When The Penny Dropped Among The Billions

ET spoke to insiders in both groups, politicians and government officials to piece together a dramatic 15 days during which the two brothers and their mother, Kokilaben, put together a new peace agreement

ON MAY 26, an Airbus ACJ 320 with the call sign 'VT-IAH' touched down at New Delhi's Indira Gandhi International Airport from Mumbai. Another flight, a Falcon 2000 that answered to the call sign 'VT-AAT', landed two minutes later. The pilots of both the jets informed their billionaire owners that they have landed safely. Outside, the day was just beginning, but the mercury in Delhi had already climbed to 38 degrees. 

    Mukesh Ambani, the owner-passenger from the first plane, walked out of the airport in his characteristic brisk style, his mind preoccupied with the packed schedule for the day. On top of his priority list was a meeting of the Prime Minister's Council on Trade and Industry. 
    At the airport, Mukesh ran into Angarai Sethuraman, head of corporate affairs at the Anil Dhirubhai Ambani Group (ADAG) and a close aide to Anil Ambani. He was there to receive the owner-passenger of the second jet: Anil Ambani. 
    Suddenly, Sethuraman was face-to-face with his old boss. 
    Mukesh, chairman of India's largest private sector company, Reliance Industries (RIL), calmly walked up to Sethuraman, shook hands and asked him warmly, "How are you, Sethu?" 
    That small gesture travelled quickly through the political and business circles of the Capital, where the news on Monday that the Ambani brothers have decided to end their six-year-long acrimonious battle and to "collaborate" had been received with surprise bordering on scepticism. 
    Even though the brothers lived and worked in Mumbai, many of their battles were fought in the power corridor of Luyten's Delhi. The Capital's decision makers and influencers knew the bitter saga closely. It had divided them, put them in awkward spots, and in many cases, rewarded them handsomely. The fault lines of the battle divided the loyalties of New Delhi, whose importance was understood early and well by the Reliance patriarch, the late Dhirubhai Hirachand Ambani. 
    So the city had to see for itself if there was actually a thaw in hostilities. By warmly greeting a man who had been a key figure in the rival camp's New Delhi affairs, Mukesh Ambani sent a clear signal—he meant to stick to the agreement in spirit. Mummy is the big daddy 
    Exactly a week earlier, on May 19, Kokilaben Ambani, Dhirubhai's widow and mother of the warring brothers, had returned after a visit to the famous Shiva temple at Kedarnath in the Himalayan foothills. 
    "This has gone too far now. The two of you have to resolve the differences," Kokilaben is believed to have told younger son Anil, according to insiders who have heard accounts of the conversation. Anil had accompanied her on the pilgrimage along with his sister Deepti Salgaonkar. 
    But Kokilaben had been there before and almost done that. Five years ago, she had stepped in and drew up a settlement between her two sons, who lived in reasonable harmony while her husband was alive, and had a bitter fallout soon after his death. The agreement, dividing the companies Dhirubhai Ambani had assiduously built between his two sons, was signed on June 18, 2005. 
    Six months before that Mukesh Ambani had, during a TV interview, admitted to "ownership issues" that were in the "private domain". That was the first public admission of disharmony that had been brewing behind the scenes since the death of Dhirubhai. 
    While Kokilaben had made several attempts to resolve the differences between her sons, she hadn't been successful. The two brothers had plunged headlong into running the businesses that they had inherited, and in an era that saw unparalleled growth in the Indian economy, multiplied wealth for their shareholders and themselves. 
    But they had also allowed an apparatus of hostility to grow around them. Vast public relations (PR) teams ran down the other group's companies. Executives who successfully managed media and public opinion grew in clout within the group. It was a race that neither would win. When a dispute over gas supply arose between Mukesh Ambani's Reliance Industries and Anil Ambani's Reliance Natural Resources it spiralled into a no-holds-barred battle that shook even the government at the Centre. The Supreme Court settled the legal war finally early this month and effectively nullified the part of the family settlement between the brothers that referred to supplying gas from Mukesh's Krishna-Godavari basin block to Anil's power projects at a discount. 
    Kokilaben seized the opportunity and summoned her two sons when she got back from the Kedarnath trip. Enough was enough. 
PEACE IN SEA WIND 
    Mukesh and Anil, the world's richest brothers, met their mother in her 10th floor residence at Sea Wind, a 12-storey building in Mumbai's tony Cuff Parade neighbourhood that is the Ambani family home. Even though the brothers have fallen out, they live in the same house, on different floors. 
    A few kilometres away, on Napeansea Road, the world's most expensive residential building, named 'Antilla', is coming up at a cost of $2 billion. Upon completion, Mukesh Ambani will move into the 570-ft tower. Kokilaben was firm with her demand and persuasive in her logic. If Mukesh was going to produce gas, why not give it to Anil, than anybody else? Now if Anil was getting assured gas supply for his power plant till 2022, why not make some concessions in the original non-compete agreement and allow Mukesh to enter telecom and power, if he so desired. The discussion started thus, and made significant headway. There were two meetings, between May 20 and May 23, in which the broad contours of the agreement were thrashed out, says a person familiar with the negotiations. 
