Reliance gets down to business
Mumbai, August 7:
As the curtain finally came down this ast week on the feud that has divided India’s most powerful business family and riveted the nation, analysts had one warning: the Ambani brothers need to remain at peace.
India’s largest private company, Reliance Industries Ltd, announced on Wednesday its board had approved a ‘demerger’ of the company — splitting it between older brother and company chairman Mukesh Ambani and younger brother Anil. In front of thousands of applauding shareholders at the company’s annual meeting, the brothers wished each other well.
The split, initially announced in June, gave the oil and petrochemicals businesses of Reliance Industries and Indian Petrochemicals Corp Ltd to Mukesh.
Anil will inherit the telecom business Reliance Infocomm, financial services Reliance Capital and the electricity business Reliance Energy Ltd. Shareholders will receive shares in all the new corporate entities, Mukesh said.
“I am happy to inform you that the proposed business reorganisation would lead to a significant unlocking of shareholder value,” Mukesh said. But the images that will remain are of the powerful business family getting emotional during the company’s annual meeting — the younger brother’s voice choking, their mother and peace-broker wiping her eyes and shareholders clapping.
“Shareholders should take heart that both brothers can get back to running their domains,” said Rajesh Jain, chief executive officer of the Bombay-based firm Pranav Securities. But he was a little skeptical that the tears meant that the battles were really over at the Fortune 500 giant.
“After something of this magnitude happens, you can only hope that what you see is what you get,” he said. What matters, he said, is how it is implemented.
After the Reliance board officially approves the division, a decision expected to come soon, the company has to file the plan in court. Final court clearance could take up to a year.
“It is in the interest of both sides now to keep any family feud away from the business,” said Shekhar Datta, former president of the CII, “Both brothers will have to pull in the same direction for their own good or both will be affected.” Reliance Industries, the group’s flagship, has annual revenues exceeding $22 billion.