Reprieve for Reliance

In his lifetime, India’s Reliance industrial empire builder Dhirubhhai Ambani created history by setting up manufacturing plants at record pace. Now his sons have set a record of sorts in creating geography – splitting the conglomerate in record seven months -- by no means a small feat considering the long-drawn messy issues plaguing many of the country’s family run industrial houses. The settlement of the issues between the two brothers, Mukesh and Anil, have resulted in an amicable split with the elder brother getting control over Reliance Industries (RIL) – the flagship company with interests in oil exploration, refining and downstream petrochemical. Anil gets telecom, energy and finance businesses.
The settlement should offer happy tidings not only for the family but for the nearly three million Reliance shareholders, for whom it has been a roller-coaster ride since the news broke. That the dispute, which had seen a lot of dirty linen being washed in public, has ended so fast shows the maturity with which the brothers approached the issue. While the settlement can be seen as a victory more for Anil, who quite apparently made sure the settlement came about with the equitable division of assets among all players. He played his cards well – having gained control over Reliance Infocomm, which was Mukesh’s pet project and Reliance Capital, while holding on to Reliance Energy, while having to relinquish his role in the flagship, though his role in RIL has been on the wane since the death of the group patriarch. Mukesh, on the other hand, while having had to concede more, must be congratulated for showing the large heartedness to go the extra mile for the sake of an amiable settlement. But then it should be no small consolation for him that he can lord over the money spinning petrochemicals giant built up by his father.
Now that the worries of the shareholders and the family have been set to rest, the only question that remains is: How did the government and its myriad arms perform in the drama in the light of the corporate governance issues Anil had raked up, particularly in Reliance Infocom. It is a shame that in India, despite the plethora of laws and the entry of foreign institutional investors, promoters still keep the investing public and the regulatory authorities in the dark over their shenanigans and use companies as personal property. The federal government has not covered itself in glory by not looking into the issues raised, something which is not surprising considering the relationship the conglomerate has with the ruling party, whose chief recently flew to Moscow in the company’s corporate jet.

This is an editorial published in Oman Tribune