Can we rely on this peace? | india | Hindustan Times
Today in New Delhi, India
Apr 24, 2017-Monday
New Delhi
  • Humidity
  • Wind

Can we rely on this peace?

india Updated: May 23, 2010 22:49 IST

Almost an anti-climax to those tracking this battle, the decision by Mukesh and Anil Ambani to dump their differences and scrap the contentious non-compete agreements is a positive step in their five-year dispute, one of the most vicious corporate wars we have seen.

Should this development be perceived as an indication of the two brothers coming together again? Or does it indicate the beginning of a fresh business rivalry as their groups enter sectors that are currently barred under the family pact of 2005 and the subsequent 2006 non-compete agreement?

It may be too early to say if the current change in stance is merely public posturing. All we have so far are statements from the two sides.

"These developments will eliminate any room for further disputes between the two groups, on matters relating to the scope and interpretation of the non-compete obligations," a Reliance Industries Ltd (RIL) statement said.

"RIL and Reliance ADA group are hopeful and confident that all these steps would create an overall environment of harmony, cooperation and collaboration between the two groups, thereby further enhancing overall shareholder value for shareholders of both the groups," an ADAG statement echoed.

The billionaire brothers have agreed to compete against each other for the first time, easing a dispute that stalled a power generation project and a telecom merger.

But two weeks after the May 7 Supreme Court judgement that ordered the brothers to "negotiate" within six weeks and present their final settlement to the Company Bench of the Mumbai High Court, both sides are keeping the cards close to their chests.

Analysts say the opening up of exclusive business domains could lead to a fresh round of rivalry, but the truth might lie elsewhere. At his meeting with Prime Minister Manmohan Singh last week — a few days after Anil met him — Mukesh is learnt to have asked for a change in the government's gas utilisation policy.

The present policy allows gas from RIL's KG-D6 fields to new power projects that include Anil's Dadri, a senior official told Hindustan Times.

This decision, if implemented, would benefit Anil, as Mukesh in his statement today said that barring captive requirements, RIL will not enter gas-based power generation till 2022.

Further, in the current business environment, the end of Ambanis' non-compete agreement matters little. The telecom business has a large number of established players with scale, which would make it difficult for Mukesh to enter, while the refineries and petrochemicals businesses are stagnating with low returns on capital.

The two areas where entry barriers are low and potential high — special economic zones and financial services — may see minor skirmishes between them. The final speculation today is if the two merge. If that happens, the two brothers would be the world's fourth richest men (Mukesh already is).

Clearly, a lot to watch out for.