Advantage Anil?

The tussle between the Ambani brothers is showing little signs of ebbing. Rather, not only is it escalating, it’s assuming increased significance by the day. What’s more, the fortunes of the brothers could be made or broken depending on what shape the government coalition takes.

Who's doing better at Dalal Street?

Look at what’s happening on Dalal Street, first. Younger brother Anil, head of the Reliance-Anil Dhirubhai Ambani Group (R-ADAG), is accusing elder brother Mukesh of playing foul by hammering the stock price of his group companies; he has duly appealed to the Securities & Exchange Board of India (SEBI) to investigate. R-ADAG has also thought it unfair that Mukesh should attempt to throw a spanner in the works of Reliance Communications’ attempt to strike a deal with South Africa telecom major MTN, by fishing out a right of first refusal clause.

If Anil is upset, one reason could be the free fall the stocks of his group companies have slipped into. Since the beginning of June this year till July 4, these stocks plunged by between 17 and 42 per cent; Mukesh’s companies didn’t fare as badly, falling by between 2 and 35 per cent.

During the same period, the benchmark BSE Sensex was down 18 per cent. During the heady days when the markets were peaking— between July and December 2007— both brothers were on a roll. The stock prices of Anil’s companies rose between 44 and 368 per cent, whilst those of Mukesh’s companies spurted by between 69 and 365 per cent. The Sensex gained 38.5 per cent in that period (see Together They Rose).

The upshot: As one industry analyst quips: “If SEBI needs to investigate the fall, it should also look into the rise of both the groups’ stock prices.” A Reliance ADAG group spokesman declined to comment and an e-mail reply remained unanswered till the time BT went to press.

So, what does the future hold for the brothers? Politics might just determine that. The Samajwadi Party (SP) has agreed to support the UPA government over the nuclear deal with the US, but with some conditions. One such condition is the imposition of a ‘windfall profit tax’—basically tax on high profits— on private oil companies. One such private oil company is Mukesh Ambani’s Reliance Industries Ltd (RIL), whose stock fell more than 3 per cent on the day this news made the headlines (even as the Sensex climbed 0.5 per cent ). Will it be advantage Anil? Watch this space.

—Virendra Verma