Friday, November 14, 2008

Government cries off Mukesh-Anil gas row

A dispute between estranged industrialist brothers Mukesh and Anil Ambani over the price of gas one’s company would buy from the other’s has taken a new twist the government distancing itself from the issue.
The Government of India told the Bombay High Court in an affidavit filed on Friday that it will not influence the price that Reliance Industries Ltd (RIL) would charge Anil Ambani-controlled Reliance Natural Resources Ltd (RNRL) for gas from the Krishna-Godavari basin.
The government said gas from the basin to be sold to any agency other than the government or its nominees will be treated at market rates.
Both companies declined comment as the matter is before courts. However, sources indicated that RNRL is preparing to file a counter-affidavit by November 25.
The affidavit said RIL approached the Centre to seek approval for a price formula but it was “rejected by the government for not having been based on an arm’s length transaction.”
RNRL wants the sale of natural gas at a preferential rate of $2.34 per unit of gas (MMBTU), against the government approved rate of $4.20 per unit.

Tuesday, October 21, 2008

Hamish McDonald, who wrote the “Polyester Prince” a book on the life of Dhirubhai Ambani, which was later, banned in India, has engaged himself in writing a sequel on Ambani brothers fight.
He has been in touch with various journalists in India to gather a lot of material and info on Murli Deora & Amar Singh.
Old Hamish McDonald watchers recount with glee an episode in the 90’s, when he was based in Delhi. On one of his many trips to Mumbai to gather material on Polyester Prince ,Murli Bhai is believed to have taken him out for dinner and then subsequently offered him a complimentary friend for the night, an offer which horrified the overzealous born- again Christian McDonald. Subsequent retaliation was the scathing diatribe on Dhirubhai Ambani.

Friday, October 17, 2008

Ambani brothers may fight over Mumbai metro project

The Ambani brothers are once again going to clash over Mumbai's infrastructure as the Mumbai Metropolitan Regional Development Authority has decided to call financial bids for the Rs 12,000-crore (Rs 120 billion) second corridor of Mumbai Metro connecting Charkop to Mankhurd via Bandra from short-listed consortiums.
The decision was taken at the MMRDA's executive committee meeting, which was chaired by CM Vilasrao Deshmukh.
Earlier, the brothers have clashed over the 22-km, Rs 6,000-crore Mumbai Trans Harbour Link connecting Sewri and Nava Sheva. They also fought a bitter battle over a conventional centre at the Bandra Kurla Complex, the first phase of the metro project and monorail.
While Mukesh-led Reliance Industries [
Get Quote] won the bid for the convention centre, the Anil Ambani-controlled Reliance Infrastructure is developing Mumbai Metro's first 11-km, Rs 2,356 crore (Rs 23.56 billion) corridor for Varsova-Andheri-Ghatkopar.
Addressing the mediapersons, Metropolitan Commissioner Ratnakar Gaikwad said MMRDA would soon initiate a process to call financial bids from seven consortia that were short-listed in the pre-qualification and technical bid rounds.
While the consortium led by Reliance Infrastructure has tied up with Canadian engineering giant SNC-Lavalin, the RIL-led group has joined hands with Siemens and Gamon India.
Consortia led by other major corporate houses from country such as the Tatas and Larsen and Toubro are also among the seven short-listed groups.Irked by constant delays from MMRDA, the Maharashtra Chief Secretary Johny Joseph had given a deadline to MMRDA to ensure that work starts by January 2009

Thursday, October 16, 2008

Explain interest in RIL-RNRL case: Bombay HC to govt

THE Bombay High Court on Thursday asked the government to explain why it was interested in the legal tussle between Reliance Industries (RIL) and Reliance Natural Resources (RNRL) over supply of gas from the Mukesh Ambani-led firm’s KG basin for the latter’s proposed power plant at Dadri in Uttar Pradesh. This happened after the government sought to be a party to the case. The government counsel will present his case on Friday. RNRL lawyer Ram Jethmalani said the government has not intervened in the case between RIL and NTPC, a stateowned firm, but it had sought to intervene in this case. Mr Jethmalani said the government has no right to intervene in the contract between RIL and RNRL. Government counsel T S Doabia said the government has an interest in the case as it had a production sharing contract with RIL. The High Court has restrained RIL from entering into contracts with parties other than RNRL and NTPC for sale of gas. But Justice J N Patel on Thursday pointed out the stay did not affect the production sharing contract between the government and RIL. The court has asked if RNRL could sell gas to NTPC at the same terms and conditions decided initially between RIL and NTPC before the demerger of the Reliance empire. This was in response to Mr Jethmalani’s submission to the court, seeking an order so that RNRL could get 40 million metric standard cubic meters of gas per day from RIL. If this happens, Mr Jethmalani said, RNRL would provide 12 mmscmd of gas to NTPC as per RIL-NTPC contract. The contract envisaged the sale to NTPC would take place at $2.34 per metric million British thermal unit. Mr Jethmalanai also argued RNRL should be allowed to sell gas to third parties till its own power plant is set up. This appears to run counter to the RIL-RNRL pact, which says the latter can draw gas for its own use.

