| The 14-storey residential palace in Cuffe Parade, Mumbai, is called Sea Wind. The House of Ambanis could not have aspired for a better irony. For months, it was not the breeze from the Arabian Sea that wafted between the walls that protected the most powerful family in Indian business. A storm was raging within-of mistrust, anxiety, ambition and hurt. On June 17, late in the evening, there was a palpable atmospheric shift on the 10th floor, where the family has its private temple. Kokilaben Dhirubhai Ambani, a diminutive woman at 70, with sons Mukesh and Anil, daughters Deepti and Neena, sons-in-law Raj Salgaonkar and Shyam Kothari in tow, stood before Shreenathji, the deity. She made a brief declaration that would turn out be more than a ceasefire on the war of the brothers. It was the inaugural words of the partition of an empire. She then placed the peace treaty at the feet of the deity, and prayed for her sons who had long ago lost faith in each other. Next morning, armed with the four-page agreement and a 300-word press statement, she was there to face the world and rehabilitate the legacy of her late husband Dhirubhai.  | | PICTURE SPEAK | |  | "I am confident that Mukesh
and Anil will uphold the values
of their father and work
towards enhancing value for
RIL shareholders."
KOKILABEN AMBANI | | In a house divided, the mother alone remained supreme, as the singular upholder of family values. In July 2002, when her husband died, Kokilaben was the richest widow in India, and that could have been her moment to become the all powerful dowager of Indian business. Dhirubhai didn't leave a will and, as per the Hindu Succession Act, she was the natural inheritor. She was happy to be the mother of two able sons, Mukesh and Anil. They let her down; they let their father down, as a corporate edition of Cain-and-Abel began to be played out in public. On that Saturday morning, when the brothers were disarmed at her command, she was more than mother. She was the matron saint of partitioned peace and sole protector of the indivisible legend of Ambani. For, what was at work was the Four Commandments of Kokilaben. After Dhirubhai's funeral, it was not a happy family, certainly not happy business. Even though there was no clear division of ownership, Mukesh got the Rs 73,164 crore flagship company with a market capitalisation of Rs 83,863 crore. The trouble began when the big brother began to act really big. The younger one found himself isolated, persecuted. Warring camps were born and cronies and courtiers were having a field day. Kokilaben couldn't afford to be a passive witness to the disintegration of the House that Dhirubhai built. On December 28, 2004, Dhirubhai's birthday, she called all of them-sons, daughters and sons-in-laws-to her private quarters on the 10th floor of Sea Wind for some hard talk. And the commandments were issued: Reliance, the brand, shall not be split; You shall not walk away with cash; You shall not compete with each other; You shall not allow outsiders to interfere. | AN EMPIRE DIVIDED
Kokilaben has decided who will run what in the Reliance Group. Ownership will be transferred through the issue of fresh shares for every RIL share to a special purpose vehicle after the board ratifies the de-merger. | | | Mukesh D. Ambani
30%
Though the big brother owns only as much of the family's share in Reliance group as Anil-30%-he gets the unhindered control of India's largest private sector company, RIL. But relinquishing Reliance Infocomm is an emotional, and financial, loss. | | Kokilaben D. Ambani
40%
Even after enforcing the mother of all settlements between her sons, Kokilaben still controls 40% of the family's share in the Reliance group, including her two daughters'. She could use her stakes as carrot-or stick-to prevent the brothers from fighting again. | Anil D. Ambani
30%
After fighting a lone battle for control for a year, Anil used a combination of threat of disclosures and appeal to mother to finally get RCL, REL and Reliance Infocomm. And his 30% share will help him infuse much needed funds in the three companies. | | Translation: Sons, I won't let you mess with Dhirubhai's memory. And Kokilaben was no longer going to indulge her wayward sons. The mother with an iron fist was born. So she came out with a partition formula: 30 per cent each to Mukesh, Anil and herself; and 5 per cent to each daughter. It was too smart a plan to please the sons, for mother and daughters together would remain the single largest shareholders in the companies managed by Mukesh and Anil. She then sought the services of two professionals, JM Morgan Stanley Chairman Nimish Kampani and ICICI Chairman K.V. Kamath, the trusted banker of Dhirubhai and a family friend. In January, she asked Kampani to give her an evaluation of the entire group. Kamath would talk to the brothers and report back to her. In March, Kampani gave his report, which she presented to the sons, and asked Kamath to sit with them to work out the division. War broke out as both brothers rejected the evaluation report. Mukesh felt RIL was overvalued and Infocomm was undervalued, which