BOMBAY, 2 December 2004 — Share prices of Reliance group companies, India’s leading corporate empire, gained yesterday, a day after a board meeting eased market fears of a damaging power struggle between the two brothers who control the conglomerate, fund managers said.
Investors were cheered by a board decision by utility firm Reliance Energy to consult Reliance Industries, the group’s flagship, on “several matters concerning the future prospects of the company.” “This seems to be an indication the two brothers, Mukesh and Anil, have softened their stand, at least for the moment,” a fund manager with a foreign brokerage, who did not wish to be named, said.
Mukesh Ambani, 47, is chairman of Reliance Industries, India’s largest petroleum manufacturer which spans oil exploration, refining and chemicals, while younger brother Anil, 45, heads Reliance Energy. “For the moment, there appears to be a truce between the two,” the fund manager said. “Concern (over the dispute) appears to be receding,” said another fund manager.
Reliance Industries closed up Rs.11.50 or 2.23 percent at Rs.528.25, Reliance Energy gained Rs.5.85 or 1.04 percent at Rs.566.50. Reliance Capital added 0.55 rupees or 0.40 percent at Rs.139.35 while Indian Petrochemicals, also part of the group, added Rs.3.10 or 1.72 percent to Rs.183.05. The stocks, however, are still well below their levels before the dispute became public.
“Reliance stocks are fundamentally strong and good long term investments,” Jitendra Panda, vice president at leading brokerage Motilal Oswal, told AFP. “A positive picture is emerging from the group and its fundamentals are really strong operationally.”
The long-rumored battle between Mukesh and Anil burst into the open two weeks ago when Mukesh said on television there were “ownership issues” within the family. Days later, he sought to calm the storm by saying his remarks were “torn out of context” but then followed his statements up with an e-mail to employees saying he was the “final authority” on all matters involving Reliance.
Talk the brothers were not on good terms had been making the rounds since their father, rags-to-riches entrepreneur Dhirubhai Ambani, died two years ago. Although they live in the same building in Bombay, they rarely appear in public together except at Reliance shareholder meetings. At the heart of their rift is that Mukesh wants to take greater control of Reliance Industries and its subsidiaries, media reports say. The first signal of a thaw came when the brothers shook hands at a business awards dinner last weekend. The photo was splashed on newspaper front pages. “The two are signaling to the markets as well as the media that their issues are internal and not affecting the fundamentals of the group. At least for the time being these issues are in abeyance,” a fund manager said. On Monday, Anil asked employees of Reliance Industries in an e-mail to support him and Mukesh to keep the group on a steady course.