Reliance feud eases

Friday, 24 December 2004, 08:00 Hrs
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MUMBAI: The bitter differences between the Ambani brothers, who control the mammoth Reliance Industries, may ease a bit after elder brother Mukesh decided to renounce his controversial stake in a fast-growing group company.

Experts term Reliance Industries chairman Mukesh Ambani's decision to give up his 12 percent stake in Reliance Infocomm as the removal of a major roadblock between him and his younger brother Anil Ambani, vice chairman.

"With Mukesh now showing signs of softening his position with the annulment of his stake in Reliance Infocomm, hopes of an early resolution of the rift have soared very high," said a leading corporate analyst.

Mukesh's 12 percent "sweat equity" or 500 million shares in Reliance Infocomm, one of the leading telecom services firms, was one of the main areas of dispute between the two brothers.

It was alleged that the elder Ambani sibling was allocated the stake in Reliance Infocomm without full disclosure to the parent company Reliance Industries' board and that allocation was made on highly favourable terms.

"This is a very positive development. The tension between the brothers may ease somewhat after the latest move," said Jaspreet Singh, a senior equity market analyst with the brokerage firm Prabhudas Lilladher Securities.

"The annulment of shares move has raised hopes of a reconciliation ahead of the crucial company board meeting next week. This also comes as a major boost for investors," Singh told IANS.

Shares of all Reliance group companies staged a smart rally in the early trade Friday, helping the key share market index touch a new all-time intra-day high, on hopes of an early resolution to the Reliance ownership feud.

While group companies Reliance Energy and Reliance Capital rallied nearly one percent in the early trade, shares of flagship Reliance Industries soared as much as 1.6 percent on fresh institutional buying.

The rally on Reliance counters, which account for significant weightage in the benchmark index, propelled the 30-share Bombay Stock Exchange sensitive index or Sensex to a new record intra-day high of 6,475.55.

Mukesh late Thursday sought annulment of the transaction that provided him with 12 percent stake in Reliance Infocomm.

The board of Reliance Communication Infrastructure Ltd., the holding company of Reliance Infocomm, has accepted his request.

Reliance Communication Infrastructure has informed the parent Reliance Industries of this decision. The detailed communication sent on this would be placed at the business conglomerate's board meeting Monday.

Earlier Thursday, Anil Ambani, vice chairman of Reliance Industries, called for a detailed discussion on the shareholding pattern of group company Reliance Infocomm in the upcoming board meeting of the industry conglomerate.

In a letter written to the board members of Reliance Industries, Anil had reportedly said despite Reliance being the largest stakeholder in Reliance Infocomm the changes in equity pattern were not brought before its board.

Reliance Industries' board of directors would meet Monday to discuss buy back of company's shares.

It would be the first board meeting of the group after differences between the Ambani brothers, who control Reliance Industries, over the control of the mammoth business empire, became public.

Source: IANS
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