Reliance "Ownership Issues"

[Arun 795]

Reliance feud enters crucial phase

Saturday, 14 May , 2005, 09:14

Bangalore: The talks for settling the Reliance family feud is expected to gather momentum with Anil Ambani slated to resume formal negotiations in this regard after May 21.

Informed sources said the Ambani brothers, Mukesh and Anil, would convey their fresh perspectives on the division of Reliance group assets through K.V. Kamath, Chairman of ICICI Bank.

Sources said the settlement process would move forward in the last week of the current month as the younger brother, Anil Ambani, was likely to resume talks only after May 21 for "personal reasons". This follows a significant thaw in the sibling rivalry, which reached a crescendo with the younger Ambani going public with allegations pertaining to corporate governance in Reliance Industries Ltd, the flagship group company, on April 27 even as the board met for the annual financial statement.

It is learnt that a key figure in the UPA Government stepped in to warn about a possible intervention by the establishment if the feud continued to rage in the public domain. Meanwhile, Anil Ambani, through his trusted manpower, has been taking a close look at Reliance Infocomm, the group's telecom arm that was slated to go to him as per the asset division in the Kamath formula.

According to the original plan, with valuation done by Nimesh Kampani, Chairman of JM Morgan Stanley, Mukesh Ambani was to retain Reliance Industries and IPCL, while Reliance Infocomm, Reliance Capital and Reliance Energy would be transferred to Anil Ambani.

It is learnt that while Mukesh Amabani has had no major differences with the Kamath plan, the fact that two of the major companies that the younger Ambani inherits are cash guzzlers in the short-to-medium term queered the pitch for settlement.

However, sources said, the fate of ownership of Reliance Infocomm business hung in balance as the two brothers re-start negotiations. Whether Anil Ambani will keep the business accompanied by a cash component or would push for alterations in the original Kamath formula is left to be seen.

[deepu 0]

RoC to issue notice to Reliance

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May 19, 2005 14:29 IST

In the first direct intervention in the Reliance affairs, government on Thursday said it has asked Registrar of Companies to issue notice to the group, headed by Mukesh Ambani, on complaints filed by his younger brother Anil.

Company Affairs secretary Komal Anand however, did not elaborate either on the details of the notice to be served by RoC, which is under administrative control of the ministry, or on the nature of complaints made by Anil.

During the over seven-month old public wrangling with Mukesh, the younger Ambani sibling has on many occasion raised the issues of corporate governance and absence of financial information and disclosures in Reliance.

Late last month despite serving as vice chairman and managing director Anil had declined to sign the financial accounts of the group's flagship company Reliance, headed by Mukesh, and had made public his dissent at the board meeting on April 27.

Speaking on the sidelines of a seminar organised by the Competition Commission of India, Anand said a report on the issue is expected to be completed within a week.

Anand's comments come within a week of Company Affairs Minister P C Gupta stating that the government was not sleeping over the issue and would take appropriate action.

Expressing concern over the developments in the Reliance group, Gupta had said on Monday that "government has to do its job. We are concerned with all developments taking place. We have received complaints from Anil Ambani."

"We are not sleeping over the matter. We know what we have to do. We are getting feedback (on Reliance developments) from the Registrar of Companies," Gupta had said.

Incidentally, market regulator Securities and Exchange Board of India had said on Wednesday that it would take appropriate action on complaints filed by Anil.

"We have received certain letters from the company's vice chairman and managing director (Anil Ambani). We are acting on those letters. We will do whatever is necessary," Sebi chairman M Damodaran had said, adding, "we know about those issues and we know how to address those issues. We have started looking at those issues."

[Arun 795]

Truce talks in final lap - Mumbai June 04, 2005

Reliance Infocomm & REL would go to Anil, while Mukesh would get Rel Ind & IPCL.

The Ambani brothers are believed to be in the final stages of an agreement to split the Rs 100,000 crore Reliance group.

Sources close to the developments said an announcement on the settlement was possible before the annual general meeting of group flagship Reliance Industries, scheduled to be held in June-end or the first week of July. Last year, the AGM was held on June 24.

Though neither camp was willing to comment on the developments terming it as an “internal family matter”, the sources said no final settlement formula had been reached yet but “things were moving rapidly”.

