In my last posting on the Ambani brothers, I am glad I put that question mark at the end of the headline: Growing Ambani bonhomie? Today’s annual general meeting of the Reliance Industries Limited shareholders, not to mention unfolding events over the past week, reiterate what I termed as follows in the previous post:
“It almost seems as if Anil Ambani, in a rare act of surrender after the stinging loss at the highest court and sustained pressures in almost all his businesses, prostrated at brother Mukesh’s feet seeking forgiveness.”
Well, the forgiveness has yet to come. If anything, it appears Mukesh is arming himself to compete with his brother’s businesses in the not-too-distant future.
Anil was not present at today’s AGM, despite much speculation about growing friendly ties between the brothers. Also, Mukesh made no major announcement about Anil’s ADAG, except saying his company would provide gas to Reliance Power’s plants as and when the plants are ready. This also disappointed investors imagining, or at least anticipating, the brothers to join forces again.
A simple listing of major events since the Supreme Court ruling on the gas dispute might help us get a clear, unemotional, understanding of what might be happening.
• The two brothers eliminate a no-compete clause in their MoU splitting the empire of their late father Dhirubhai Ambani. This allows Mukesh to enter all businesses except gas-based power plants, giving Anil’s businesses a shred of protection
• Anil withdraws a Rs 10,000 crore ($2.2 billion) defamation suit against Mukesh
• Mukesh’s RIL buys Infotel, the only company that has won a nationwide wireless broadband license, and signals a foray into telecom. Prior to the split, Mukesh had built Reliance Communications into a formidable company, besides having grand plans for its future. In just a week’s time, Mukesh not only has re-entered the sector but also demonstrated a keen understanding of the business. He has ventured, at least at this stage, into broadband, not voice and appears to have a clear roadmap to 4G technology, called Long Term Evolution
• Mukesh also has signaled his interest in pursuing opportunities in power, including nuclear energy, finance (where he could come into conflict with Anil’s most profitable business, Reliance Capital) and pharmaceuticals
What has Anil got? Just assurance of gas supply. It is clear Anil has signed off all the concessions and potentially allowed Mukesh to become a competitor only under duress, to save his ambitious power projects that vitally depend on gas from RIL. Right now, it appears Mukesh is happy to just enter new businesses, and compete with Anil, rather than seek any cooperation. It is speculated that he may buy the tower business from Reliance Communications but even if that happens, it would be nothing than a business deal. The bottom line: Mukesh is not in any conciliatory mood, as many have assumed.