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Last Updated: Wednesday, 1 December, 2004, 15:45 GMT
Saga of India's tycoon brothers

By Paranjoy Guha Thakurta
India economic analyst in Delhi

Mukesh Ambani
Mukesh Ambani is said to be a conservative, reticent workaholic
It has all the ingredients of a popular soap opera.

Pioneering tycoon dies without a will. His two sons squabble. Their wives are not exactly the best of friends. The widow tries to reconcile the brothers.

For weeks on end, newspapers, magazines and television channels report the sibling rivalry in excruciating detail.

This family drama is not a work of fiction.

It is an all-too-real story of India's largest privately controlled corporate conglomerate, spanning a wide range of industries - textiles, telecommunications, petrochemicals, petroleum refining and marketing, oil and gas exploration, insurance and financial services - the list goes on.

Controversial

The Reliance group of companies was founded by Dhirubhai Ambani who died in July 2002 intestate, or without leaving a will. His was a rags-to-riches story.

Anil Ambani (L) with Bollywood stars Aishwarya Rai (C) and Amitabh Bachchan
Anil (left) with Bollywood stars Aishwarya Rai and Amitabh Bachchan

The son of a poor schoolteacher in a nondescript village in Gujarat in western India, he started his career in 1958 as a petrol pump attendant.

The industrial empire he founded currently includes India's largest - and the world's fifth largest - petroleum refinery.

The late entrepreneur was a controversial man, spreading the "cult" of owning shares among more than two million Indians, most of them belonging to the middle class.

In 69 years, he built from scratch India's largest privately controlled industrial empire.

At the same time, Dhirubhai was close to most important politicians and bureaucrats.

He thought big, acted tough, knew how to bend rules or have rules bent for him.

He was a visionary as well as a manipulator, a man who communicated with the rich and poor with equal felicity.

At the time the patriarch passed away, the Reliance group had an annual turnover in the region of $15bn.

Since his death, the group has grown by a quarter and currently accounts for over 3% of India's gross domestic product.

Financial issues

Dhirubhai's two sons, Mukesh (47) and Anil (45) are said to be a study in contrasts.

The elder is supposed to be conservative, sober, reticent and a workaholic.

Anil Ambani
Anil is now a member of parliament's upper house

The other is flamboyant and loves being in the limelight in the company not of accountants but of glamorous personalities from the world of cinema and politics.

In this case, opposites did not attract. Behind the ego clashes were hard financial issues.

Mukesh was reportedly unhappy about Anil's political ambitions - he recently become a member of the Rajya Sabha, India's upper house of parliament - and not exactly enamoured of Anil's grandiose plans of setting up what is being touted as the world's largest gas-based power plant near Delhi.

Anil, on the other hand, is apparently peeved that one of Mukesh's pet ventures, Reliance Infocomm that provides telecom services, is embroiled in a messy legal dispute with major financial implications.

The telecom firm faced allegations over its system of call charging and was given a hefty fine.

It appealed to the Delhi High Court and was ordered to pay a proportion, although the court said the public sector bodies that levied the fine should not cut off connections as it would inconvenience too many subscribers.

The public sector bodies are currently appealing against that ruling in the Supreme Court.

Stock fluctuations

While the differences between the Ambani siblings had for long been a topic of discussion in corporate circles, the spat came out into the open last month when Mukesh told a television reporter there were certain "ownership issues" in the "private domain" that remained unresolved.

The media went to town. The two brothers tried damage control but the cat was out of the bag.

Reliance dominates India's oil industry
Oil is only one of a huge range of Reliance concerns

Confidential e-mail messages and internal boardroom documents were leaked to journalists.

They indicated that Mukesh and Anil had had a major squabble a few months ago over who was the "real boss" of the group's flagship, Reliance Industries Limited - Mukesh is officially designated chairman and managing director while Anil is vice-chairman and managing director.

The dispute between the two brothers is essentially as much related to managerial control as it is to ownership of companies.

In order to live with India's complicated tax laws, the promoters of the Reliance group have floated a maze of hundreds of investment firms to hold shares in the group's major concerns.

Given the fluctuations in Reliance stock value in the current controversy, the regulator of India's capital markets is closely tracking the activities of the group to protect the interests of small shareholders.

The value of Reliance, considered a blue chip, took a beating but has since recovered during a bullish phase in the stock exchanges.

Directors resigned in droves from the boards of group companies and were being persuaded to stay on.

The tussle has also spurred important political leaders to claim that they have had nothing to do with the division in the Ambani family.

The two brothers smiled at each other and shook hands before cameras at a recent social occasion.

But the tensions beneath the surface are all too apparent from their public statements.

Wait for the next episode of the serial.

Paranjoy Guha Thakurta is director of the School of Convergence at the International Management Institute in Delhi.


SEE ALSO:
Reliance seeks to heal 'dispute'
30 Nov 04 |  Business
Directors retreat from Reliance
25 Nov 04 |  Business
Reliance denies any family row
22 Nov 04 |  Business
India's Ambani factor
03 May 04 |  South Asia
Indian oil major cheers investors
29 Apr 04 |  Business
India's Reliance sees profits soar
31 Oct 02 |  Business
Indian business giant dies
07 Jul 02 |  Business


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