The sources said the fact that both camps had stopped the “proxy war through the media” was a clear signal that a truce formula was in sight.

Besides, Reliance Energy’s massive investment plan in Orissa also proves that things were being sorted out. “No one makes such announcements unless the company has a clear idea of the ownership,” they said.

Talks on a settlement are based on a formula proposed by family friend and ICICI Bank CEO and Managing Director KV Kamath. According to this formula, Reliance Infocomm and Reliance

Energy would go to Anil Ambani, while Chairman and Managing Director Mukesh Ambani would get Reliance Industries and IPCL.

The valuation of the group assets was done by Nimesh Kampani of J M Morgan Stanley.

The fate of Reliance Capital is not known, with some sources saying that it might go to the sisters, Dipti Salgoacar and Nina Kothari. However, this could not be confirmed. Anil Ambani has already begun talking to executives of Reliance Infocomm, a move that strengthened the speculation that he would be taking over Infocomm.

Reliance Infocomm executives refused to comment and said the company was a professionally run organisation and a change in ownership would not have any impact on operations.

[deepu 0]

Ambani feud may be resolved in 6 weeks

The Ambani brothers' (Mukesh & Anil) settlement issue, which is doing rounds for the last few days, are understood to have been worked out and are expected to be formalised within the next six weeks.

The first of the announcements about the settlement could be made between four and six weeks although restructuring of group companies and legal formalities could take six months.

Being keenly watched by the government, the settlement process has made speedy progress during the last one month to end the fiercest battles in the country's corporate history, knowledgeable sources said.

Kokilaben, widow of the founder chairman of Reliance, Dhirubhai Ambani, is meeting the two brothers separately almost on daily basis, sources said.

Contrary to media reports about the confusion over who would get Reliance Capital, the sources indicated that the company operating in the market is set to go to Anil along with Reliance Energy and Reliance Infocomm, headed by Mukesh.

As per the broad understanding, new businesses of Reliance group that came into existence in the last few years would go to younger brother Anil while the parent company RIL and petrcochemcial venutre IPCL would be retained by Mukesh. Possibilities of a merger between RIL and IPCL in future could also not be ruled out.

Finance Minister P Chidambaram said last fortnight that the two Ambani brothers were moving towards settlement and there was no need for any government intervention in the family dispute.

Courtesy - rediff.com

[city02 63]

told you guys in feb that mukesh would never give up IPCL!

just did not make any sense.

kind of like handing infocomm over without FLAG.

its a DOA (dead on arrival) proposal.

what will happen to RIC's bad debts of a couple billion $$?

anil should (in theory) get:

capital, energy, insurance, and infocomm, FLAG + cash/irrevocable gurantees (write off on all bad debts accumulated)

to make it even else mukesh wins...

[abhay 0]

told you guys in feb that mukesh would never give up IPCL!

just did not make any sense.

kind of like handing infocomm over without FLAG.

its a DOA (dead on arrival) proposal.

what will happen to RIC's bad debts of a couple billion $$?

anil should (in theory) get:

capital, energy, insurance, and infocomm, FLAG + cash/irrevocable gurantees (write off on all bad debts accumulated)

to make it even else mukesh wins...

33411[/snapback]

i say give anil energy + infocomm and a hell lot of cash reserves then see the magic (actully only infocomm is enough) tech has lots of power in it.

[Arun 795]

Reliance Infocomm may match RIL in profits in 4 years - Sify.com

Tuesday, 07 June , 2005, 07:55

Bangalore:

As the broad contours of the Ambani settlement story emerge, the information from the top rungs of the Reliance group suggests that Reliance Infocomm, the telecom arm that has been critical to the family split, is poised to match the flagship company, Reliance Industries Ltd, in turnover as well as net profits over the next four years.

This is seen as crucial to the settlement process, and also seems to answer the rather steep Rs 29,000 crore valuation of the 50 per cent stake controlled by Mukesh Ambani in the Infocomm business.

According to the asset division plan, Anil Ambani would get Infocomm, Reliance Energy and Reliance Capital besides a cash component of at least $1 billion. Mukesh Ambani would keep Reliance Industries along with IPCL.

