Brothers at war

Corporate family battles are rarely amicable. After all, internecine conflicts can get ugly and if the fight happens in the public gaze like the battle between the two Ambani brothers—Mukesh and Anil—it can get even more unsavoury. Splitting family businesses is not a simple matter of apportioning assets and businesses among rivals; the process can take time.

More than 20 years ago when the Birla clan decided to divide its empire, it wasn’t an open and shut case. Indeed, disputes over the shareholdings in investment companies that controlled key assets went on for years. In the late 1980s when the Modi family decided to split the group’s businesses between its scions, the process was acrimonious, taking more than a decade to come to a head.Yet, no business family’s dispute has had repercussions as the Ambanis’ fight has had. First, it is the sheer size of their businesses: the revenues of their businesses taken together is nearly 5 per cent of India’s GDP. Second, it is the political fallout of their battle.

In the days running up to the trust vote in Parliament, one set of conditions that the Samajwadi Party supremo, Amar Singh, laid down before agreeing to support the UPA government seemed to be designed to help the interests of Anil and, conversely, hurt the interests of Mukesh.

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Whether such conditions were accepted is a different matter but the fact remains that the fight between the brothers has threatened not only to influence the government’s economic policies (like Singh’s demand for taxing windfall profits by private oil firms) but also has the potential to affect stability of the government in power.

The other fallout of the Ambanis’ fight is in the global corporate arena. One of the reasons why the Anil Ambani-controlled Reliance Communications’ deal with South Africa’s MTN fell through was a spoke in the wheel that came from the rival camp.

This does not bode well for either faction. In future, global corporations looking for alliances with either of the two will be wary. And that wariness could well influence their dealings with other Indian business families. Two things are clear from the Ambanis’ troubles.

First, the brothers should bury the hatchet and get on with their respective businesses so that shareholders’ interests are protected. And second, the government should not be seen to be backing one or other of them in what is really an internal affair of a business family. But with their enormous economic and political clout, will that ever happen in the case of the Ambanis?