Sucheta Dalal :Dhirubhai's legacy
Sucheta Dalal

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Dhirubhai's legacy  

Nov 29, 2004

As the Ambani siblings slug it out in public, the mystery of Dhirubhai Ambani’s unwritten will is causing a lot of confusion. Several documents have been floated in the media to establish that Dhirubhai Ambani hadn’t quite decided the succession issue or that their mother has the power to intervene. For the first time ever, the media has obtained a detailed list of Ambani’s personal assets and holdings. (This does not include the web of investment companies that control the crucial 29 per cent stake in Reliance).

As it turns out, there are two relatively insignificant documents listing trivial assets. One dates back to Dhirubhai Ambani’s lifetime, dissolving the Dhirubhai Hirachand Ambani (HUF) and partitioning its assets (from July 31,1999) between the patriarch, Kokilaben Ambani and the two sons. Unfortunately, what we have in that are meaningless nuggets such as the ownership of a land and a bungalow in Lonavala and Khandala, LIC policies, Provident Fund Accounts, jewellery and silver utensils etc.

A second document relates to 2002, after Dhirubhai Ambani had passed away. This one has all the four Ambani siblings (including the daughters), relinquishing their right to Dhirubhai Ambani’s personal assets (personal property, jewellery, small holdings in Reliance group companies etc) to their mother Kokilaben Ambani. One line in those papers is being extrapolated to give it a broader meaning, which doesn’t quite wash. The Ambani battle is not about assets and wealth. Both the brothers have more money than can be spent in the next two generations. They are fighting for management control over the Rs 100,000 crore corporate empire and the 29 per cent shareholding is key to that power.

Corporate bonds

The row between the Securities and Exchange Board of India (SEBI) and the Reserve Bank (RBI) over regulating the debt market continues. Last week, SEBI attempted to forge ties with corporate honchos and bankers by inviting them to a discussion on increasing awareness about the corporate bond market and finding ways to increase trading. The attendees included Ratan Tata, Kumar Mangalam Birla, Gautam Thapar, chairmen of all leading banks and many others. Industrialists and bankers apparently supported the view that bond trades on the two national bourses must be cleared and settled by RBI’s Clearing Corporation of India, in order to boost trading volumes.

This is important, especially since debt market volumes have shrunk nearly 40 per cent after interest rate uncertainty sent banks scurrying for cover and brokers were demoralised by the Reserve Bank’s threat to shut them out of its upgraded, anonymous, order-matched Negotiated Dealing System (NDS). Brokers are lobbying hard to stop RBI from splintering the debt market and restricting it to a closed club of banks and chosen institutional traders. They have also obtained legal opinion to support their case and will seek legal redress if the Finance Ministry fails to intervene and stop their business from being closed down.

Lobbying begins

Although G.N.Bajpai’s term ends only in February 2005, lobbying has begun in earnest to fill his shoes. Heading the list is a Finance Ministry babu who claims some knowledge about capital market regulation and is soon to retire. If he gets the post, it would indicate that the government intends to continue reserving the top slot at independent regulatory bodies as sinecures for babudom.

Interestingly, the Finance Minister, in his second innings has been slow in filling up key vacancies at banks and institutions. SEBI needs a lot of senior staff. A full time board member’s post lies vacant and one more member may be needed to handle the commodity markets. Life Insurance Corporation also needs a full-time Chairman and a Managing Director. The Infrastructure Development Finance Company (IDFC) hasn’t got a Managing Director after Nasser Munjee’s exit in March; but IDFC is scheduled to launch a fund-raising exercise. ‘‘Surely it doesn’t plan to go on a road show without a CEO?’’ asks a leading banker. Finally, nobody seems good enough to take over UTI Mutual Fund, so M. Damodaran remains part-time chairman.

However, banking regulations and his responsibilities at IDBI Bank are compelling him to shed several other hats. In the last few days, he has relinquished Chairmanship of the National Stock Exchange, the National Share Depository and Infrastructure Leasing & Financial Services.

Tailpiece: When a corporate war is fought in the full glare of the media, it spawns a bunch of weird theories. We received an email saying that the Ambanis belong to the Vaishnav modh vanik Gujarati sect, which is a strict community that even shuns investment in businesses that deal with meat and alcohol.

 The writer is horrified by the discovery that Reliance Web World serves non-vegetarian food. He is incensed enough to predict that Jain and Vaishnav investors will dump Reliance shares at this shocking discovery. If the solution to their problem was to simply banish non-vegetarian food from the Web Worlds, the Ambanis may have gladly complied.

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-- Sucheta Dalal