a will. Still, the reality is that Mukesh, a Stanford graduate, heads the group while Anil, an alumnus of the University of Pennsylvania's Wharton School, is his deputy.

Their boardroom rivalry boiled over on July 27 when Mukesh had the Reliance board pass a resolution making it mandatory for all directors, including the vice chairman of the group, to report to the chairman.

Anil, a flamboyant executive married to a former film star, felt slighted and his status diminished.

Mukesh was also apparently irked when Anil recently became a member of the upper house of Parliament -- a non-elected, nominated post -- with the backing of a regional party that has been critical of the ruling coalition.

Mukesh believed Anil was disrespecting their father's memory: Dhirubhai, although an adept lobbyist who manipulated Indian politicians and the country's labyrinthine bureaucracy to obtain lucrative licenses for starting businesses, had studiously avoided politics.

By September last year, a year after Dhirubhai's death, Mukesh began to take control of the group and according to India Today magazine, Anil was given no role to play in Reliance, except the authority to run two subsidiaries, Reliance Energy and Reliance Capital.

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