Anil Ambani wins battle over gas price with Mukesh Ambani
In Round 3 of the five-year-old Ambani-versus-Ambani battle, the Bombay HC on Monday directed Reliance Industries Ltd, controlled by Mukesh Ambani, to supply gas from its Krishna-Godavari Basin fields to Reliance Natural Resources Ltd, controlled by Anil Ambani, at a rate that could derail its revenue projections and wreck the future profitability of India’s largest private company, reports HT Correspondent. Fight for the empirebusiness Updated: Jun 30, 2009 21:52 IST
In Round 3 of the five-year-old Ambani-versus-Ambani battle that has enthralled India and shaken its stock markets, it’s Advantage Anil.
The Bombay High Court on Monday directed Reliance Industries Ltd (RIL), controlled by Mukesh Ambani, 52, to supply gas from its Krishna-Godavari Basin fields to Reliance Natural Resources Ltd (RNRL), controlled by Anil Ambani, 50, at a rate that could derail its revenue projections and wreck the future profitability of India’s largest private company.
Following the order, RIL, which stands to lose Rs 3,800-4,000 crore a year, fell 7 per cent on the Bombay Stock Exchange while RNRL shares surged 23 per cent.
The court stipulated a price of $2.34 (Rs 112.32) per unit, which is 44 per cent lower than the government-mandated price of $4.2 (Rs 201.60) per unit and just about a third of the international price of about $6 (Rs 288) per unit.
The government fixes the price of gas, which is used mainly by fertiliser and power companies.
The order bars RNRL from trading in gas. The Anil Ambani firm needs the gas for its proposed 7,000 MW power plant at Dadri in UP.
RIL executives declined to comment, and it was not clear if the company would file an appeal against this order before the Supreme Court.
The court also ordered the two companies to come to an agreement over gas supplies within one month, failing which either of them can approach Ambani matriarch Kokilaben Dhirubhai Ambani — mother of Mukesh and Anil — or the court.
Under the memorandum of understanding (MoU) signed between the two brothers when they partitioned the then undivided Reliance empire between themselves in 2005, Kokilaben has the right to mediate any dispute arising from the MoU. That was Round 1 of the battle.
At the time of the Reliance partition, Mukesh and Anil had signed several agreements between themselves.
One of them, the Gas Supply Master Agreement, signed in January 2006, said RIL was to supply gas to RNRL for its Dadri plant at $2.34 per unit.
Round 2, won by the elder Ambani, was when Mukesh scuttled Anil’s plans of merging Reliance Communications with South Africa’s MTN. He had then claimed that the 2005 MoU gave him the first right to buy R-Com shares if his younger brother decided to sell them.
First Published: Jun 16, 2009 00:26 IST