Brothers split Reliance empire

The Guardian

New Delhi, June 20:

India’s biggest private sector business empire is to be dismantled after the mother of two feuding brothers brokered a deal that brought peace and the carve-up of the Reliance group of companies founded by her late husband. Mukesh Ambani and his younger brother Anil had been engaged in a public spat over the running of the empire founded in 1958 by their father Dhirubhai Ambani, who started as petrol pump attendant, and died three years ago without leaving a will. Reliance is often compared to General Electric and is portrayed as a symbol of India’s industrial renaissance. The company has worldwide sales of $23 billion, a turnover larger than Coca-Cola. Since last year the air has been thick with mud thrown by rival camps. The family feud appears to have started when Mukesh elevated friends to positions above that of his younger brother, Anil.

There followed allegations of cheating, financial impropriety and serious flaws in Reliance’s corporate governance. All that looks likely to be swept under the carpet by regulators keen to close this chapter of Indian corporate history. The country’s prime minister, Manmohan Singh,

and the finance minister had counseled that the two US-educated brothers should settle in the wider interests of the country. In public, both sons have deferred to their mother, Kokilaben. “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 in a weekend statement announcing the division of assets. Under the split, Mukesh, 48, keeps control of the oil, gas and petrochemicals businesses of the group’s main business, Reliance Industries Ltd, and Indian Petrochemicals Corp. Younger brother Anil, 46, will get control of Reliance Energy, one of India’s biggest power utility firms, Reliance Infocomm, market leader in the country’s booming telecoms sector, and Reliance Capital, the group’s finance arm.

Shares soar

Mumbai: Shares in Reliance Industries jumped on Monday to a new high, taking the broad market with it as investors cheered the end of a bitter family battle for control of India’s biggest private sector conglomerate. Reliance Industries Ltd, which has the second largest weighting on the 30-share Sensex on the Mumbai Stock Exchange, was up Rs 33.90 or 5.64 per cent at 634.75, a record high. “It’s a strong opening with investors lapping up Reliance shares after the weekend end to the family dispute,” said Sanjay Suratwala, dealer at Dalal and Broacha Stock Broking. The rally by Reliance shares, which lagged the market during the seven-month battle between the Ambani brothers for control of the $23 billion group, pushed the Sensex to a record high of 6,978.33, up 71.81 points or 1.04pc. — AFP