RIL original demerger document missing

The original document pertaining to the demerger of the Reliance empire seems to have been misplaced. Reliance Industries (RIL) had submitted the document to the High Court in September 2005, seeking the court's approval for the demerger. The court on Wednesday ordered the Registrar to produce the document by October 17. While passing the order, the division bench of the high court said it was "surprising" that the record was missing from the court and that none of the parties-- RIL, RIL's counsel, RIL's secretary and the RIL board-- was aware of the whereabouts of the document. This development came to the fore on Wednesday when Ram Jethmalani, counsel for Reliance Natural Resources (RNRL), drew the attention of the High Court to the non-production of the original demerger scheme. He sought the original document to establish that the split between the Ambani brothers was based on the family settlement in June 2005. The court associate reported that the document could not be traced in the registrar's office. When asked, RIL's counsel Milind Sathe told Justice Patel of the division bench that neither his client nor RIL's solicitor at the tine has a copy of the document
The registrar's office subsequently produced a copy of the document within an hour. The bench has asked the registrar to file an affidavit since the document was not original. After the day's proceedings, Mr Jethmalani told ET, "We have been given a reconstructed copy of the
application when we asked for the original application. We are told that the original copy is lost. They (RIL) do not have the original copy, nor their legal advisor Amarchand Mangaldas has it. Somebody has to inquire into this." A RIL spokesperson declined to offer any comments citing the matter to be sub-judice. While arguing in the court, Mr Jethmalani said that RIL had deliberately created a dispute with NTPC to help it in its dispute with RNRL. He said that the proposed gas sales agreement between RIL and RNRL is based on the RIL-NTPC agreement.

Tuesday, October 14, 2008

Family feuds turn off foreign investors

For over a century, familyrun business empires have held sway in India, but acrimonious succession battles are now turning off foreign investors and prompting Indian corporations to adopt post-dynastic strategies.
With names such as Tata, Birla, Godrej and Reliance, they are some of the biggest players in the world in industries that range from steel to concrete, autos, telecoms and petrochemicals.
Yet some of Indias largest conglomerates are still family affairs, much to the chagrin of investors who have seen some family-run companies implode as the founders have died and their children have squabbled over their business empire inheritance.
"Badly-run family firms run the risk of not being able to grow profitably and of scaring off potential investors," said Anjan Ghosh, a general manager at ICRA, a unit of Moodys Investors Service that has studied family firms in India.
As India faces the fallout of the credit crisis and fears of a global recession rise, family-run companies may need to quickly determine how they will handle succession or risk being badly buffeted by a turbulent global economy.
"Especially in the current market environment where access to capital is such an issue, unless you are professionally run and have a succession plan in place, it will be tough,"Ghosh added.
Inheritance wars between feuding siblings such as Mukesh and Anil Ambani, the worlds fifth and sixth riches people according to Forbes magazine, have tarnished Indias allure as a top investment destination, raising risks for investors in a country where corporate legislation and regulation are in their infancy and shareholders largely stand passively on the sidelines.
With families controlling 18 of the 30 firms on the benchmark BSE index, the risks are serious.
Certainly, some family-run companies have made ambitious acquisitions recently and taken on global rivals, while others are drawing up tentative succession plans, hiring professionals in leadership positions, divesting assets, and even surrendering control.
Private equity firms invested more than $14 billion in Indian firms in 2007, while last year foreign funds bought shares in Indian companies worth a record $17.4 billion.
These welcome signs of maturity are lost in the clamour around the squabbling Ambani siblings and other corporate succession battles.
Mukesh, the elder brother, took control of energy and petrochemical giant Reliance Industries, Indias biggest private sector company after the Ambani empire was split in 2005, three years after its founder Dhirubhais death.
Anil gained control of mobile services firm Reliance Communications, Reliance Capital and other power, infrastructure and entertainment assets. The two brothers, however, have continued to fight in the full glare of the media. Recently, a judge at Mumbais city court that is hearing agas supply dispute between companies headed by the brothers is reported to have suggested they go back to their mother to settle the matter, rather than fight in court. The judge was referring to their homemaker mother Kokilaben, who had brokered the deal in 2005.
The feud, which also extends to other businesses, is causing real damage to Indias economic development and its appeal as a top investment destination, and even spilling into the political arena, thinktank Oxford Analytica said in arecent report.
"The rivalry ... reflects fundamental questions of business ethics (and) threatens to exert a serious impact on the economy, notably (in the short term) by introducing uncertainty into energy regulation and delaying investment in the gas sector." These and other public spats and legal battles over succession have put the spotlight on the future of familyrun businesses in India, among the worlds fastest growing economies. Mukesh and Anil Ambani: Investors have seen some family-run companies implode as the founders have died and their children squabbled over their business empire inheritance

