Financial Daily from THE HINDU group of publications
Friday, Apr 29, 2005

News
Features
Stocks
Port Info
Archives
Google

Group Sites

Home Page - Corporate Disputes
Corporate - Corporate Disputes


What is stalling Kamath plan for Ambanis?

Boby Kurian

Bangalore , April 28

THE settlement of the family dispute between the Ambani brothers hinges on whether there should be a cash component to the Anil Ambani's share, over and above the management of a clutch of the Group companies that he would get, say sources privy to the terms of the settlement.

This cash component, these sources additionally indicate, is in turn linked to the near term investment needs of the Group's telecom business. Reliance Infocomm, the telecom arm of the Group, would require anywhere between Rs 4,000 crore to Rs 5,000 crore in the next six to eight months as per the capital expenditure plans chalked out for the company, at the beginning of the calendar year 2005. Mr Anil Ambani would have to raise this sum without the comfort of cash flows from the parent company, Reliance Industries, which would be controlled by his elder brother, Mr Mukesh Ambani, under the terms of the settlement hammered out by the ICICI Bank Chairman, Mr K.V. Kamath.

This, these sources concede, might turn out to be a difficult task and hence the insistence on the part of Mr Anil Ambani, for a cash component to the terms of the family settlement. It is this lack of a component in the division of assets between the two brothers that has effectively derailed the Kamath formula for settling the Reliance spat, according to informed sources. Reliance Infocomm is expected to guzzle between Rs 10,000 crore to Rs 11,000 crore in capital expenditure through the year 2005, and the Mukesh Ambani camp has infused close to Rs 6,000 crore out of the planned expenditure. This still leaves the younger Ambani with the task of raising another Rs 4,000-4,500 crore after accounting for the Rs 500 crore the infocomm business is expected to internally throw up. Further, the top brass of the infocomm business is learnt to have decided to stay with the Mukesh Amabani camp leaving a vaccum at the top of an operation where manpower is crucial, sources added.

Informed sources said the Kamath plan, which was supposed to go through in the first week of May, had envisaged a 30:30:40 split in the Reliance Group assets between Mr Mukesh Ambani, Mr Anil Ambani and mother Kokilaben and her two daughters.

According to the formula, the elder brother would keep RIL and IPCL, while the younger Ambani would get to keep all service related businesses and the other group business including Reliance Infocomm, Reliance Energy and Reliance Capital.

Article E-Mail :: Comment :: Syndication :: Printer Friendly Page


Stories in this Section
What is stalling Kamath plan for Ambanis?


RBI hikes reverse repo rate to absorb excess liquidity — Alert sounded on rate front
VAT uncertainty, US ruling drive down Ranbaxy's Q1 net by 63%
Indian soldier gets dressed to kill
Banking stocks shed considerable value
Tribunal quashes bandwidth price cut — `TRAI has violated principles of natural justice'
RBI takes note of small depositors!


The Hindu Group: Home | About Us | Copyright | Archives | Contacts | Subscription
Group Sites: The Hindu | Business Line | The Sportstar | Frontline | The Hindu eBooks | The Hindu Images | Home |

Copyright 2005, The Hindu Business Line. Republication or redissemination of the contents of this screen are expressly prohibited without the written consent of The Hindu Business Line