The Telegraph
Since 1st March, 1999
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Salary swings in Reliance deal

Mumbai, July 8: Brothers Ambani ' Mukesh and Anil ' got an almost 100 per cent pay hike last year: both received Rs 22 crore as salary, perquisites and commissions from Reliance Industries, the Rs 57,000-crore behemoth within the Reliance group.

In 2003-04, the two brothers had received a pay packet of Rs 11.62 crore, which had placed them joint second on the ladder of promoter salaries with B.M. Munjal of Hero Honda topping the charts with a salary of Rs 11.7 crore.

But after the June 18 settlement within the Ambani clan, Anil and Mukeshís fortune will go separate ways ' and thereís a strong possibility that the younger scionís salary packet will shrink dramatically once the group companies are riven.

The salary of the Ambani brothers is structured in such a way that over 90 per cent of the pay packet comes out of commissions, which depend crucially on the profits of the company.

Reliance Industries, which earned a profit of Rs 7,571.68 crore in 2004-05, paid Rs 21.64 crore each by way of commissions to the two brothers.

But once Anil takes over Reliance Energy, Reliance Capital and Reliance Infocomm as part of his share from the settlement, his salary will go down sharply. A pointer to this comes from the amount that Reliance Energy paid him in 2004-05 ' just Rs 49 lakh.

The extent of profits made by the three companies under Anilís belt do not come anywhere near RILís earnings.

But what he might miss on the swings could be made up on the roundabouts as the new flagship holding company, Anil Dhirubhai Ambani Enterprises, is presumed to be cash rich and investing heavily in group businesses, after the settlement entitled him for a huge cash component.

Mukesh, while reaping a fat commission, has also lost during the year under review as he decided to forego last December around 10 per cent of sweat equity in Reliance Infocomm after his brother raised a storm over it.

A simple back-of-the-envelope calculation reveals that he has lost around Rs 2,500 crore.

New equation

The latest RIL annual report, which contains the salary details, does not reveal much about the recent family squabble and a settlement thereafter.

The only inkling about Anilís exit is a mention everywhere his name appears in the annual report (in connection with the board of directors and the various committees in the company) that he has resigned with effect from June 18, 2005.

The annual report also throws light on the new equation within the company. The photographs of Dhirubhai Ambani, the founder, and Mukesh Ambani the chairman are displayed above the chairmanís letter to millions of RIL shareholders.

ďI have enjoyed steadfast support from the board of directors of RIL. I would like to take this opportunity to express my gratitude to the board, all well wishers and RILís over two million shareholders for their understanding and appreciation of the dynamics of the transition, and for their abiding confidence,Ē Mukesh wrote in his letter preferring to remain silent on the settlement details.

Reliance Info assets

Reliance Industries Ltd has valued the assets of Reliance Communications Infrastrucure Ltd and its subsidiaries, including Reliance Infocomm, which is under Anil Ambaniís control now, at Rs 29,007 crore.

As on March 31 this year, total income, on a consolidated basis, of Reliance Communications and its subsidiaries, including RIC, stood at Rs 8,058 crore, according to RILís annual report released here today.

The consolidated net profit for the reporting year stood at Rs 52 crore, RIL said.

Reliance Telecom Ltd, a GSM services provider which is also now under the wings of Anil Ambani, posted a net profit of Rs 11 crore on a total income of Rs 453 crore. Its asset base is valued at Rs 513 crore, it said.

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