Wednesday, October 8, 2008

Papers on gas supply to be produced before court today

The documents that specify the terms of supply of gas from the Krishna-Godavari basin by Mukesh Ambani’s Reliance Industries (RIL) to Anil Ambani’s Reliance Natural Resources (RNRL) would be submitted by Anil Ambani’s counsel in the Bombay High Court on Wednesday.
The terms of the agreement are part of a memorandum of understanding signed between the Ambani brothers.
RIL had said that the production of the relevant sections of the MoU at this stage would not be correct because it has not been exhibited so far before the court as a document.
According to RNRL, the MoU entitles it to 2.8 crore million tonnes of standard cubic metres of gas per day at $2.34 per million British thermal unit for 17 years from the KG basin. RIL had bagged the contract for producing gas from the basin and had to supply gas to RNRL according to the MOU.
RIL had argued that it would not be possible to supply gas to RNRL at the price claimed by the latter because the gas price was decided by the government as a matter of policy. Moreover, RNRL needed gas for its power project, which was yet to come up and if it purchased gas from RIL it would have no option but to sell it to a third party, RIL had said.

Papers on gas supply to be produced before court today

The documents that specify the terms of supply of gas from the Krishna-Godavari basin by Mukesh Ambani’s Reliance Industries (RIL) to Anil Ambani’s Reliance Natural Resources (RNRL) would be submitted by Anil Ambani’s counsel in the Bombay High Court on Wednesday.
The terms of the agreement are part of a memorandum of understanding signed between the Ambani brothers.
RIL had said that the production of the relevant sections of the MoU at this stage would not be correct because it has not been exhibited so far before the court as a document.
According to RNRL, the MoU entitles it to 2.8 crore million tonnes of standard cubic metres of gas per day at $2.34 per million British thermal unit for 17 years from the KG basin. RIL had bagged the contract for producing gas from the basin and had to supply gas to RNRL according to the MOU.
RIL had argued that it would not be possible to supply gas to RNRL at the price claimed by the latter because the gas price was decided by the government as a matter of policy. Moreover, RNRL needed gas for its power project, which was yet to come up and if it purchased gas from RIL it would have no option but to sell it to a third party, RIL had said.

Tuesday, October 7, 2008

The Ambani battle continues

The Ambani brothers Mukesh and Anil, have yet again refused the court’s suggestion to settle their dispute over supply of gas from Godavari basin through an independent authority. The court had asked them to let their mother Kokilaben resolve the battle. Hearing arguments advanced by Mukesh’s Reliance Industries Ltd (RIL), Justice JN Patel suggested that they should take their dispute to an independent authority. Although he did not elaborate on who can be an ‘independent authority’, the court hinted that an expert could hear the dispute. However, RIL’s counsel Harish Salve submitted that the contentions made by both sides were legal and could only be decided by the court and not by an arbitrator or any other independent authority. RIL has bagged a contract for producing gas from Godavari basin and Anil Ambani Group’s Reliance Natural Resources Ltd (RNRL) has staked its claim on buying the gas at a price fixed as per a memorandum of understanding (MoU) signed between the brothers during the Reliance demerger. Salve argued on Monday that RIL is a contractor for the Union government to produce gas from the Godavari basin and has to seek government approval to sell gas to RNRL. “RIL cannot keep gas on the ground and it has to be produced,” he said. Salve said the government had valued the price of the gas at $4.34 per million British Thermal Unit (MBTU) but RNRL is insisting on purchasing gas at $2.34 per MBTU. “RIL is not worried about RNRL’s profits but is concerned about its own losses,” he said. Mukesh’s lawyers also objected to RNRL producing the MoU in court at this stage saying it was not pleaded earlier as a document. The MoU was not enclosed with the appeal filed by RNRL. “You should have enclosed the MoU in the plaint and cannot rely upon it at the stage of arguments. If it was not pleaded as a document, at least RNRL should have indicated who has the document,” Salve said. On a query by the court, Ram Jethmalani, counsel for RNRL, had earlier offered to place a copy of the MoU before the court. He argued that the MoU existed between the two brothers over sharing of certain facilities, including supply of gas from Godavari basin.