Sources said Infocomm can post revenue of over Rs 86,000 crore by the year 2009. The company earned a maiden profit of Rs 51 crore on total revenue of Rs 5,387 crore in 2004-05. This could put Anil Ambani, Vice-Chairman of Reliance Industries, on course to vie with his elder brother and Chairman, Mukesh Ambani, for a more prominent legacy for their father, the late Dhirubhai Ambani.

"Infocomm business is at the tipping point. The net profit is poised to grow several hundred times a year due to higher revenue streams coming from the same assets and due to long tenure of tax benefits available to telecom service providers," sources at Reliance corporate office said.

The company has already stated that it is targeting subscriber base of 100 million by 2008, up from the existing 10 million, which would make it one among the top three telecom service providers in the world along with China Telecom and China Unicom.

Interestingly, Reliance Infocomm was touted as the elder brother's dream project, and his move to pump in Rs 24,000 crore as initial investment for the roll out had fuelled the family fire when the squabbling still raged only in the private domain.

"The real strength of Infocomm lies not just in making available mobile communications to the masses but its untapped ability to provide a bouquet of all imaginable telecom services, IT-enabled information services and entertainment services to institutions as well as home segment.

"The company has already laid integrated infrastructure as well as taken multi-pronged initiatives to develop content for delivery on mobile, landline, broadband Internet and digital television. It is fully geared to reap the benefits of convergence of technologies and services on Information Communication & Entertainment (ICE) platform," the company sources said.

"We believe Infocomm is likely to match RIL both in sales and net profit by the year 2008-09. In fact, Infocomm may overshadow RIL five to seven years hence in much the same way as refining has overshadowed petrochemicals within RIL," sources added.

RIL posted a turnover of Rs 73,164 crore in 2004-05. The company's turnover as well as net profit has undergone dramatic change in the last five years since the commissioning of Jamnagar refinery whose level of integration of different units is similar to Infocomm's level of integration of all elements of value chain of ICE.

------------------

nice deal eh, Anil ?

[city02 63]

its a bit optimistic - 100 M subs and 75,000 cr is possible by 2010 at the earliest since that would yield an 'ARPU' (not really since it would include a host of corp services also - but as a rough guide) of Rs. 7,500/year or about Rs. 600-650/month.

the global trend is towards declining ARPUs so how they will try to reverse it will be interesting to watch.

currently its about 400-450/mth & FALLING!

[abhay 0]

its a bit optimistic - 100 M subs and 75,000 cr is possible by 2010 at the earliest since that would yield an 'ARPU' (not really since it would include a host of corp services also - but as a rough guide) of Rs. 7,500/year or about Rs. 600-650/month.

the global trend is towards declining ARPUs so how they will try to reverse it will be interesting to watch.

currently its about 400-450/mth & FALLING!

33610[/snapback]

you are almost right that the ARPU's are falling but theres a lttle bit to add in there!!

the ARPU's are falling but only in voice segment not in data and VAS (value-added services) segment

and also we should forget our B & C grade markets which are still untapped they will provide growth and expantion while the A grade segments will provide much needed higher ARPU's due to large demand of VAS from this segment.

this is my personal op would like some comments on it ??

[city02 63]

yes, you are correct the voice ARPUs are falling FASTER.

but even the cumulative ARPU is showing a decline from about 450-500/month @ launch to the present for RIC.

in india, the growth in non-voice (mostly data) services is smaller than the decline in voice revenue so the net is a small but steady decline.

[compenn 0]

How much is 10 million. is it 1 lakh?

What is the current RIM subscriber base in India.

is it 1 Lakh,10 Lakh or 1 crore.

Please teach me international counting.

unit,tens,hundred,thousand,ten thousand,..... what after this in international counting method???

Edited June 9, 2005 by compenn

[deepu 0]

How much is 10 million. is it 1 lakh?

What is the current RIM subscriber base in India.

is it 1 Lakh,10 Lakh or 1 crore.

Please teach me international counting.

unit,tens,hundred,thousand,ten thousand,..... what after this in international counting method???

33778[/snapback]

1 million = 10 lakh

10 million = 1 crore

Current Subscriber base of reliance is around 1Crore(10 million).

This is what I think..

