Mukesh vs Anil: Round II

THE BIG FIGHT

Anil Agarwal has taken on many rivals in the past — and now, he's stepped into Mukesh Ambani's den

ANIL Agarwal's decision to explore and refine oil — and produce power — may pit the 56-year-old chairman of Vedanta Resources against Reliance Industries, making it the first significant domestic challenge to Mukesh Ambani's dominance.
    Ambani and Agarwal are two sides of the entrepreneurship coin — successful in their chosen fields of petroleum and metals, but hardly compete against each other. A few years from now, they will, if Vedanta has its way in buying a controlling stake in Cairn India.
    "With the entry of an aggressive company like Vedanta, that has the ability to scale up businesses fast, competitiveness in the oil and gas sector would also rise," says Arvind Mahajan, executive director at consulting and auditing firm KPMG.
    Agarwal may have staged a coup in agreeing to buy a 60% stake in Cairn India for 44,800 crore, or $9.6 billion, the asset on which the Ambanis are believed to have set their sights on nearly a decade ago, but the battle has just begun.
    The two business houses may compete head-on in bids for oil & gas blocks whenever they are auctioned, power projects that the government invites bids for, and refining, if Vedanta sets up one to extract the best out of the latest deal.
    Reliance now says it is not interested in Cairn India and it is unlikely to bid for oil blocks for the next few years as it invests over $7 billion in shale gas ventures in the US. But the ultra mega power projects and a refinery by Vedanta could become the potential trouble spots. "RIL and Vedanta will complement each other due to the scarcity in power and hydrocarbon sectors in India," said investment adviser SP Tulsian. "But if Vedanta forays into refining, it can lead to conflict."
    Reliance has a history of dominating businesses with monstrous capacities in any field it ventures into, including refining and petrochemicals. Its scale of operations leads to such economies that most other businesses become unviable as they struggle to match RIL's prices. Today, it is the nation's biggest refiner and petrochemical maker, from starting as a textile firm four decades ago. Agarwal, who built a scrap trading business into the nation's largest metals company, is neither fish nor fowl.
    "They (Reliance) will continue to be the largest player," said Agarwal in an interview to ET. "But, at the same time, there is enough water in the sea for other players to also do business." Reliance declined to comment for ET's special feature story.
    Whether the potential battle turns out to be one between David and Goliath, or a Waterloo for Vedanta, remains to be seen.