Ambani truce leaves us no wiser than before
India’s headline hogging billionaire Ambani brothers have provided much grist for the rumour mills with their truce announcement on May 23.
After five years of a bitter and high profile playground squabble, many in the Indian media hailed the truce with headlines like ‘Blood is thicker than gas’ (Economic Times). But others believe the truce - like most things related to this highly secretive and powerful family - raises more questions than answers.
First, it comes just two weeks after a Supreme Court ruling rejected younger brother Anil’s claims to cheap D6 gas. Now, as part of the reconciliation, the brothers have surprisingly scrapped the ‘non-compete’ clauses in the family separation agreement, brokered by their mother in 2005.
If the solution was so simple why did the brothers rush to the courts and conduct such well-publicised and fratricidal campaigns against each another for so long And what motivated this sudden reversal On the surface, the truce seems to weaken Anil’s position. Mukesh controls Reliance’s E&P, refining and petrochemicals business, while Anil controls the power, telecom and finance businesses.
With the ‘non-compete’ agreement history, Anil could enter the domestic E&P sector. But will he Unlikely, says one observer, as “there are no good blocks left.
” Anil is similarly unlikely to compete with Mukesh in the petrochemicals and refinery sector - India currently has an overcapacity of refineries. “So it makes no sense for Anil to enter these sectors for the next five to seven years,” we hear.
Similarly, Mukesh is unlikely to bother with the overcrowded power, telecom or finance sectors. “What has either brother really achieved by scrapping the ‘non-compete’ agreement” questions an analyst.
“In reality neither can enter the other’s business area.”