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Advantage Mukesh: experts

business Updated: May 24, 2010 01:38 IST
HT Correspondent

Sunday's agreement between the Ambani brothers will benefit the Mukesh Ambani-promoted Reliance Industries (RIL) more in the long run, say experts.

The agreement cancels all non-compete arrangements that the Mukesh and Anil Ambani-led groups entered into in January 2006.

Experts say that while the Mukesh Ambani group has the money and ability to enter the capital-intensive power, telecom and financial sectors in which the Anil Dhirubhai Ambani Group (ADAG) is present, it would be tough for the younger brother to get into petrochemicals.

"Realistically speaking, at the ground level Mukesh Ambani group has a strong cash surplus as compared to ADAG. While Mukesh Ambani can enter non-gas-based power projects and also realise its ambitions of getting into the financial sector, it is not easy to set up another RIL," said Aseem Dhru, CEO, HDFC Securities.

Others, however, feel that resources should not be an issue for both the brothers.

"If they decide to enter into a business, I don't think resource will be an issue for each of the two groups," said Arvind Mahajan, head of energy and natural resources, KPMG.

"While RIL may look at the financial services, ADAG group may look into the oil and gas business through a partner," said another expert on condition of anonymity.

Experts also say that it may not be a good time for Anil Ambani to enter into the petrochemical business and for Mukesh to get into the telecom business.

"Getting into the refinery business is not as attractive as it was when RIL entered it, and also the stiff competition in the telecom space does not make it very attractive," said the head of a mutual fund on condition of anonymity.

Experts say this will open up the opportunity for the brothers to get into each other's business and compete.