Do not know the exact figures.. Especially after they disconnected many subscribers due to nonpayment

[deepu 0]

Ambani war: Cash settlement will hit RIL

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Even as news of a possible settlement between the Ambani brothers are doing the rounds, global rating agency Standard and Poor's on Friday cautioned that any substantial cash payment made out of Reliance could impact the group's flagship company adversely.

"RIL's business and financial profiles could weaken materially if the settlement involves substantial cash payments by RIL, resulting in increased financial leverage or a transfer of any of its core oil refining and petrochemical businesses," the agency said from Singapore while rating Reliance.

"A potential settlement of the differences between the chairman and vice-chairman of RIL (BB+/stable), as reported by the media, is by itself not expected to have an immediate impact on the rating," it said.

However, it said that if the settlement entails a carved out and transfer of the group's telecommunication business along with power and energy business to the vice chairman (Anil) as reported by the media, then it is not expected to harm RIL and even have a positive bearing on the flagship company.

It said the outlook on the rating was stable, signifying that the rating on RIL was unlikely to change, with the exception of "material adverse developments" in the settlement.

Standard and Poor's expects that final settlement would balance the interests of all the involved parties -- lenders and shareholders, given RIL's prominent position in

India's private corporate sector and its links with domestic and international banking system and capital markets.

RIL reported 30 per cent jump in revenues at $16.7 billion and 47 per cent rise in net profit at $1.7 billion in fiscal 2005 as compared to previous year's figures, reflecting its "superior" position in the refining and petrochemicals businesses.

Its debt servicing ability was adequate, while its debt to capitalisation was below 40 per cent for fiscal 2005, the rating agency noted.

"RIL's liquidity has improved from the previous year, with cash and liquid investments for fiscal 2005 adequately covering the debt falling due over the next one year," it said.

Going forward, RIL was expected to maintain adequate liquidity, although a part of these liquid resources is likely to be deployed for the company's planned capital expenditures, S&P said.

Courtesy - rediff.com

[deepu 0]

Reliance settlement likely on July 6

An end to the bitter seven-month old battle between the Ambani brothers for the ownership of the Reliance business empire appeared imminent and an announcement about the settlement is likely to be made on July 6, the third death anniversary of their father and group founder chairman late Dhirubhai Ambani.

Reliance Industries Ltd chairman Mukesh and his younger brother and RIL vice chairman Anil met last week as part of efforts to hammer out a settlement, under which flagship company Reliance Industries and IPCL would be retained by Mukesh, while Anil would get Reliance Energy, Reliance Capital and Reliance Infocomm, sources in the know said on Wednesday.

Day-to-day talks are being held between the two sides to work out details, based on which a formal announcement could be made on July 6 to end the fiercest battle in the corporate history of India.

The settlement is based on the formula suggested by ICICI chairman and Ambani's family friend K V Kamath, who preferred IPCL and RIL going to one brother instead of splitting the companies.

Being keenly watched by the government, the settlement process had gained speed during the last one month, knowledgeable sources said.

As part of the speeding up progress, Kokilaben, widow of the founder chairman of Reliance Dhirubhai Ambani, is meeting the two brothers separately almost on a daily basis, they said.

Contrary to media reports about the confusion over who would get Reliance Capital, the sources indicated that the company operating in the market is set to go to Anil along with Reliance Energy and Reliance Infocomm, headed by Mukesh.

As per the broad understanding, new businesses of Reliance group that came into existence in the last few years would go to younger brother Anil while the parent company RIL and petrochemical venutre IPCL would be retained by Mukesh.

Possibilities of a merger between RIL and IPCL in future could also not be ruled out.

Keenly watching the progress on the largest corporate house in the country, finance minister P Chidambaram said last month that the two Ambani brothers were moving towards settlement and there was no need for any government intervention in the family dispute.

"Both Mukesh and Anil talk to me from time to time and I advise both to settle their dispute quickly. Looks like they will reach a settlement," said Chidambaram, who is understood to be apprised of the progress by Ambani siblings regularly.

Along with the finance ministry, the ministry of company affairs too has been keeping a tight watch on the developments, with sources saying that the two brothers have communicated to the government their willingness to put behind their past.

Kamath, who has been working on the evaluation and settlement formula, had broken his silence a few days ago saying that the brothers were matured and intelligent and would find a way out.

