By luck or deliberate strategy, or a combination of both, the execution of the refinery project in Jamnagar transformed Mukesh (Ambani) from an introvert into a confident entrepreneur, who no longer shied away from public appearances. He still had few friends, but interacted comfortably with the Who’s Who of India and the world and entertained them lavishly. By the end of the 1990s, Mukesh was truly convinced that he was the legitimate heir to Dhirubhai’s legacy, that he was the one chosen by his father to lead Reliance into the 21st century and make it one of the largest corporate groups in Asia and the world. His way of thinking became apparent when the group launched its telecom venture, Reliance Infocomm. Although it was said to be Dhirubhai’s dream to make voice calls on mobile phones cheaper than a 50-paise postcard, Infocomm was essentially Mukesh’s baby, with neither Anil nor any of his representatives on the company’s board of directors.
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The holding structure is worth looking at. Reliance Infocomm’s parent company was Reliance Communications Infrastructure Limited (RCIL) which held a majority stake. Mukesh and Nita indirectly owned 50.5 per cent of the company through nine holding firms, with 45 per cent being held by RIL. While Mukesh was Infocomm’s chairman and managing director, there were three other directors: Anand Jain, Manoj Modi, and Bharat Goenka (promoter of Tally Solutions, a computer software firm), all of them Mukesh loyalists. For Anil, the shareholding structure and composition of the board of Reliance Infocomm was a clear indication that his elder brother had sidelined him in favour of his wife Nita and those loyal to him. What infuriated Anil was that he was being treated as an unequal partner by his own brother in favour of his colleagues, AJ and MM. The rift between the brothers was widening.
- A 21st Century Mahabharata
On 22 July (2011), Jaipal Reddy announced that the government had cleared a $7.2-billion deal for RIL (Reliance Industries Ltd) to sell a major stake in 21 of its oil and gas blocks to British Petroleum (BP). Though the ministry itself was competent to clear the deal, Reddy instead played it safe and referred the decision to the Cabinet Committee on Economic Affairs (CCEA) which cleared the deal on 22 July 2011, five months after it had been announced. Of the 23 blocks in which BP wanted to buy a 30 per cent stake, the CCEA approved 21. In the other two, there were technical issues to be sorted out between the government and Reliance. The minister gushed that this would be the single-largest foreign investment in the country’s history, and it would also mean induction of vast technical expertise in India’s hydrocarbon sector. If Reliance was linking the efforts to raise KG output to clearance of the BP deal, the government had given the company a chance to come clean. Reliance had all along been hoping that BP’s deepwater drilling expertise would increase output from the KG-D6 field. The participation of a global leader in deepwater oil and gas fields like BP strengthened Reliance’s defence of its high capital expenditure in the D6 block. The view in industry circles was that BP would have diligently scrutinised the cost of development and production before agreeing on a valuation of the assets. Reliance needed BP’s ‘certificate’ and it got it.
-- A Storm Over the KG Basin
