It’s Judgement Day in India’s biggest corporate battle
At 10.30 am on Friday, the Supreme Court (SC) will decide the future of Rs 388,000 crore worth of businesses, owned by 11.5 million investors. At stake will also be the fortunes of billionaire brothers Mukesh and Anil Ambani.
The big question: what will be the price of 45 per cent of gas from India’s largest field KG-D6 — $4.20 (Rs 190) as Mukesh wants or $2.34 (Rs 106) that Anil seeks?
Passing judgement on the biggest and most high-profile case in Indian corporate history, the three-judge bench headed by Chief Justice of India K.G. Balakrishnan will also answer two related questions.
One, who is the owner of the gas from Krishna-Godavari (KG-D6) fields — Mukesh’s Reliance Industries Ltd (RIL) or the government? And two, what is the validity of the family agreement between Mukesh and Anil on the price that RIL will sell the gas to Anil’s Reliance Natural Resources Ltd (RNRL)?
In the corridors of Shastri Bhawan’s second floor, where the petroleum ministry sits, the ruling could set the basis for future regulations on gas pricing in India, officials said.
Outside the Tilak Marg premises of the apex court, analysts are wondering whether Friday’s verdict will put an end to this five-year-long dispute or will it open a new chapter.
On Dalal Street, where fortunes are made and lost in seconds, this judgement would determine whether Mukesh’s Rs 338,000 crore RIL or Anil’s the Rs 50,000 crore RNRL and Reliance Power Ltd (RPL) will make or lose thousands of crores of rupees. The share prices of both companies fell today — while RIL was down 1 per cent at Rs 1,011, RNRL closed at Rs 68.35 (down 0.22 per cent) while RPL ended the day at Rs 154 (up 0.03 per cent).
As things stand, Mukesh was supposed to sell gas to Anil at $2.34 per unit under a 2005 family agreement, brokered by their mother Kokilaben and sewn together by K.V. Kamath, Rahul Bajaj and Nimesh Kampani.
As the brothers fought over the price, the government in 2007, set a price of $4.20 per unit for KG-D6 gas.
Anil’s RNRL claims would incur losses of $1 billion (Rs 4,530 crore) over 17 years if the gas was sold at $4.20 per unit.
Mukesh’s RIL says its losses would cross $5 billion (Rs 22,650 crore) over the same period, if it had to sell the gas at $2.34.