MUMBAI: Two of India’s biggest industrial conglomerates – Reliance Industries Ltd (RI) and the Anil Dhirubhai Ambani (ADA) group – said that they have canceled a non-compete agreement inked five years ago, allowing both to significantly expand their business ventures.
India’s warring billionaire Ambani brothers, who have battled in court over gas supplies, on Sunday, called a truce and scrapped all non-compete pacts. The pacts were signed in 2006 by brothers Mukesh Ambani – who controls RI – and his younger brother Anil Ambani – who controls ADA when they carved up their late father Dhirubhai Ambani’s business in 2005. RI, led by Mukesh Ambani, and ADA, led by Anil Ambani, pledged in a statement to create “an environment of harmony” between the two corporate groups. At present, RI is India’s largest company by market value.
RI operates oil and natural gas exploration, refining and marketing businesses, along with running a chain of retail outlets. Scrapping of the non-compete agreement will allow RI to enter India’s lucrative telecommunications and financial services sector, while the ADA can now enter the petrochemicals sector. Both groups have agreed that RI will not enter the gas-based power generation business until March 31, 2022, other than for Reliance’s captive gas-based power plants. “[The cancellation of noncompete pact] will eliminate any room for any further disputes between the two groups on matters relating to the scope and interpretation of the non-compete obligations,” the groups said in separate but similarly-worded statements.
Two weeks ago the Indian Supreme Court ruled in favour of Mukesh Ambani, India’s richest man, in his long-running feud with Anil over a family deal to share the nation’s largest gas find. In a landmark decision, the court threw out a deal between the estranged siblings involving access to the Krishna Godavari Basin off India’s east coast in a move hailed by Mukesh’s lawyers and the government. Both groups have been given six weeks to renegotiate a fresh pact for the gas sale. “We hope to conclude these negotiations very soon,” both said in their statements. “We are hopeful and confident these steps will create an overall environment of harmony, co-operation and collaboration between the two groups, thereby further enhancing overall shareholder value,” they added.
Supplies from KG-D6 block, India’s biggest gas find to date, is critical for RI, which is seeking to build a gas-fired power plant in the northern Indian town of Dadri. “This is a first step towards reconciliation between the two groups after the Supreme Court verdict,” analyst Deepak Pareek of Mumbai-based brokerage Angel Broking said.
Published in the Express Tribune, May 24th, 2010.
COMMENTS (1)
Comments are moderated and generally will be posted if they are on-topic and not abusive.
For more information, please see our Comments FAQ