| Mukesh Ambani
Mumbai, Dec. 23: Some would say Mukesh Ambani has blinked and others that he has silenced brother Anil's guns.
Ahead of a crucial board meeting of Reliance Industries on Monday, Mukesh has renounced the 50 crore sweat equity that was offered to him in Reliance Infocomm and is now worth more than a couple of thousand crores.
The chairman and managing director of Reliance Industries Ltd (RIL) and promoter of Reliance Infocomm had been facing a barrage of attacks from Anil, who questioned what he called preferential treatment to Mukesh.
While the renunciation could be interpreted as giving in under pressure, Mukesh has also headed off the possibility of a stormy debate at the board meeting on a potentially explosive issue.
In April, Mukesh had exercised the Rs 50-crore stock option which had given him a 12 per cent stake in the Reliance group's telecom venture at the par value of Re 1 a share, prompting the Anil camp's campaign against him after ownership issues between the two brothers burst into the open.
'For the last few weeks a sustained campaign is being carried out about the acquisition of 50 crore Reliance Communications Infrastructure Limited (RCIL) shares at face value by Mukesh Ambani.
'Mukesh Ambani has sought annulment of this transaction and his request has been accepted by the board of RCIL, the holding company for Reliance Infocomm. RCIL has also been told that the detailed communication sent by the company on this will be placed at the RIL board meeting of December 27,' a Reliance spokesperson said.
Mukesh's sudden decision to annul the sweat equity in Reliance Infocomm came late in the evening on a day that began with Anil firing off a second letter to the 12 directors of Reliance Industries. Anil said in the letter the flagship company had been kept in the dark about the shareholding pattern in Reliance Infocomm.
Anil had also complained that the RIL board was 'not informed' about documents that had been filed by Reliance Infocomm a year ago in which it had talked about acquiring the ailing bandwidth provider FLAG.
The younger scion demanded a discussion on the changes in the shareholding pattern in Reliance Infocomm (in which RIL had invested over Rs 12,000 crore), the resignation of senior director M.L. Bhakta, who was a close associate of Dhirubhai, and the future of Reliance Energy, the power utility company he heads and in which RIL has a 50 per cent stake.
Recent developments have ensured that discussions on at least two of these issues will be infructuous: Mukesh has annulled the stock options and Bhakta is reported to have withdrawn his resignation.
In a tactical move ahead of Monday's meeting, Anil decided to conduct a postal ballot of the shareholders of Reliance Energy (REL) seeking to restore the powers of Reliance Industries to appoint the chairman and vice-chairman in the power utility.
Anil had been conferred the powers to appoint the chairman and vice-chairman of the company in April and his latest move was an attempt to go back to the pre-April position.
The Anil camp said the proposal to be placed before REL shareholders was that RIL should be permitted to appoint the two key incumbents as long as it continued to hold a 26 per cent stake in the power utility.
This leaves only one main issue before the board which has been the ostensible reason for calling the meeting: Reliance Industries' proposal to buy back its own shares and restore the confidence of its investors who have been badly shaken by the public spat.
RIL insiders reveal that the board meeting will be held this time at Maker Towers IV. The location is significant: the last four board meetings this year have been held at Reliance Centre in Ballard Estate, the new hub that Anil prefers to operate out of.
Mukesh works from Maker IV at Nariman Point and from the same fourth floor Dhirubhai occupied when he ran the group.
He enjoys the confidence of the entire board, except Anil, observers say. They felt that after the decision to annul the Reliance Infocomm sweat equity, he will be on a stronger wicket.