Sucheta Dalal :Ambani Charges: The numbers don’t add up
Sucheta Dalal

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Ambani Charges: The numbers don’t add up  

October 9, 2009


In the latest bout of the Ambani vs Ambani fight, Mukesh Ambani has blamed Anil Ambani of attempting to make a profit of Rs3,50,000 crore in 17 years. Anil Ambani does not have his own gas-based power projects, charges RIL. He cannot use this gas for himself and will trade in it to make huge profits. 
Last month Anil Ambani had come out with a series of advertisements charging Reliance Industries of trying to make super profits. Interestingly, neither of the two brothers has given calculations behind these huge figures.
Here are our calculations that both the brothers are hugely exaggerating the numbers. Reliance Industries controlled by Mukesh Ambani was contracted to supply 28 million cubic metres of gas (which is equal to one million MMBTU) everyday to Anil for 17 years at a price of $2.4 per MMBTU. RIL says that he has to follow government pricing of $4.2 per MMBTU. In fact, calorific value of one MMBTU is equal to 28 cubic metres of natural gas. The production, demand and supply are measured in cubic metres whereas pricing is done as per MMBTU. As per Anil Ambani, he has to pay $2.4 per MMBTU and his daily expenses are $2.4 million per day. As per the agreement between the two brothers, he will pay $876 million per year. For 17 years, Anil will pay $ 14.89 billion which is equal to Rs 74,450 crore at a conversion price of even Rs50 a dollar. This is nowhere near the figure RIL alleges Anil of making. Clearly, both the brothers are charging each other of trying to make highly exaggerated sums. Dhruv Rathi [email protected]

-- Sucheta Dalal