Friday, February 25, 2005

Rediff story on Ambani vs Ambani

Rediff, based on a story in Business World says the Ambani feud is close to a solution, brokered by Kamath of ICICI Bank.

I am not entirely certain.

There has been at least one high profile feud in the past - between Bajaj brothers - which was brokered by Auditor Gurumurthy. However the issue is yet to be resolved, after initial acceptance.

Another issue, between Kumarmangalam Birla controlled AV Birla group and L&T was resolved amicably (also brokered by Gurumurthy), primarily because it did not involve blood relations and egos. L&T is a professionally managed company, with no shareholder group controlling it. Kumarmangalam Birla obtained a controlling stake by buying the shares from Dhirubhai Ambani.

The advantages of vertical integration will be lost if Reliance is split along the lines of petrochemicals and oil & gas. In terms of growth though Mukesh will get the better ones oil & gas including the retail portion of the same, as well as the hot infocomm business.

Let us wait and see.


  1. Bajaj family's problem was resolved quickly and there was no mudslinging in public or media. L&T and AVB group problem was about how to demerge the cement unit and they resolved it professionally. But Ambani brothers are fighting in public which impacted the stock price of the reliance. Nobody knows about the Reliance Infocomm except Mukesh and his cotrie. Although Reliance Industries owns 45% in Infocomm the RIL board is not looking into the finances of infocomm. Also Infocomm has violated the Terms and Conditions of their telecom license by routing the international calls as local calls. What happenned to Corporate Governance? What SEBI is doing now?

  2. Bajaj family problem has not yet been resolved, my dear friend. It is far from over.

    I consider Bajaj family problem to be on par with Ambani family problem. However in case of Bajaj, the market clearly understood that the fight will not result in any adverse impact on the companies since the management controls of the companies are well known.

    It was only in case of the Ambani family that the management controls of various companies were unclear, once the feud started.

    The fight in Bajaj family was unlocking value; there never was any fight in terms of who should control what company. In Ambani feud, Mukesh clearly indicated that he has overall control over all the group companies and his younger brother was only a dummy. So it escalated much more.

  3. Please change the layout and make the font size small for your tamil blog.

    Please use the same template as used here in the tamil blog too...