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Others Guest Column Retrofit: Ambani Vs Ambani – a lot of hot air around gas

Guest Column Retrofit: Ambani Vs Ambani – a lot of hot air around gas

Author | Sandeep Bamzai | Wednesday, Jul 29,2009 8:05 AM

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Guest Column Retrofit: Ambani Vs Ambani – a lot of hot air around gas

It is a cross between ‘Dynasty’ and ‘Dallas’, with a touch of the Biblical Cain and Abel (Jeffrey Archer reprised that in his best seller ‘Kane and Abel’) thrown in for good measure. ‘Dynasty’ and ‘Dallas’ were two of the longest running soaps on American telly. However, there is more ‘Dallas’ than ‘Dynasty’ in the Ambani feud, which has taken a curious turn with the ongoing gas feud.

‘Dallas’ had two siblings – the scheming John Ross ‘JR’ Ewing and his younger brother Bobby, played by Patrick Duffy. They were in the oil and cattle ranching business and the Machiavellian JR was always at odds with Bobby in the soap that ran for 13 years in prime time American telly. Strangely, ‘Dynasty’, too, had the oil industry as its backdrop and initially it was even titled ‘Oil’.

What is being played out in front of lakhs of shareholders is a similar opera. Manas Chakravarty, writing in the Sunday Hindustan Times, spoofed the Ambani versus Ambani feud, likening it to a ‘reality show which has mesmerised us for years, but in the end critics say it is just a load of gas’. Yes, at the very core of the most recent internecine sniping is gas. The gas row is top of mind, it has become a media whirligig and the political class is also consumed with its daily gyrations. Sadly, most of media cannot comprehend the nuances of this joust as it listens to one side or the other and takes notes. It is a simple tale.

The corporate restructuring of Reliance Industries entailed several aspects and facets. As part of this gigantic exercise, also described as the largest corporate transaction in Asia in 2005, gas was to be given by RIL to RNRL for the 4,400 MW gas-fired Dadri plant. RNRL was created with the express purpose of providing the necessary fuel linkages to the Dadri plant. I am writing all this on the basis of my limited understanding of the matter. Subsequently, the scheme of demerger was approved by the shareholders and Board of Directors of RIL, and ratified by the Bombay High Court, which makes it a commercial dispute between two corporate entities and not a private dispute. This gas deal was further subsumed in the family settlement MoU architected a year later in June 2005.

Oh yes, I forgot, the price decided between RIL and RNRL of $2.34 was based on the internationally floated tender by NTPC for its fuel requirements for the Kawas and Gandhar plants. Incidentally, NTPC is a Government-owned company and RIL won the internationally floated tender and subsequently reneged on it. And that is the twist in the tale, with a little bit of sting. Since then, two courts cases have been fought – one by NTPC versus RIL and another by RNRL against RIL. RNRL received a favourable verdict on June 15 this year from the Bombay High Court. This is where it gets complicated. With media complicating the issue, there is, as Manas says, a lot of hot air around the gas.

Business history does not have too many mirror images of this fratricidal joust. The only other battle that quickly comes to mind is the Adi and Rudolf Dassler estrangement, which led to the creation of two of the biggest sporting brands. Long years ago, two brothers – Rudolf and Adolf Dassler – started making sports shoes in their mother’s laundry room in the early 1920s.

Barbara Smit, a Dutch author and journalist, in her book ‘Three Stripes versus Puma’ traces the rise and rise of the two embittered rivals, estranged brothers in Germany’s sport obsessed 1920s, their cooperation with the Nazis, their post-War split and their hatred driven energies, which enabled both to create global sporting brands and behemoths. From Herzogenaurach, a small town outside Nuremberg, the two brothers began their monumental journey, which has spawned two business empires.

From Dassler Brothers Shoe Factory, they went their separate ways after the second Great War. Both brothers joined the Nazi Party. Adolf called his business Adidas, while Rudolf called it Ruda before changing it to Puma in 1948. Adidas AG is the second largest sporting goods company in the world after Nike. In 2009, Adidas’ sales were worth €10.8 billion with a net profit of €651 million. Over time, Adidas has even swallowed Reebok to grow larger and acquire more mass and muscle. In comparison, Puma is much smaller – global sales of €2.8 billion and earnings before taxes of €326.4 million. Much like the Ambanis, the Dasslers have a big brother and small brother in terms of sales and profits. The difference is that unlike the Ambanis, who are growing their inheritance, the Dasslers were first generation entrepreneurs.

Adidas and Puma, as we well know, are two of the most enduring sporting brands. Jesse Owens was probably the first megastar to wear the Dassler Brothers’ products. He won the sprint golds. Since then, many a global sporting star has worn and endorsed for the two brands. The sheer size and scale of the two companies and their pan global presence makes them the best known case history of two siblings warring over a family empire and emerging stronger separately. Two are better than one makes sense in the case of the Dasslers. For the Ambanis, too, it makes sense. More so, because shareholder wealth has multiplied. Despite an acute downturn in the capital markets, net-net, shareholders who held Reliance Industries shares at the time of the demerger have only benefited handsomely.

The last few days have seen non-stop media blitz on the Ambani gas row. This time, the battle is different because it is not a straight fight between the two brothers over their family inheritance. As Manas wrote in HT, “Enter a new character called Murli, who proclaimed the gas belonged to us, the people. This left the audience a bit flabbergasted, their encounters with gas so far being of the sort where they quoted ‘Austin Powers’ line – ‘I did not mean to be so rude, it was not me, it was my food’. Yes, Oil Minister Murli Deora and the Oil Ministry has got itself involved in the ever escalating war of words between the two brothers. At stake is gas. The matter pertains to sovereign ownership of a national resource, but the Bombay High Court judgment has dealt with the issue in public interest.

So, does it end there? Certainly not. Brace yourself, buckle up, get the airbags in place and get ready for a rocky ride till September 1, when the Supreme Court hears the special leave petitions. Meanwhile, more masala for the ever hungry media legions as they lap up everything that the high profile, high decibel bro-fight throws up.

(Sandeep Bamzai is a well-known journalist, who started his career as a stringer with The Statesman in Kolkata in 1984. He has held senior editorial positions in some of the biggest media houses in three different cities - Kolkata, Mumbai and New Delhi. In late 2008, he joined three old friends to launch a start-up – Sportzpower Network – which combines his two passions of business and sport. Familiar with all four media – print, television, Internet and radio, Bamzai is the author of three different books on cricket and Kashmir.

The views expressed here are of the writer’s and not those of the editors and publisher of exchange4media.com.)

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