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Home  » Business » How fair is the RIL settlement?

How fair is the RIL settlement?

Source: PTI
June 18, 2005 15:08 IST
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Reliance matriarch Kokilaben assumed the role of Lord Kuber in dividing the enviable over Rs 100,000 crore (Rs 1000 billion) business empire between the warring Ambani brothers but a moot question has emerged - how equitable is the division?

Exuding confidence that both Mukesh and Anil would "work towards protecting and enhancing value for over three million shareholders of the Reliance Group... the largest private sector enterprise," she gave elder sibling Mukesh control over flagship Reliance Industries and IPCL while putting in Anil's kitty Reliance Energy, Reliance Capital and Reliance Infocomm.

If Dhirubhai Ambani, who founded the Reliance empire and took it on the path of prosperity, would have been proud of the biggest private corporate entity, it would have posed as much difficulty for his wife Kokilaben to rip off the seams and divide the joint fabric of the buisness group.

Aided by trusted family friend K V Kamath and valuer Nimesh Kampani, Kokilaben's formula for truce envisaged carving out a separate holding company, headed by Anil, to which RIL would surrender Reliance Energy and Reliance Capital where it has 45 and 47 per cent equity respectively.

Ambanis resolve ownership battle

RIL will also dissociate from Reliance Infocomm, estimated at Rs 23-25,000 crore, a privately held group company, where it has 45 per cent stake.

Though the creation of a separate entity to be headed by Anil has been approved by the RIL board, it is yet to draw the broad contours since the structure and shape was a detailed matter and would be worked in due course of time.

To balance the scale, Kokilaben has made Anil give up his claim on Reliance Industries and IPCL, from where he has already disassociated himself by putting in his papers.

While there is total clarity about the division of listed entities of the group companies as also Reliance Infocomm, it is not clear as to how the host of privately held companies by the group are being divided between the two brothers.

Kamath's settlement formula envisaged two possible scenarios. One of them involved the family assets being divided in the ratio of 30 per cent each for the two brothers and the remainder going to mother and sisters.

The other way out had the two brothers getting half the share each and the mother appeared to have chosen the second alternative as there is no mention of what sisters and she herself is getting in the settlement.
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