    But just why was this latest attempt at peace-making suddenly making progress when both parties had refused to budge an inch during similar efforts in the past? Even in June last year, after the Bombay High Court pronounced its verdict in the gas dispute, Anil had met his elder brother in the latter's Maker Chambers offices in Nariman Point. But precious little came out of those talks. 
    The answer perhaps lies in the longdrawn-out legal battle over gas that had just concluded. The two groups had been consumed by the dispute that dragged on for four years. It strained their relations with senior politicians. It cost both sides a bomb—every day of Supreme Court hearing amounted to more than Rs 1 crore in lawyers' fee and other infrastructure costs. The case took away much time and attention, the opportunity cost of which would be millions of dollars. Above all, it had been exhausting, mentally and physically. 
    While the two brothers were spending resources fighting each other, other groups were gaining from the cold war. The spouses of the two brothers are not known to be best friends, but their children get along fine. 
    Blood, after all, is thicker than gas. 
    The Sea Wind meetings then were about a way out of the morass for both the brothers. Kokilaben was striking the iron when it was unbearably hot: The noncompete agreement would be scrapped and the brothers would collaborate. 
    Yet, it was not just a simple matter that a mother could settle between her sons. At stake were the fortunes of two of the world's largest business houses. And each brother had to take his war cabinet into confidence. 
    Mukesh Ambani called Manoj Modi and Anand Jain; Anil Ambani called Satish Seth and Amitabh Jhunjhunwala. They were briefed about what transpired at Sea Wind. 
    The next Sunday, May 23, then would be the red-letter day. Early that day, Anil Ambani summoned his closest executives for a "review meeting". Just before 2 pm, he took out a crumbled sheet of paper from his pocket and handed it to the group. "This is a statement we are sending out today," he said. One after the other, the executives read the statement in silence. The game had changed. Not entirely, however. Now on, it would be a tightrope walk. If you faltered in figuring what has changed and what hasn't, it could cost you dearly. 
    "We have a lot of work at hand," the younger Ambani said, according to oneof the people present. "Enforcing peace takes a lot of work." 
    His older brother had a similar message for his people when he briefed them about the details. 
    Tony Jesudasan, chief propagandist of the Anil Ambani side, dialled Niira Radia, his counterpart on the other side. The two generals who managed public perception could not smoke the piece pipe because Radia was in the US and wasn't available immediately. Jesudasan then called Manoj Warrier, Radia's close associate and CEO of a company that handles PR for all RIL group companies. "This is an opportunity to work together and also an opportunity to stop working against each other," Jesudasan told Warrier, who agreed. Like Jesudasan, Warrier too had been asked to come to work on a Sunday. 
    The same statement went out from both groups to the media. By evening, the news had spread. Corporate tycoons across India called their associates to discuss the development and learn further details. 
    On Monday, the morning of May 24, the Sensex rose 280 points in opening trade. Shareholders had little doubt about the benefits of the decision. Several central ministers, including Pranab Mukherjee, Kamal Nath and Praful Patel, called Kokilaben to congratulate her on the settlement. 
    RIL's group president for corporate affairs, V Balasubramaniam, called up several politicians and said: "Now, we are one house again." 
    For Balasubramaniam—Balu as he is known in Delhi's power corridors—it was a personal moment too. ADAG's Sethuraman is his nephew, but the two had stopped speaking to each other when they moved to different camps after the group split. 
    The uncle and nephew too can make up now, just like the brothers. 
POST SCRIPT 
    At the height of the battle between the two brothers, a key aide of Mukesh Ambani had met with a few journalists in his office. As he was impressing upon them how the ADA group was supposedly squandering away opportunities that were handed to them on a platter, at one point, he was overcome with emotion. He pointed to the large portrait of Dhirubhai Ambani in the room and said, with emotion in his voice: "In logon ne hamare papa ke naam barbaad kar diya hai." (These people have ruined our father's reputation.) The Ambani turf war was as much about emotion as it was about enterprise. But in the end, the rage appears to have dissipated. The top executives on both sides, some of whom were uncomfortable fighting former colleagues, are happy to give peace a chance. They can how go back to their first love, making money, rather than draft affidavits for courts and brief the media about the alleged wrongdoings of the other group. 
    There are some, particularly business houses who had faced the might of the undivided Ambanis, who would love to see the brothers resume fighting. For now that seems unlikely, though that could change as both enter sectors where they had been barred by the now-scrapped non-compete agreements. 
    An official at the PMO, who met both the brothers on Wednesday, remarked how unusually relaxed they both appeared. It will be important for them to remain calm through a number of inevitable misunderstandings that will occur given the nature of their businesses, temperament of their key executives and the incessant media attention their affairs attract. 
    As for now, the Ambani patriarch's larger vision prevails: Ambani ka sapna, sab ka apna apna.