It is learnt that Kamath and Kokilaben had indicated to both Anil and Mukesh that they would like the process to be completed by June.

After the sharp attacks from Anil and his camp a few days before the crucial meeting of RIL board, including the younger sibling questioning the locus standi of a cousin and Mukesh camp follower Nikhil Meswani in family affairs, the two sides have virtually ended the proxy war through media and maintained silence.

Even as the negotiations are in full swing, movement of top executives within the group has already started. Some of the close lieutenants of Mukesh Ambani, including Manoj Modi, have already moved away from Reliance Infocomm.

Most of the executives who had opted to work with Mukesh Ambani, both in Delhi and Mumbai, have been absorbed in the parent company RIL's new oil and gas business, sources said.

The group's HR chief V B Bhatt had asked the top executives of Infocomm, including Manoj Modi, in April itself to make their choice clear on whether they would like to revert to the parent company or continue in their present position in case the company, headed by Mukesh, goes to Anil.

Along with this, RIL had provided a few weeks ago details of borrowings and other financial parameters to the younger Ambani to enable him in making an assessment of the company, sources said, adding that a broad evaluation of the companies by Anil's team is nearing completion.

In his report evaluating group companies and family assets, Kamath, aided by investment banker Nimesh Kampani of J M Morgan Stanley, is reported to have fixed a value of about Rs 25,000 crore (Rs 250 billion) for Infocomm and up to Rs 800 a share for RIL equity, an issue that dominated the negotiation process.

Courtesy - rediff.com

Edited June 15, 2005 by deepu

[Arun 795]

Looks as though we are nearing towards the 'end' of this thread !

[deepu 0]

What the Ambani peace plan is like

The Reliance settlement between the Ambani brothers, Mukesh and Anil, will see the creation of a new holding company that will own the controlling shares of Reliance Energy, Reliance Infocomm and Reliance Capital.

These are the businesses that are slated to go to Anil following the division of the group, scheduled to be announced early next month.

According to usually reliable sources, this new holding company will have the same shareholding as the existing Reliance Industries, so that no minority shareholder loses out in the split of the group.

This structure achieves two other objectives. First, there are no tax implications. And second, under Sebi rules the new holding company can get automatically listed on the stock exchange, since it has the same shareholding structure as the already listed Reliance Industries.

The agreement is said to be that Mukesh and Anil will then buy out each other's shares in the two holding companies, with synchronised deals effected on stock exchange screens in order to avoid capital gains tax.

This will involve the holdings of group investment firms but would avoid having to untangle their complicated internal structures. Controlling ownership will then be aligned with management control in RIL as well as in the new holding firm.

Since Reliance Industries, which goes to Mukesh, will be valued at more than the new holding company, Mukesh will in effect have to pay Anil cash as part of the mutual transactions. The amount involved is not known, but informed sources have said it is substantial.

It is also not clear whether the two brothers have agreed on prior valuations for unlisted firms like Reliance Infocomm, which will form the basis for share swaps after the new holding company is listed, with compensating payments to be made in case the stock market price of the new company differs from what has been agreed on.

Even these payments, it is said, are tax-free if made as a gift to a relative.

Easing the split

# The holding company will own the controlling shares of Reliance Energy, Reliance Infocomm and Reliance Capital. It will have the same shareholding as Reliance Industries

# Mukesh and Anil Ambani will buy out each other's shares in the two holding companies

# Controlling ownership will be aligned with management control in Reliance Industries as well as in the new holding firm

Courtesy - rediff.com

[vb86 0]

i can tell you for a fact that as per current plans, RIC is going to Anil and the rest of the staff will not be changed. I know some1 in info who is earning 60L per annum at info and although he wants to stay with mukesh, he has recieved a call personally from mukesh to stay in info.

[city02 63]

mmm... - gotta love that CTC!

it must be a nice job @ 5 L/month

[sajokj 8]

Ambani dispute comes to an end

Mukesh Ambani will have the responsibility for RIL, IPCL. Anil Ambani will have the responsibility for Reliance Infocomm, Reliance Energy and Reliance Capital.