meant he would have to pay more to get control of both. Anil thought RIL was undervalued, which was understandable as he wanted more of his share. But Kampani stuck to his valuation as the brothers resorted to epistolary combat and other forms of warfare, including planting stories in a gullible media that was all the more eager to sex up the biggest corporate break-up saga. Towards the end of April, Kokilaben, frustrated but not exhausted, pronounced the final decree: behave and listen. Mukesh, being the elder son, would get the flagship company plus IPCL; and since the younger one can't be denied the second biggest, Anil would have Infocomm plus Reliance Energy. Kokilaben asked Kamath to sort out some intra-company matters. Kamath went on a holiday and didn't return till May-end. By then the war had turned dirty, with Anil even writing to the finance minister. Again, the mother had to change the script. June 4 would mark the denouement. It was Anil's birthday and on the 10th floor of Sea Wind there would be another family meeting. Enough is enough, Kokilaben admonished the sons, you have made no progress. For the next 12 days, the fifth floor of Sea Wind, where once Dhirubhai held his court, would become her durbar. Kamath, patient and meticulous, would sit with the brothers and their lawyers-Zia Modi for Mukesh and Cyril Shroff for Anil-and navigate them through the demarcated peace charter. Most often, the meetings went beyond midnight. Kamath, who had 20 meetings with the mother and the brothers by this time, would dutifully report the progress to Kokilaben. And bridging the communication gap between Kamath, who spoke no Gujarati, and the Mother Supreme was Kalpana Morparia, deputy managing director, ICICI Bank, who is known to the family. Throughout, the mother had ensured that the peace mission didn't extend beyond the family walls. On June 16, she issued the ultimatum: nobody would leave the room without a final document of truce in place. After 34 hours, there was one, agreed upon by all, that spelt out the partition, the valuation and the road map. On the morning of June 18, when Kokilaben announced the bittersweet news of an Empire Divided, it was Mother's Day in the hoary history of the Ambanis. | | | | | 17 Nov 2004 Mukesh Ambani (MDA) tells a TV reporter, "There are other issues like ownership issues which are in the private domain." This brings the Ambani rift out in the open. | | 22 Nov RIL issues media statement, where MDA clarifies, "My remarks were torn out of context. Dhirubhai settled all ownership issues pertaining to Reliance within his lifetime."
 Anil Ambani (ADA) empowers Kokilaben to decide on the ownership issue as she deems fair. | | 23 Nov MDA's letter to RIL employees says, "CMD (Mukesh) is the final authority on all matters concerning Reliance."
M.L. Bhakta quits RIL Board | | 26 Nov 6 directors quit Reliance Energy. Anil Ambani says: "The board will consider the resignations." All powers of ADA are stripped by MDA. | | 30 Nov ADA's tells RIL employees in a mail, "Watch out for chamchas, chelas and cronies."
Reliance Infocomm (RIC) ownership questioned. | | 1 Dec REL Board meets
REL to consult RIL on gas linkages for its upcoming Dadri project. REL Board decides to request the 6 directors to reconsider their resignation. Y.P. Trivedi, RIL Board member, denies any information on MDA holding 55% stake in RIC. | | 2 Dec RIL Board had approved the Dadri project. | | 3 Dec SEBI to take up issue of Reliance group entities' corporate governance.
RIL investment in RIC questioned. RIL invests close to Rs 12,000 cr for only a 37% stake in RIC. MDA with a much smaller investment has a higher stake. 10-yr lock-in period for Rs 8,100 cr preference shares of RIL in RIC without any conversion price-source RIC Information Memorandum. Ownership of RIL and RIC, web of companies unearthed. All the equity in the web held by 4 companies whose directors are Manoj Modi & Satish Parekh-all MDA confidants. | | 6 Dec RIC balancesheet shows Reliance Communications Technologies Ltd (RCTL) owns 53% of RIC. RCTL's ownership is not known. | | 7 Dec ADA seeks proof of Dhirubhai having settled succession from MDA. | | 8 Dec It is revealed RIL put in Rs 8,100 cr in RIC without board discussion. | | 9 Dec RIL official says BSE site information on shareholding pattern of RIL is incorrect. 7.5 % stake in RIL held by Petroleum Trust not part of promoter holding as shown on the site.
ADA asks if ownership had been settled by Dhirubhai "why disclosures were not made to exchanges, SEBI or RIL Board and why no information was available on MDA's ownership claims." | | 13 Dec RIL invests Rs 1,600 crore in the ONGC IPO through Smart Entrepreneur and Smart Infosolutions. Both have paid up capital of Rs 1 lakh each
Two REL directors, V.P. Malik and Leena Srivastava, write to RIL board seeking answers on resources and resignations of six directors. | | 14 Dec SEBI asks bourses to look into the listing agreement provisions of Reliance Group companies. | | 16 Dec MDA says the architecture of the group's ownership obviated the need for a will by Dhirubhai.
