It?s as big, as it can get. The fight for K-G Gas? one of the biggest gas discoveries made in recent years ? between the Ambani brothers, had roped in just about everybody. With no less than the PMO stating that instead of fighting, the groups should patch-up as they contribute sizeably to India?s economic growth. With accusations and counter-accusations taking centre stage, the Supreme Court?s three-member bench comprising Chief Justice KG Balakrishnan, Justice RV Raveendran and Justice P Sathasivam reportedly compared the tussle between the two brothers to a fight between two countries. ?The fight is between the two persons, who are heading the country. But the fight has percolated down to the people.?
Murad Ali Baig, who has observed many a hostile take-over bids in the past, such as Manu Chhabria buying Shaw Wallace and Dunlop, and the Swaraj Paul battle for Escorts and DCM, terms this as the ?law of the jungle?, in which the weaker player generally gets wiped off. ?Such disputes in the past have ruined businesses. But this is indeed the biggest corporate battle, as the sheer scales are so enormous.?
Given the scales involved, the issue also rocked Parliament, with Mulayam Singh Yadav demanding the resignation of petroleum minister Murli Deora and later Deora going on the defensive by declaring that ?gas does not belong to either Mukesh or Anil, but the government.?
The media too was made a party to mayhem, with Anil Ambani?s ADAG, on behalf of its 8-million shareholders, launching a multi-crore ad campaign, covering over 15 publications nationwide, issued ?in the public and national interest?. The ads, accusing the petroleum ministry of favouring RIL at the cost of ?navaranta? NTPC, flagged an ?80% higher gas price? for NTPC coupled with a ?loss of up to Rs 30,000 crore for the navratna with RIL making ?super-normal profits of nearly Rs 50,000 crore.?? Interestingly, the campaign also invited comments and responses from the public over the issue.
Offended with allegations of favouritism, Deora clarified that the ministry had better things to do than support RIL. Union law minister Veerappa Moily also stated that the government was ?not interested? in responding to the ad campaign by ADAG against RIL and the petroleum ministry.
SR Mohnot, author of Reliance, An Industrial Legend, says, ?The dispute has certainly provoked the government to intervene, where its role was limited ? to overall allocation of natural gas ? as a national resource. It affects both potential users of natural gas and the downstream products.?
Amidst constant finger pointing, former director-general of hydrocarbons, VK Sibal even alleged how he feared for his life. ?I fear a threat to my life,? Sibal wrote to the home and petroleum ministries. And the letter was penned on a day when ADAG filed an application in the Supreme Court alleging a nexus between Sibal and RIL. Meanwhile, ADAG slammed Sibal for making ?absurd and baseless? allegations, saying it would file criminal proceedings against the DGH for defamation and character assassination.
The Fertiliser Association of India too joined the wagon by filing an application in the Supreme Court asking for permission to intervene in the RIL-RNRL case as national representative of all fertiliser manufacturers in the country; ?When it comes to distribution of gas, the fertiliser industry has the priority. They (RIL and RNRL) cannot take away these rights by way of a private agreement.?
If this was not enough, a Public Interest Litigation (PIL) was filed in the Delhi High Court by Arvind Gupta, a shareholder of NTPC, seeking the Centre to probe the contract between RIL and NTPC for supply of gas. Gupta alleged ?NTPC was sluggish in pursuing its case against RIL…The silence on the part of NTPC and ministry of power in the matter and inaction of the NTPC and its officials are wholly arbitrary, illegal, contrary and against public interest.?
Raman Mahadevan, a Chennai-based business historian, explains the chaos has its root in the origins of entrepreneurship in India. ?Corporate houses were, and still are tightly held and controlled by the original patriarch or the founder. Problem emerges when the founder disappears from the scene. It inevitably results in friction and bickering between the successors over matters relating to governance and control, and eventually a point comes when there is no option but to split.?
A lesson in the offing? Mahadevan rounds up, ?(A) much needed reform (is needed) which would divorce shareholding control from management. The Tatas were the pioneers and trend setters in this sphere and though others like Narayanmurthy of Infosys have emulated this path, it hasn?t as yet become a movement for reform.? Time to take a cue.