2005-06-18 09:59

- MoneyControl.com

The dispute saw the beginning of a settlement this morning with a letter released to the media from the group matriarch Kokilaben Ambani. Outlining the broad points of the settlement, Kokilaben has said that elder son Mukesh will have the responsibility for RIL, IPCL. Younger son Anil will have the responsibility for Reliance Infocomm, Reliance Energy and Reliance Capital.

The letter goes on to say that all issues will be amicably resolved, and the brothers will work towards protecting, enhancing value for shareholders.

Meanwhile, the Reliance Industries board meeting is on. Anil, who is not attending the meeting has sent in resignation of the company's vice chairman and managing director.

The brothers arrived at a final settlement after a night long meet at Sea-Wind in South Mumbai. The settlement is formally expected to be announced after the board meeting.

According to sources the settlement will be based on a de-merger. CNBC-TV18 learns that this way, not only do the two brothers hope to ensure clear lines of ownership and control, but also create an investor-friendly settlement.

Significantly, the brothers are learnt to have agreed to a five-year non-compete agreement. Reliance is also likely to continue its investments in Reliance Infocomm, and to also provide a bank guarantee to the company.

Reliance will also ensure gas supply to the Dadri gas project of Reliance Energy. It is also likely to continue investments in Reliance Infocomm. It is also likely to provide bank guarantee to Infocomm.

Kokilaben D Ambani's statement

June 18, 2005, Mumbai

“With the blessings of Shrinathji, I have today amicably resolved the issues between my two sons, Mukesh and Anil, keeping in mind the proud legacy of my husband, Dhirubhai Ambani.

I am confident that both Mukesh and Anil, will resolutely uphold the values of their father and work towards protecting and enhancing value for over three million shareholders of the Reliance Group, which has been the foundational principle on which my husband built India’s largest private sector enterprise.

Mukesh will have responsibility for Reliance Industries, and IPCL while Anil will have responsibility Reliance Infocomm, Reliance Energy and Reliance Capital.

My husband’s foresight and vision and the values he stood for, combined with my blessings will guide them to scale new heights.”

- Kokilaben D Ambani

Talking about the Reliance settlement, Reliance Director YP Trivedi , said that all has ended well, and Kokilabhen has been instrumental in resolving the dispute. He said that everything is fine but had no comments on the demerger.

Trivedi refused to disclose the proceedings of the board meeting. "I am not allowed to disclose proceedings of the board meeting," he said.

Trivedi however added that the board meeting was "emotional".

He also said that the board recorded a formal vote of thanks for all the efforts put in by Reliance matriarch Kokilaben to resolve the dispute.

Tax Consultant HP Ranina is of the opinion that the word "responsibility" has been used with great emphasis. The brothers may not change shareholding pattern; only management responsibilities might change hands.

Ranina says that transfer of Anil Ambani's stake into a holding company is to permit changes in shareholder patterns. The board meeting is likely to discuss settlement for stamp of approval. Information of settlement could be given to SEBI before close today.

RIL board, headed by Mukesh Ambani, today approved the demerger plan, as part of the separation of group companies, Reliance Energy and Reliance Capital to create a separate entity for younger sibling Anil Ambani, says a PTI report.

The decision to demerge listed group companies RIC and REL was part of the settlement to end the seven-month long battle between the Ambani brothers over the ownership issue of Reliance empire, highly placed sources said after nearly an hour-long meeting of the flagship company RIL. The decision is subject to ratification of the shareholders.

As part of the de-merger, the flagship company would exit from Reliance Energy and Reliance Capital where it has 45% and 47 % equity respectively.

RIL would also dissociate from Reliance Infocomm, a privately held group company, where it has 45 % equity. The demerged entity would be under the charge of Anil Ambani, sources said, adding that the structure and shape was a matter of detail which would be worked out in due course of time.

However, there was no official comment from either Mukesh or younger brother Anil, who stepped down as RIL Vice Chairman and Managing Director just before the company's board meeting, on details and structure of the settlement.

RIL is expected to make a formal announcement today.

[Arun 795]

Anil gets share of Infocomm troubles

Business Standard / Mumbai June 18, 2005

Call re-routing, CBI inquiries and desertion by top executives, the whistle blower now has to face the music.

Anil Ambani, the whistle blower, may face a daunting task in managing the group’s telephony and internet business as Reliance Infocomm Ltd (RIC) is plagued with myriad problems, including an impending probe by the Central Bureau of Investigations (CBI).

