I started out this blog with a comment on the relations between the Ambani clan and the political system in India, and had then remarked that the Ambani clan had everything going for it; a supportive government, excellent personal relations with the people who mattered, a buoyant market, and the general acclaim of all their peers. I think I spoke too soon.
For now that the Reliance Empire has been splintered into two, the remnants of the Empire have lost their sheen. With all due respect to the Ambani clan, but their constant bickering does neither them nor their investors any good. After all, the problems of the promoters are bound to reflect in the balance sheets of a company. And problems of this magnitude are sure to make a big impact.
RIL or Reliance Industries Limited, as the Mukesh Ambani controlled remnant is termed, and ADAG or Anil Dhirubhai Ambani Group, as the eponymous controller’s group is named, are now at loggerheads over non-compliance with the non-compete agreement that the two brothers had signed a year back. Mr. Anil Ambani contends that his elder brother had violated the agreement by attempting to create a civil aviation and electricity generation facility in a Special Economic Zone to be set up in the Indian state of Haryana. He says that the non-compete agreement clearly left infrastructure development as a core area for ADAG’s growth, and by implication, RIL should desist from attempting to enter such area of development until such period as mandated by the agreement. RIL contends that the said facilities are integral to the SEZ and as such the SEZ was being created to ensure better growth prospects for RIL and in turn for the state of Haryana, and not so much to compete with the endeavors of ADAG. Besides the non-compete agreement stated that the contentious facility should not be developed unless and until it is essential to the growth of the developer.
To be fair, even ADAG has violated the agreement, but one hasn’t heard much of it until the time when Mr. Anil Ambani chose to highlight his brother’s non-compliance. RIL has pointed out that ADAG’s intent to invest in oil-exploration blocks and pipelines was in direct competition to RIL’s petroleum interests, which were pre-existing, and hence solely their preserve for the given period. However, behaving like magnanimous people, RIL says that it chose to ignore this lapse as it understood that the acquisition of such assets was integral to the growth of ADAG’s Reliance Energy. It has also said that the electricity to be generated in the Haryana SEZ, if produced beyond the needs of the SEZ, the excess would be offered first to Reliance Energy, and then alone sold to other firms.
So, clearly, Reliance Energy doesn’t have much to fear from this facility, as far as intentions are concerned. Whether or not these intentions are translated into action is for time to tell. But one thing’s for sure, the manner in which the whole issue has been handled is rather disappointing, considering the character of both groups, and could have been handled in a more discreet and more amenable manner. Creating a public circus of the issue simply diverts one’s energies and might even make one reluctant to sit down and discuss the matters in a calm and composed manner. If there has been some problem, then it is best to meet, to discuss this in the appropriate forum, and resolve it, rather than dashing off press statements at the drop of a hat. It is imperative that both groups comprehend that in the end, irrespective of who grows faster or better, it will be the Reliance brand name that will grow, whether RIL or ADAG is immaterial.
For now that the Reliance Empire has been splintered into two, the remnants of the Empire have lost their sheen. With all due respect to the Ambani clan, but their constant bickering does neither them nor their investors any good. After all, the problems of the promoters are bound to reflect in the balance sheets of a company. And problems of this magnitude are sure to make a big impact.
RIL or Reliance Industries Limited, as the Mukesh Ambani controlled remnant is termed, and ADAG or Anil Dhirubhai Ambani Group, as the eponymous controller’s group is named, are now at loggerheads over non-compliance with the non-compete agreement that the two brothers had signed a year back. Mr. Anil Ambani contends that his elder brother had violated the agreement by attempting to create a civil aviation and electricity generation facility in a Special Economic Zone to be set up in the Indian state of Haryana. He says that the non-compete agreement clearly left infrastructure development as a core area for ADAG’s growth, and by implication, RIL should desist from attempting to enter such area of development until such period as mandated by the agreement. RIL contends that the said facilities are integral to the SEZ and as such the SEZ was being created to ensure better growth prospects for RIL and in turn for the state of Haryana, and not so much to compete with the endeavors of ADAG. Besides the non-compete agreement stated that the contentious facility should not be developed unless and until it is essential to the growth of the developer.
To be fair, even ADAG has violated the agreement, but one hasn’t heard much of it until the time when Mr. Anil Ambani chose to highlight his brother’s non-compliance. RIL has pointed out that ADAG’s intent to invest in oil-exploration blocks and pipelines was in direct competition to RIL’s petroleum interests, which were pre-existing, and hence solely their preserve for the given period. However, behaving like magnanimous people, RIL says that it chose to ignore this lapse as it understood that the acquisition of such assets was integral to the growth of ADAG’s Reliance Energy. It has also said that the electricity to be generated in the Haryana SEZ, if produced beyond the needs of the SEZ, the excess would be offered first to Reliance Energy, and then alone sold to other firms.
So, clearly, Reliance Energy doesn’t have much to fear from this facility, as far as intentions are concerned. Whether or not these intentions are translated into action is for time to tell. But one thing’s for sure, the manner in which the whole issue has been handled is rather disappointing, considering the character of both groups, and could have been handled in a more discreet and more amenable manner. Creating a public circus of the issue simply diverts one’s energies and might even make one reluctant to sit down and discuss the matters in a calm and composed manner. If there has been some problem, then it is best to meet, to discuss this in the appropriate forum, and resolve it, rather than dashing off press statements at the drop of a hat. It is imperative that both groups comprehend that in the end, irrespective of who grows faster or better, it will be the Reliance brand name that will grow, whether RIL or ADAG is immaterial.
2 comments:
One, in retrospect, division of the Ambani empire might not have been as bad as people might have thought it to be..
Going apart is a lot better than staying together battling fire from each other. Even the investors got much better value after the division.
As far as the latest controversy goes, it fast turning out to be episode no. 250 in the Anil-Mukesh saga. The way the duo manage to find themselves in controversy, they may soon become the business world's most captivating item number!
Having said that, we must accept that both are exceptional leaders and shrewd businessmen. Small time bickerings apart, I hope each manages to make their companies among the world's largest and most respected companies. As far as the non-compete agreement, both would do well to realize that outside India, there's the entire world to conquer.
'exceptional leaders and shrewd businessmen'...I think one of them is far shrewder and has a better footing than the other. And I have a feeling he's going to leave him far far behind. Though as the cliche goes...only time will tell.
PS: uve stopped allowing anon comments now?i kinda tend to agree with ranj on this one...
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