The billionaire brawl

BANGALORE — An extended, vicious brawl between two billionaire brothers who run gigantic Indian businesses is rattling investors — and giving the government a migraine.

In the latest chapter of the long-running feud, Mukesh Ambani, 52, who owns the petrochemicals conglomerate Reliance Industries, India’s biggest company, and his younger brother Anil Ambani, 50, whose businesses span telecom and energy, are clashing over gas. Specifically, the supply of natural gas from Mukesh’s firm to Anil’s plant.

Anil insists that under a contract signed a few years ago when the brothers partitioned their father’s business empire, he had the right to buy gas from Mukesh’s company at a below-market price.

The ferocious fight started a little after the death in 2002 of the Ambani patriarch Dhirubhai, who built the Reliance empire, and did not leave a will.

The ugly fight now has the Indian government entangled and has crossed several legal strides to reach India’s Supreme Court.

“The family scrap is creating anxiety in the stock markets and hurting investors,” said Arun Nair, a Bangalore-based management specialist who says he has lost heavily on the volatility of the companies’ stocks.

Anil Ambani has accused his brother of refusing to honor a previous agreement which stated the quantity, price and duration of gas supply that his electricity generation firm could buy from his brother’s petrochemicals company.

The fraternal squabbles have reached such a state that many feel they are beginning to hurt India’s business image. “The Ambani companies move and shake Indian business so this is frightening,” said Suresh Hinduja, an investor.

The dent in India’s business image has come not so much from the brotherly spat but from the charges that are being traded in public. At a shareholder meeting earlier this week, Anil attacked Reliance Industries, saying it was trying to become a "monopoly" gas producer. He accused his brother of backing out of the contract because of greed.

Indians are consumed by the battle, whose twists and turns have often rivaled television drama. The two brothers live on separate floors in a luxurious 100,000-square foot multi-storied building in Mumbai’s upscale Cuffe Parade neighborhood. Their mother Kokilaben, who lives with them, has often played mediator in their fights.

The brothers have dissimilar styles. Mukesh, the more restrained and reserved of the two was educated at Stanford University and his managerial and operational skills are much admired. Anil is an MBA from the Wharton School and a whiz at finances and numbers. He is outgoing and married to a glamorous former Bollywood star.

After the split, the separate companies headed by the two brothers have thrived. Mukesh’s Reliance Industries runs one of the world’s largest oil refineries. One of Anil’s companies distributes power in India’s biggest cities, New Delhi and Mumbai. Another is among the largest and fastest-growing mobile phone service providers in the country.

The two have led flamboyant lives outside of their traditional businesses. Mukesh’s new $2 billion, 27-floor home being built in Mumbai’s Altamount Road will be among the world’s most expensive and lavish. He also owns a cricket team in India.

Anil has invested in the entertainment industry including Steven Spielberg’s DreamWorks SKG.

In the brothers’ fight, India’s government has been dragged in with Anil accusing the oil ministry of siding with his older brother and playing a partisan role in a commercial dispute.

In turn, the government has said the two brothers had no right to fight over the gas which is a natural resource and therefore a property of the state.

The vengeful battles have hurt the reputation and businesses of the two brothers. Anil has accused Mukesh of scuttling an initial public offer of one of his companies. An ambitious overseas merger plan by Anil’s telecom company failed because of the fight.

It seems the courts, the government and even their mother cannot put an end to the war between the two brothers. Without doubt, that is hurting the business and personal fortunes of the ultra-ambitious Ambanis.

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