The Hindu Business Line : All eyes on Reliance meetings

THERE IS much anticipation in the market about the third quarter results announcement by the respective boards of Reliance Energy, IPCL and Reliance Industries on January 19, 20 and 21, though more about the `other issues' that may be raised rather than the financial figures themselves.

And despite the buy-back that is currently on, Reliance Industries shares are trading at around Rs 510, and the bourses would surely be interested to see what the week unfolds in the form of `surprise insights' into the goings-on within the group.

Of the three board meetings (excluding that of Reliance Capital), at least two are expected to generate considerable heat. The Reliance Energy meet on Wednesday is expected to set the tone for the week: Is it going to be more of the same in terms of tirades against the `unilateral' way business is being carried out? For the view that it could be another day in office there are not too many takers.

Come Thursday and one is more likely than not to see the issue of Mr Anil Ambani's resignation as the IPCL Vice-Chairman and Director taking the centre-stage. However, it is a moot question whether the issue would boil down to a least common denominator — of choosing between brother and friend. The likelihood is that it will be treated at the professional level, without bringing personal equations into the matter.

According to the head of a broking company, the investors are by and large happy that the simmering differences have come out into the open, and that they can now invest in Reliance and its group companies with their "eyes wide open".

"Hopefully, the forthcoming announcements will be supported with better quality disclosures. While those institutions that had qualms about the group getting divided have already offloaded their holdings in Reliance, there are many who are happy to know who is actually in charge. To that extent, the public washing of linen is not making much of a difference as Reliance's fundamentals continue to be strong. But one expects Mr Mukesh Ambani to be more transparent with his disclosures," he said.

The reading in the market is that Mr Anil Ambani will no longer be presenting the RIL results, as has been the practice in recent years. Instead, it could be a combination of one of the top managers (the name of Mr Alok Agarwal, President, Finance, leading the fray) reading out the results and Mr Mukesh Ambani fielding questions from the media.

As the latter may not be too comfortable in this role for too long, one may get to see some of the senior professionals taking over in the coming years even on this front, and the Chairman left to doing what he likes best — strategising and rolling out fresh projects.

The Reliance Industries meeting on Friday is expected to see fireworks, more along the lines of the December 27 (share buy-back) board meeting. While there were quite a few red faces when the Vice-Chairman of the company let loose a volley of gunfire against the decisions of the board, quite a few among the investing community believe that Mr Anil Ambani lost as much face as anybody else with his tirade against his own company. Yet, nobody is ruling out the likelihood of more of the vitriol being spewed this Friday.

The market has begun to discount these `exposes' as the outpourings of someone who is peeved that he is no longer in control, said an investment banker: "The dirty linen that is now being washed has been there for a while. It became available for public viewing only after ownership/ management issues made clear that one brother was in control. Now, one way or the other it needs to get resolved. The investing community is not too concerned about it any longer."

For the investors, the battle being waged both inside and outside the boardroom may prove to be a boon after all. For, amid the mud-slinging, the homilies on investor protection, transparency and corporate governance too may have had an impact on the way business is transacted by the group companies.

However, another section continues to be apprehensive. According to this school, more than ownership and management, Reliance would be more worried about untangling the operations web that criss-crosses the group companies.

"It is fine to get a valuation done and even consult legal eagles as back up. But how is the group going to sort out operational complexities thrown up by questions such as whether other group companies will have access to the Reliance Infocomm network. Or whether the throughput of Reliance refinery will still be available as raw material for the petrochemicals division in case of a vertical split.

The other issue is whether the Reliance Energy distribution chain would be available for carrying gas from the Krishna-Godavari (KG) basin. All this and more will have to be sorted out in case it is not an all-cash settlement between the brothers," one analyst said.

The expectation is that the strife will not be allowed to drag on till the company AGMs are held in a few months' time. Then, the big question is how long can one keep slinging charges. And what would be the snapping point for the other?

True, much of the damage has already been done. The take of `those in the know' is that it will go till one empties one's quiver while the other will just ignore it as these pot-shots can only cause some discomfiture, not really hurt.

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