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The second round of battle between the Ambani brothers, Mukesh and Anil, intensified on Sunday with the Anil Ambani group accusing Reliance Industries of trying to prevent the transfer of ownership of four companies.
This comes after the two brothers reached an agreement on June 18, 2005, to carve up the Rs 100,000-crore (Rs 1000 billion) Reliance business empire.
Anil Dhirubhai Ambani Group (ADAG) also charged Reliance Industries with providing "incorrect, incomplete and misleading" communication to the Bombay Stock Exchange and the National Stock Exchange in draft information memoranda of these companies.
ADAG claimed that Reliance Industries' "deliberate and criminal attempt" to prevent the transfer of four group companies was a "mockery of all fundamental principles of propriety, transparency, fairness and corporate governance" and was detrimental to the interest of its 2.2 million shareholders.
Reliance Industries denied the charge and defended its action late this evening saying that transfer of control of these companies would not affect listing.
It also came out with a counter-allegation that ADAG's move to merge Reliance Telecom and Reliance Infocomm Infrastructure with Reliance Infocomm would affect shareholders.
In a hurriedly called press conference this evening that lasted for only 10 minutes, an ADAG director, Satish Seth, said non-transfer of shares to the group violated the philosophy of the overall settlement between the Ambani siblings, which was approved by Reliance Industries shareholders and sanctioned by the Bombay High Court.
According to arrangements between the Ambani brothers, four companies from the Reliance group were to be passed on to the ADAG.
They are: Reliance Capital Ventures, Reliance Communications Ventures, Reliance Energy Ventures and Reliance Natural Resources. These are special purpose vehicles. The boards of these companies were also to be reconstituted for ADAG to gain management control in them after the record date of January 25.
The fresh round of battle, after a lull of six months, began on Friday with Reliance Natural Resources submitting a draft information memorandum to the stock exchanges in which it claimed that it had signed a master gas supply agreement with Reliance Industries.
Yesterday, a director of Reliance Natural Resources, JP Chalasani, alleged that the gas supply agreement deviated from the terms of the original agreement between the Ambani brothers.
He said ADAG would take necessary steps to execute a suitable agreement once it got control of Reliance Natural Resources.
Late in the night, Reliance Industries came out with a counter-charge saying Chalasani's statement was misleading.
Seth said today ADAG wrote to the Securities and Exchange Board of India, the Bombay Stock Exchange and the National Stock Exchange, informing them that the boards of these four companies had not been reconstituted.
Reliance Industries continued to control these companies, Seth added. Each of these four companies has a three-member board with two representatives from Reliance Industries, Sandeep Tandon and LV Merchant, and one from ADAG.
When asked Seth, however, refused to elaborate on his charge of Reliance Industries' "criminal attempt" to prevent the transfer of the four companies.
Reliance Industries made public an e-mail sent by Tandon to ADAG nominees late this evening. In this mail, Tandon said Reliance Industries was taking necessary steps for implementing the demerger scheme.
"In a record period of less than a week, we arranged to despatch more than 50 lakh share certificates to shareholders across the country.... All these efforts demonstrate our commitment to the shareholders," Tandon said in his mail.
Tandon alleged that ADAG was yet to provide information on Reliance Communications Venture, including updated financial details and the telecom industry overview.
Tandon objected to ADAG "wanting to merge Reliance Telecom and Reliance Infocomm Infrastructure with Reliance Infocomm before listing." This would dilute the holding of Reliance Communications Venture in Reliance Infocomm, he said.
The e-mail added that the shareholders would be affected if the capital of Reliance Communications Venture was reorganised without suitable price discovery. Tandon also objected to the "delayed and staggered listing".
On its part, ADAG drew Sebi's attention to the fact that the draft information memorandum for three of the four companies had been "unilaterally" submitted to the BSE and the NSE without the approval of ADAG nominees and that the final draft information memorandum was not provided to the group.
A company is expected to file a draft information memorandum with stock exchanges in case it seeks to be listed without an initial public offering.
An ADAG insider said Reliance Industries made comments on the future prospects of these companies in the draft information memorandum.
"Reliance Industries is the trustee of these companies. It is supposed to pass on management control to ADAG. How can it comment on the future business of a company which it will not be associated with?"
