Essar and Reliance make peace

Vol 3, PW 26 (02 Feb 00) People & Policy
     

One of the most bitter corporate rivalries in Indian industrial history could soon be drawing to a close.

A reliable source tells a local correspondent for Petrowatch that Essar and Reliance, two of the most powerful industrial groups in India, have agreed to patch up their differences and make peace. It is understood that one of the Ruia brothers that controls the family run Essar group held a meeting with the Ambani family, which controls Reliance, with a plea to end the mutual hostility, that has soured relations for years.

The meeting is believed to have taken place in December last year, roughly the same time that Indian financial institutions were asked to agree a bail-out package for Essars 10.5m t/y refinery in Gujarat. A source tells this report the Ruias have told Reliance that Essar will concentrate only on its core activity of steel, shipping and possibly infrastructure development, leaving energy related activities to Reliance.

It is understood that intense pressure has been applied on Essar by Indian financial institutions to settle its differences with Reliance. News of the agreement fits in with reports that Essar is in the final stage of negotiations to sell off a 26% equity stake in its refinery to the Oman Oil Company.

Reliances 27m t/y refinery is located at nearby Jamnagar. The reported reconciliation has reached the corridors of the local state administration in Gujarat, and officials are welcoming the news.

No formal announcement is likely to be made of the patch-up because officially, it never existed. Unofficially however, journalists in India are full of stories about how both companies have in the past tried to undermine each others activity.