FIVE YEARS DOWN THE LINE: A NEW BRIDGE OVER TROUBLED WATERS
BLOOD IS THICKER THAN GAS
Mukesh and Anil Ambani will also negotiate a new gas supply agreement
Non-compete pact buried by Mukesh, Anil in Truce II MUKESH and Anil Ambani took a giant step towards ending their bitter feud by agreeing to scrap a set of agreements that had stirred up trouble between them. The apparent end of the soap-opera style fight between the brothers, which had captivated the country but had delayed vital infrastructure projects, was greeted with relief by government ministers.
The two billionaire brothers said in a joint statement on Sunday afternoon that they had decided to end agreements preventing them from investing in industries where the other was present and pledged to work together in an atmosphere of harmony.
The second Ambani truce, which comes almost five years to the day after the original family settlement brokered by Kokilaben, the mother of the two brothers, scraps a no-compete pact that had barred Mukesh, 53, from sectors such as power, telecom and financial services and had kept Anil, 50, away from refining and petrochemicals. The only vestige of the earlier agreement left over is RIL's pledge not to set up gas-fired plants till March 31, 2022.
In the joint statement, Reliance Industries, headed by Mukesh and four companies of the Anil Dhirubhai Ambani Group (ADAG) said they had signed a new and simpler non-compete agreement that "will eliminate any room for further disputes between the two groups... on the scope and interpretation of the noncompete obligations"
The two sides also said they would soon negotiate a new gas supply agreement in keeping with a
Finance minister Pranab Mukherjee, the government's favoured interlocutor for resolving tricky problems, including fixing the price of gas, told ET the truce would lead to healthy competition and boost investor confidence.
"It is a very positive development. It is good that the two companies and the Ambani brothers have reached an agreement as it would lead to healthy competition. They are corporate giants in themselves and this kind of an agreement will have a real positive impact on the larger corporate world. Other companies will draw confidence from them as this would mean an end of the rivalry."
The two brothers also said they were hopeful that Sunday's developments would create an atmosphere of "harmony and collaboration between these two groups".
Sunday's development, while sudden, was not entirely unexpected. Both sides, according to persons familiar with the situation, had become increasingly exhausted over the seemingly interminable dispute. "Neither side is dying to get into each other's sectors. That's not primarily what this is about. What the agreement really does is that it will stop both sides from spending their energy blocking each other," said a person close to ADAG.
Sources familiar with the developments of the past week said Kokilaben had once again played a key role in the latest truce. According to these sources, Anand Jain, a close friend of Mukesh, and Atul Dayal, one of RIL's top lawyers, were key players in the last-lap negotiations. Last week, in an indication of the impending truce, Mukesh had met the PM requesting a change of rules to help new gas-fired plants obtain supply of the fuel for a period longer than the five years currently fixed by the government. If implemented, this will help ADAG attract financing for its power projects.
A new gas supply agreement remains the only matter that still needs to be resolved. Non-compete pact escalated tussle
ONCE that happens, a clause in the family MoU—which said Anil could sue Mukesh in case a suitable gas supply agreement was not reached—was likely to be scrapped, according to the sources.
The existence of the non-compete pact had escalated the estrangement. Anil had objected to Mukesh's move to enter the financial services sector to support RIL's retail operations.
In 2008, a possible deal between Reliance Communications and South African telecom company ran into trouble after RIL said it had a so-called right of first refusal (ROFR) to buy the telecom business of ADAG. Sunday's reworked agreements scraps all ROFRs between the two groups.
The Supreme Court ruling in favour of RIL in the prolonged legal dispute over the price of gas appears to have galvanised moves towards a settlement.
The court said ADAG companies would have to buy gas at a price of $4.20 per million British thermal units (mBtu) compared with $2.34 per mBtu contained in the family settlement in 2005 when RIL was divided between Mukesh and Anil. The SC also asked the two brothers to sign a new gas supply agreement.
it sparked speculation that the raging war between India's richest brothers may come to an end soon. But it didn't, and only got worse with time. This photo, through those agonising years, almost singularly carried the hope of Brothers Ambani coming together. Today, after 5 years of festering bitterness and mistrust, that hope is on the verge of becoming a reality.
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