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The split of an empire

All eyes are now on where the RIL price settles in the special trading session on Jan 18, writes Sandeep Bamzai.

india Updated: Dec 31, 2005 12:02 IST

As one closes out 2005, it is back to the future in many ways.

Just as the first few months of this year saw the electronic and print media space being dominated by the Ambani spat, January 2006 will see the two brothers and their respective empires dominate the mental space.

Yes, the demerger has received legal sanctity, but all eyes are now on where Reliance Industries price settles in the special trading session for price discovery on January 18.

This will in turn determine the residual share price of the four new entities which form part of the newly created Anil Ambani Group. This will be followed by the expected listing of Reliance Communication Ventures Ltd, the holding company for Anil Ambani's telecom entities —- Reliance Infocomm, Reliance Telecom, Flag Telecom and Reliance Communication Infrastructure Ltd.

The role played by Reliance Group matriarch Kokilaben Ambani in this entire demerger is something that bears repetition.

Even as the fur was flying with media being used effectively for shadowy proxy warfare, the matriarch in conjunction with ICICI Bank boss KV Kamath, JM Morgan Stanley chief Nimesh Kampani and his son Vishal was effectively working towards resolving all the fissures that had developed between the duo who the stockmarket once described as Ram-Lakhan.

But there were other players who helped in the settlement — the two sisters Dipti and Nina and of course their husbands Dattaraj Salgaocar and Bhadra Shyam Kothari.

After several flip-flops and many an attempt to destabilise the process of reconciliation, the night of June 17 saw the actual hammering out of the settlement.

It carried on till the wee-hours culminating in the matriarch issuing a press statement that all was well and the empire had been divided fairly and equitably.

At the first Reliance Industries AGM after the split, younger sibling Anil Ambani thanked her contribution to breaking the impasse profusely.

The mother's touch is still omnipresent. On the eve of the patriarch Dhirubhai Ambani's 73rd birthday on November 27, she accompanied Anil to Tirupati and the very next day she flew to Nathdwara near Udaipur to offer thanksgiving. All this leads one to believe that two business leaders from the Ambani family are better than one.

The message is clear that the underlying business of the Ambanis is business. The new year will see this being thrown into stark relief again and again. For the two brothers will create businesses of global size and scale.

If Mukesh Ambani who lost a lot of credibility during the course of the slugfest has come back strongly with mega announcements on scaling up his refining and petrochemicals businesses, then the ace up his sleeve of a gargantuan retail initiative is still to come.

Tentatively titled Reliance Home, Mukesh Ambani has over the years shown his implementation skills to deliver large sized projects with great panache. This will be another test for him and his A team.

Running parallely to this theme is the evolution of the company into an exploration and production major. His exploration forays in KG basin and Oman and the creation of a team to scour the globe for opportunities in oil and gas equity makes him the man to watch in 2006. Flush with RIL cash flows, he is busy writing his own script.

On the other side, Anil also sitting with deep pockets is hitting all the right notes — bidding for Delhi and Mumbai airport modernisation, FM radio sweepstakes and playing the role of a venture capitalist on the lines of Softbank founder Masayashi Son, he is busy acquiring stakes in a wide array of companies.

However, at the very kernel of his business credo is telecom and a content play to support it. He too is scaling up, albeit quietly, from a presence in 2200 cities, he has pushed forward to 4500 towns and cities and 300,000 villages.

The single largest telecom player — CDMA plus GSM — in the country, December alone has seen net accretions of a million lines. By acquiring Adlabs, he has already declared his intent on what the future holds in terms of a convergence play, using the platform for a content play.

While both brothers have maintained 'maunvrat', it is clear that 2006 will see both of them pulling out all the stops.

Look at what transpired in 2005, major global players like Masayashi Son, Sony's Howard Stringer, Microsoft's Bill Gates, Qualcomm's Paul Jacobs and Walt Disney's Andy Bird, Wal Mart CEO John Menzer confabulated with Anil Ambani, BP chief executive Lord John Browne, Disney bosses Michael Eisner and Bob Iger and private equity firm Blackstone Capital chairman Peter Peterson visited Mukesh Ambani.