Mukesh and Anil Ambani: Battle intensifies

New Delhi, July 13: The battle between the Ambani brothers, till now confined to the boardrooms and courts, is threatening to spill into the political arena, though all concerned deny it.

Elder brother Mukesh, who is believed to be close to several Congress leaders, could be in a fix if certain “suggestions” for changes in the retail and oil policies made by the Samajwadi Party are accepted.

The party, with Amar Singh leading the charge, have not only ruled out foreign direct investment in the domestic retail market but also suggested the setting up of a regulator to ensure that small stores were not affected by the bigger players. Mukesh, through Reliance Fresh, is setting up one of the biggest domestic retail chains in the country.

The Uttar Pradesh-based Samajwadi Party, an offshoot of the Socialist movement, has also demanded a tax on the “windfall” profit made by Mukesh’s Jamnagar refinery from selling petroleum products in the global market. The refinery enjoys the status of an export-oriented unit and is tax exempt.

Samajwadi Party leaders say their demands have nothing to do with the rivalry between the Ambani brothers, though younger brother Anil is known for his proximity to the party. Their contention is that the tax, if imposed, could fetch the government Rs 100,000 crore in revenue.

The party is also believed to have demanded that the production of gas from newly discovered fields be allowed only after court proceedings over the gas allocations are settled.

The brothers are caught in a legal spat over the pricing and allocation of gas from the Krishna-Godavari basin, where Mukesh’s Reliance Industries has made a huge find.

In telecom, Mukesh has claimed the right of first refusal over a stake sale in Anil’s Reliance Communications (R-Com).

The younger Ambani at one stage was reported to be considering the transfer of a significant chunk of R-Com to South Africa’s MTN as part of a complex reverse merger deal.

The party has also made some other suggestions that could impact the way telecom firms compete.

Amar Singh had demanded in a letter to Prime Minister Manmohan Singh that GSM operators be charged a one-time market-linked fee for spectrum held beyond 6.2 Mhz.

While this is yet to be accepted, the telecom regulator, nudged some say by the government, has agreed to hike the minimum base price by 25 per cent to Rs 2,200 crore for the auction of pan-India 3G licences.

Many believe that Mukesh has enough clout in Delhi to be able to counter moves that could impact his business empire.