Mumbai, Dec. 27: Anil Ambani breathed fire in the morning but found himself outgunned as the Reliance Industries board today gave its endorsement to brother Mukesh and crafted a set of decisions that pushed the younger sibling into a corner.
The board, which was meeting for the first time since the battle came out in the open in mid-November, approved the country's largest-ever share buyback plan for which the company is ready to splash out Rs 2,999 crore.
The board also formed a corporate governance committee to look into probity issues that the Anil camp has been raising in the past few weeks. The directors agreed to shortly create a suitable mechanism that would ensure RIL approval for all large projects within the Reliance group ' a move that is seen as an attempt to further curtail Anil's powers.
After a generous donation of Rs 1 crore for tsunami relief, Anil found himself fighting a lonely battle. He was the only one on the board who abstained or opposed the resolutions that came up for vote and left the venue soon after the meeting ended around 1.30 pm without displaying the same zest for combat he had shown earlier. Late tonight, his camp issued a statement saying that Anil dissociated himself from virtually all the board decisions.
Speculation had raged that there would be fireworks at the board meeting. But no one had expected it to begin even before the meeting started at 10 am at Maker Chambers IV.
Anil drove to the venue in his chauffeur-driven steel-grey Range Rover in a clearly combative mood and triggered a small tsunami for the Reliance group by telling the media that he hadn't been consulted or informed about the share buyback plan before it had been notified to the stock exchanges. 'A discussion on the buyback is completely inappropriate as there are several other issues that the group faces that need to be addressed,' he said.
The recent surge in the RIL stock price after the exchanges were informed about the buyback proposal indicated that 'there is more than meets the eye in terms of what is happening in the marketplace'.
Anil's comment stunned the market and precipitated a sharp fall in the stock when trading opened ' and it didn't recover until the board announced a better-than-anticipated buyback price of Rs 570 per share. Soon after news of the share buyback reached the market at 12.30, the sensex surged to an all-time high of 6566.64 points before profit booking cooled it down at the close to 6513.03, a net gain of 14.97 points and still a record.
The RIL scrip surged to a high of Rs 544.80 after the buyback price was announced but toppled at the close to Rs 516.85, down a little over Rs 7 from Friday's close of Rs 523.60.
However, capital market watchdog Sebi took cognisance of Anil's statement ' arguably the first time that a managing director of a major company has hinted at a price-rigging operation. 'This is definitely a sensitive matter and the market regulator is looking into the aspects of insider trading,' senior Sebi officials said.
Mukesh chose to make a less dramatic entry in the morning through the exit gate of Maker IV and evaded the scrum of reporters.
The Mukesh camp scrambled to put out its response to Anil's latest broadside by contending that his statement was designed to hurt shareholders' interests.
At the board meeting, Anil was at the head of the table while Mukesh sat unobtrusively on the side, next to his uncle Ramnikbhai, Dhirubhai's brother. Sources said Mukesh appeared to mirror Dhirubhai's style of conducting board meetings when he was alive.
In an unequivocal expression of support for Mukesh, all the directors except Anil resolved not to alter the organically integrated structure of the group that had been envisioned by Dhirubhai and emphasised the need to maintain flagship company RIL in its present form 'without any dismemberment'.
The board also decided to provide reasonable assistance to Reliance Energy, the power utility that Anil heads, as long as it does not affect RIL operations. It also agreed to provide gas to the power project in Uttar Pradesh ' Anil's dream venture ' as and when it would become feasible and 'on the usual terms and conditions'.
The Reliance Energy proposal clearly nettled Anil and he opposed it.
After the meeting, Anil left in a petulant mood: no longer was he willing to provide soundbites to the media. He got behind the wheel of the Range Rover (his chauffeur perched on the back seat) and drove through the throng of reporters and photographers.
The other directors waited after the meeting to interact with senior Reliance officials. Senior director M.L. Bhakta ' who withdrew his resignation today ' left with a smile and buried his face in a newspaper when reporters rapped on his car window for a comment.
In the stock markets, marketmen were clearly focussed on the meeting as the sensex ' the most trusted barometer of the market's mood ' scaled new heights. 'It is clearly a clash of egos and not a clash of numbers,' said V.R. Srinivasan, director at BRICS Securities, an institutional brokerage. 'During these times, they don't care about the consequences.'
Anil, however, was able to force Mukesh on the backfoot with his steady stream of criticism about RIL investments in Reliance Infocomm, the telecom venture. The board appointed independent directors to look into pricing and valuation issues. However, it rejected Anil's suggestion that the 162-crore preference shares that the flagship company had bought in the telecom venture should be converted at par ' which would have given RIL a 75 per cent stake in the venture and sharply reduced the holding of Mukesh and his associates.