Reliance Infocomm was in the eye of the storm after a call re-routing slur cast by state-run public sector units Bharat Sanchar Nigam Ltd (BSNL) and Mahanagar Telephone Nigam Ltd (MTNL). They had alleged that RIC had re-routed international calls as local calls through the networks of the PSUs, thereby, depriving the state-run companies of their due share of revenues.

The department of telecom (DoT) had imposed a penalty of Rs 150 crore on Reliance Infocomm in March 2005, a move that was upheld by Telecom Dispute Settlement Appellate Tribunal (TDSAT). Even though, the company has denied any wrong doings, BSNL and MTNL had imposed a penalty of Rs 175 crore and Rs 60 crore, respectively.

The issue is currently pending with the Delhi High Court, while the Indian security agencies, led by the CBI, have initiated a probe to check whether the country’s national security was affected by the re-routing of international calls.

The agencies are also believed to be probing the e-mails of Reliance Infocomm’s senior executives, including that of whistle-blower Akhil Gupta. He later quit Reliance as chief executive officer, corporate development of RIC to join technology group TCG.

Another issue that needs immediate attention will be recruitment of top-level management. The present brass— most of whom had been brought in from RIL—have decided to go back to the parent company (see box). Manoj Modi, a close confidante of Mukesh Ambani, was one of the first to leave Reliance Infocomm.

Anil Ambani had lashed out at Manoj Modi saying that he and his wife held 0.7 per cent of Reliance Infocomm shares that were purchased at Re 1 per share. Modi moved over to the parent company.

Anil Ambani, who has been critical of the functioning of the group from the very beginning, is slated to bring in his experiences at BSES to RIC. Billing problems at BSES were successfully stemmed by Anil. It is one the moot issues at RIC too.

The younger Ambani is also expected to expand the company’s fixed wireless phone (FWP) business and create a ‘hungama’ like the CDMA rollout staged by the elder brother. But RIC officials denied this and said FWP was “already doing well, and there is no need for another Hungama”.

A tug-of-war between Videsh Sanchar Nigam Ltd (VSNL) and RIC also needs to be settled on a war-footing. The company has already complained to the Telecom Regulatory Authority of India (Trai) that the Tata group-managed company was blocking bandwidth at its landing points.

RIC had also mentioned that VSNL was preventing sales of international bandwidth at competitive rates to IT-enabled services in the country.

VSNL, on the other hand, has, in a letter to Trai, alleged that RIC was selling capacity “that was not available”.

An immediate settlement of this issue is required for Reliance’s future internet and broadband plans, with top a Reliance official stating that “they do not wish to lock horns with VSNL anymore ”.

[Arun 795]

RIC heads for an Executive revamp

Business Standard / New Delhi June 19, 2005

With Reliance Infocomm changing hands from Mukesh to Anil Ambani, the search for a new chief operating officer (COO) for the company has begun.

Sources close to the development said the Anil Ambani camp had assigned the task of finding a new COO for its wireless services to international consultant Mckinsey.

“The process of identifying a successor to the current COO, Wireless Business, Kamal Nanavathy, is on. The new CEO will have to oversee the second expansion phase, which will involve more innovation, de-centralisation, adaptability and coping with competition, than just network building,” the sources told Business Standard.

The list of management heads, who are likely to shift camps include A G Dowda, president, Reliance Engineering, V V Bhatt, group president, management services and HR, Shankar Adwal, vice-president, corporate affairs, and Sanjay Mashruwala, group president, projects.

While confirming the exits, sources in RIL said that this was not aimed at “disturbing Infocomm’s top management”. “Management experts who were brought in from RIL to man Infocomm are headed back. As per the agreement, they will leave only after handing over their responsibilities to their successors,” sources said.

“Before being brought into Infocomm, they were all with RIL’s Jamnagar project. They are likely to be entrusted with RIL’s biotech or retail business,” sources added.

Anil Ambani is, however, set to retain the services of a select set of the brass, including Prakash Bajpai, president, wireline, V B Khurana, group president, Reliance Infocomm, Amit Khanna, president, entertainment wing, and S P Shukla, president, wireless products and services, sources said.

