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A. V. Vedpuriswar
V. Pattabhi Ram

THE evening when Wafers saw Mukesh Ambani tell CNBC TV 18 that there were "ownership issues" between him and his brother Anil, her heart sank. Sibling rivalry wasn't her idea of fun. That it should be played out in full public glare was unfortunate. Worse still, it involved the Ambani brothers. After all, hadn't one of them gone to Stanford and the other to Wharton she asked herself.

Wafers was at the coffee pub. So was China, her IIT friend, sipping his nth cup of coffee. He would gray fast she told herself. "Reliance is not just any other family owned business," China was pontificating. "It has a market capitalisation of Rs 99,000 crore. It employs over 80,000 people." Rinku, the journalist, in the same faded jeans for God knows how many years, chipped in: "RIL accounts for 3 per cent of India's GDP. And contributes 10 per cent of India's tax revenue." Wafers had read that the company was owned by a clutch of 14 companies which, in turn, were owned by a complex web of 1,400 investment outfits. "Didn't such elaborate parenting mean the company had something to hide?" her CA mind had suggested.

Wafers didn't like the fight one bit. Ever since her professor had told the class about how a petrol pump attendant had gone on to become the chairman of a Fortune 500 company, she had fallen in love with Dhirubhai Ambani. And here were his two sons squabbling in public. Here was the younger brother, Anil Ambani, of the "marathon run" fame lining up legal luminaries to take his brother to court. Over what he believed were questionable share transfers that had taken place after papa's death. And expressing unhappiness with the corporate governance practices in Reliance Industries and Reliance Infocomm, the two companies that brother Mukesh Ambani controlled. If media reports were true chote miyan believed that bade miyan had taken advantage of his position as Chairman of Reliance Industries to invest heavily in these businesses while starving Anil's own businesses of cash.

Even as these thoughts crossed Wafers' mind, China was on song. "The differences had kicked off with the formal launch of Reliance Infocomm in April 2003. Mukesh had been certain that Reliance could rope in 5 million subscribers, each of whom would pay Rs 22,000 upfront to get a free connection for a three-year period. This way, he hoped to raise over Rs 10,000 crore in one go and use it to expand the telecom network. But it didn't happen that way." Wafers snorted, "Man proposes, God disposes."

Winking at her, China continued, "Instead, only 1 million users signed up leading to a huge shortfall in the resources mobilised." Wafers' admiration for China grew. Here was an engineer, so knowledgeable about corporate affairs.

Rinku took over from there. "So Mukesh drew resources from RIL to finance the telecom project at attractive terms. For instance, Rs 8,100 crore had been invested as preference shares for 10 years with a dividend commitment of Rs 16 crore a year." Wafers' accounting mind did a quick math and she realised that this amounted to a return of 0.2 per cent per annum. To her this was the other end of a "usurious rate!"

Rinku, digging into his pasta continued, "RIL was given the option to convert the preference shares into equity at any given date, but the price was left open-ended."

Anil Ambani wasn't pleased with this blind date. Was that fair? Wafers remembered what her professor had said. "In India, group companies regularly give interest-free loans to finance new projects. Reliance itself had funded Reliance Petroleum (later merged with Reliance Industries) and the purchase of the majority stake in BSES (merged later into Reliance Energy which Anil Ambani controlled)." So, what was all the noise about, she wondered. And commented, "If I were Mukesh I would be peeved by Anil's stance."

Rinku reminded that Dhirubhai had merged the mega outfits Reliance Industries and Reliance Petrochemicals to make Reliance a Fortune 500 company. It was his way of saying that he did not want his legacy to be divided. And of conveying that Reliance should not go the way of other family-run business houses which had split their businesses only to the find siblings fight each other in the marketplace and destroy value.

The question turned to who was the more capable entrepreneur. China voted for Mukesh because it was he who had masterminded the RIL's mega projects. Mukesh had single-handedly set up the world's largest petroleum refinery at Jamnagar. He had also built the Rs 20,000-crore telecom empire that would "make phone calls within India cost no more than a postcard."

Rinku disagreed. He believed that Anil, as the fundraiser, had played an equally crucial role. And pointed out that the Infocomm project hadn't as yet delivered financially.

Wafers felt that Anil's political ambitions too didn't help. Mixing business with politics was the perfect elixir for disaster. Bade miyan was clear that chote miyan's lifestyle and half-baked political ambitions could hurt the group's business.

Even as the media speculated on a possible split it was clear that any physical change in Reliance's organisational structure would affect the entire operations of the group. Like, RIL owned stakes in gas fields that fed the power plants of Reliance Energy. So many investment bankers and legal pundits had started wondering if a split was possible at all.

Wafers felt that it was a fit case for her friend Bhoka's class to discuss. She had heard a lot from him about Chatshow. Surely he would have some answers. Like, could Dhirubhai have planned the succession better? Would the brothers ever get back to talking terms? Would...

Racy@thehindu.co.in

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