ADA calls for RIL Board meeting raising three issues: n Resignation of M.L. Bhakta
Future prospects of REL
Where RIL invested Rs 12,000 cr | | 17 Dec RIC said to have parked close to Rs 3,500 cr in receivables in an off-balance sheet deal with Smart Entrepreneur Solutions. | | 19 Dec Sweat equity to MDA questioned as he was not initial promoter of RIC. | | 23 Dec Bhakta withdraws resignation.
MDA annuls sweat equity. | | 25 Dec SEBI to track RIL's buyback to investigate transactions in the RIL scrip. | | 28 Dec ADA questions RIL buyback: "There is more than what meets the eye."
Corporate Governance panel comprising Y.P. Trivedi, D.V. Kapur and M.P. Modi set up.
Trivedi and Modi join RIC Board. | | 4 Jan ADA resigns from IPCL board and blames Anand Jain for the rift. | | 6 Jan RIL corporate governance panel seeks status report on implementation of corporate governance practices in RIL. | | 19 Jan REL informs BSE that its Articles of Association has been amended by postal ballot empowering RIL as long as it holds 26% or more in REL, the right to appoint directors.
MDA and Nita found to own 45.5% in RIC through 4 companies which in turn own the 8 companies which control 45.5% of RIC. | | 20 Jan REL Board meets: Amitabh Jhunjhunwala & J.Ramachandran resignations accepted. Other four withdraw resignations. | | 21 Jan IPCL Board Meeting: IPCL Board asks ADA to reconsider resignation and ignores issues raised by him in his letter. | | 22 Jan RIL governance committee gives clean chit. | | 24 Jan ADA sends RIL board 500-page letter on governance issues at RIL. | | 26 Jan Manoj Modi, MDA's aide, found to have been given 1% stake in RIC at Re 1/share whereas RIL paid Rs 250/share for stake in RIC. | | 28 Jan Apart from Modi, six others also allotted RIC shares at Re 1/share. They are Anand and Anita Sharma, Amit and Kamini Gupta, Lalit and Sapna Goyal. They owned Fairever Traders, Softnet Traders & Prerna Auto respectively. | | 4 Feb Prerna Auto found to have ties with BJP leader Pramod Mahajan. Owner Lalit Goyal's brother-in-law Sudanshu Mittal is a confidant of Mahajan. | | 6 Feb Fairever has connections with me, says Mahajan. | | 15 Feb RIC denies political links in shares flow. "No politician or bureaucrat at any moment of time has held or holds any shares of RIC." | | 16 Feb RIC claims the three companies Fairever, Softnet & Prerna Auto returned RIC equity in Dec 2004. | | 19 Feb RIC share scam: Probe Mahajan role, says Congress. | | 27 Feb PMO wants RIC shares to Mahajan kin firms probed. Sanjay Nirupam of Shiv Sena raises Mahajan-RIC issue in Parliament. | | 3 Mar Smart Entrepreneur Solutions owned by RIC sold its ONGC shares and earned close to Rs 100 cr. These shares had been bought with money loaned to the firm by Reliance Industries. | | 2 Apr No favour shown to RIC: Mahajan. "None of my family members own any shares in any company in the world," he says. | | 8 Apr ADA claims his phones are being tapped by Reliance Infocomm. | | 23 Apr ADA name is missing from Board of Directors on IPCL website. | | 24 Apr IPCL informs BSE & NSE that ADA's resignation has been considered by the board on Jan 20. | | 26 Apr Jhunjhunwala, director on board of Reliance Capital (RCL), protests RCL's sale of its 23% stake in IPCL. He also says this sale was done without informing the boards of RCL, IPCL and the exchanges and that Reliance Capital lost Rs 1,000 cr in this deal. | | 28 Apr RIL Board meets:
ADA protests appointment of two directors, flags issues of non-transparency, inadequate disclosure. | | 29 Apr ADA says Reliance group companies' shares are undervalued because of the absence of corporate governance and lack of transparency. | | 30 Apr The alleged sales of Reliance Infocomm shares at a discounted price comes up in LS with Manmohan Singh assuring members that legal action would be taken if any rule violations were detected. | | 18 Jun Settlement announced between MDA and ADA. ADA resigns from RIL board. | | Index
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