When contacted, company executives, while expressing relief that the deal had been inked before the target date of June 6, said they were concerned about the high-level changes in the offing.

“The talk in Infocomm has shifted to restructuring in senior management and redistribution of responsibilities,” said a senior executive in Delhi.

[tanveer 59]

Click here

for a pdf file which shows the original document signed by Kokilaben.

[Arun 795]

For further Info, contact Anil Ambani

TIMES NEWS NETWORK [sUNDAY, JUNE 19, 2005 02:18:16 AM]

Adoptions do make headlines. Especially when the baby happens to be the two-year-old of none other than India’s top industrialist, Mukesh Ambani. Reliance Infocomm, Mukesh’s brain child has been handed over to the Anil Ambani group of companies, according to the settlement reached between the two warring brothers.

For a two-year old, Reliance Infocomm has hit headlines more often than any other telco and not always for the right reasons. Once again, it is in the eye of the storm, since it is the only Reliance group company that is seeing a change in the top management.

While life remains much the same for the other Reliance group companies — after all, Mukesh was the chief of Reliance Industries (RIL) while Reliance Energy (REL) and Reliance Capital (RCL) have been Anil’s babies for some time now — Infocomm is in the hands of a new parent.

For Infocomm, the resolution of the ``ownership issues’’ threatens to bring about major changes. For one, it would bring in a new boss, a new management structure and possibly a change in overall direction and focus too. While Mukesh is seen as boss with a technical bent of mind, Anil is seen to be more savvy when it comes to finance and mark

With Anil at the helm, industry observers expect Infocomm’s initial public offer (IPO) plans to be fast forwarded. The earlier management team had planned to tap the markets after completion of all the projects such as wireless, and enterprise broadband so as to reap the benefits of full valuation.

The other issue for Infocomm is the future of the many projects that Mukesh had started. For instance, the future of ambitious initiatives like the Netway project is in the dark. Industry observers believe that Mukesh’s pet project, Netway, that was expected to revolutionise the way India watches television, movies and accesses the internet, is likely to be most affected by the absence of the senior Ambani.

While most of Infocomm’s projects seem to be on schedule, the Netway project has been delayed and is likely to be further delayed by 6 months or more. In the past, Prakash Bajpai, who heads Infocomm’s Enterprise businesses, had denied that the project will in any way be affected by the presence or absence of Mukesh Ambani.

``Its a matter of putting the technology in place. Remember, such a project does not exist anywhere in the world,’’ says Mr Bajpai.

It is not the technology, rather whether Anil chooses to continue with Mukesh’s pet project or suggests major or minor changes is cause for speculation. ``The issue is how different is Anil’s vision from that of Mukesh’s,’’ pointed out industry sources.

Industry sources also expect Anil to focus on brand building. This is because despite having cleaned up its subscriber base and attracting subscribers who have a minimum average revenues per user (ARPU) of about Rs 400 or more, Infocomm is stuck with the `501’ image. It has still to shed the image of a telco with a large proportion of defaulters and subscribers comprising of taxi drivers, vegetable vendors and other low ARPU yielding subs.

The `501’ image is a legacy of the past two years that were tumultuous for Infocomm. From being one of the last entrants in mobile telephony, it edged past other mobile companies to become the country’s largest mobile operator with a subscriber base of about 10 m. But each of Infocomm’s successes were won the hard way, despite the money and the muscle power of the Reliance group.

The saving grace for Infocomm is that the final report card does show little more than passing grades on completion of two years of commercial operations. Of course, competitors still scoff at some of Infocomm’s numbers like the subscriber base.

The company even has a net profit to show, albeit one propped up by other income. Infocomm’s revenues during its second year, ‘04-05, stood at Rs 5,387 crore with a net profit of Rs 51 crore. Bharti’s revenues during ‘04-05 were about Rs 8,066.67 crore.

In its short history of two years, Infocomm has possibly had to fight more fires than any other company. The uncertainty arising out of ``ownership issues’’ has come at a time when the operational issues are more or less streamlined. For Infocomm, the big question today is how the young company copes with the changes likely to be brought about by a new management.

[Saurav 22]

what is the future of wireline phone and netway under younger Ambani

[rakesh5295 0]

Is Anil Ambani less capable then Mukesh!! what u guys think!!!