brother Vs brother

the battle between the ambani brothers might in the end be the sequel to the film guru and who doesnt like sequels?

it is clear that there is a lot of hate and pain between them and the way the current fight for gas allocation of the KG6 fields is playing out - it is clear who is using the muscle and who is getting battered.

now for some history. post the demise of "guru"dhirubhai, the elder brother took the younger one for granted and this obviously wasnt taken too well by the younger brother. so this led to the famous split which initially threatened corporate india (this group at that time accounted for 6% of government taxes). the terms of the split were finally brokered by their mother.

one of the companies that was transferred to anil was RNRL which has rights on a portion of the minerals to be extracted from the KG6 basin at a predetermined cost. it is this that is the bone of contention between the brothers as the elder one doesnt want to honour the agreement while the younger brother wants the same to be honoured in full.

mukesh (the elder brother) has been flexing all his political, beaureaucratic, legal and economic muscles to defer/ delay the supply of gas or simply to deny the gas altogether. what he is playing for is that anil is financially stretched (who is not in these times of excess) and is betting that if he delays the flow of gas sufficiently his brother would be forced to sell out his assets and that he can gain control over them again.

for this problem there is such an obvious solution. let us look at the arguments for not sticking to the original agreement - including those made by the lackeys in government who are in mukesh's pay.

1. min for oil - these are government assets and no private party(ies) can distribute the same as per a private agreement - Is the minister joking? for any concession there is the government share and there is a share which belongs to the developer - in this case RIL. now how RIL chooses to dispose off its share is its business. it is this share that is being fought over and not the government share.

2. min of fin - loss of revenue as the sale price of 2.3$ is way below the 4.5$ ruling today - in all long term contracts this is the risk - but just accepting the argument of the ministy they are free to assess the tax on a notional value of 4.5$ while the private rate exchanged between RIL and RNRL can remain as per the original terms of division.

the main reason for the fight is again financial - both the brothers are stretched financially, mukesh has lost heavily in his retail foray and the capex/ acquisition of anil in the past 4 years has left them both heavily leveraged. it is the super profits in the gas/ crude that they get which can save them and that too quickly. so this is one fight where the government will end up with a lot of mud for involving itself in such a cavalier manner and mukesh his credibility for fighting over a contract that was a part of the original division of assets.

one is not even talking of the normal questionable operational practices followed by the ril management in maximising their returns by exploiting every rule in the book and by utilising every accounting trick available - as they have in the past. but because they have always shared a part of this with their god - ie the shareholders one doesnt find anybody complaining!!

its a mad world out there so enjoy this free soap = brother vs brother..