India’s Ambanis lose their shine

MUMBAI:

India’s billionaire Ambani brothers are struggling to rediscover their Midas touch after a year in which they have been battered by investigations and investor scepticism about their businesses.

Elder brother Mukesh heads Reliance Industries, with assets in mostly the energy and petrochemicals sector while Anil created the Anil Dhirubhai Ambani group (ADAG), from its telecom, finance and utilities interests.

Shares in Mukesh’s firm hit a two-year low last week and are down 20 percent in 2011 so far, while Anil’s flagship Reliance Communication (RCom) shares have more than halved in the last 12 months.

“Once ‘Dhiru’ shares were in almost every investor’s portfolio,” said Hemen Kapadia, chief executive of investment advisory firm Chart Pundit.

Mukesh’s Fortune Global 500 firm has been dragged down mostly by concerns about slowing gas output from its fields off India’s east coast.

The group had been expected to get a major boost from a $7.2-billion deal with British energy giant BP to explore the Indian company’s existing and uncharted deepwater oil and gas fields.

Another headache comes as the energy giant finds itself at the centre of controversy after the national auditor claimed that India’s oil ministry and regulator favoured Reliance as it developed the KG-D6 field.

Anil, meanwhile, saw ADAG removed from the leading Sensex index on the Bombay Stock Exchange last week. Anil has for more than a year been trying to find a foreign investor to buy a 26-percent stake in RCom, which would help lower its ballooning debt of $7.18 billion. RCom, India’s second-biggest mobile phone firm, with a 16.5 percent share, has recorded seven straight quarterly falls in profit, even though India is the world’s fastest growing mobile phone market, with 827 million subscribers at April-end, a 35 percent jump year-on-year.

Published in The Express Tribune, June 27^th, 2011.