The Hindu Business Line : Mukesh, Anil groups strike different notes

The fresh spat between Mukesh and Anil Ambani groups is now coming to centre around two issues: whether a power plant (or an airport) is incidental or not to the development of a Special Economic Zone; and whether the non-compete agreement of January 2006 that exists between the two groups was executed by the Mukesh Ambani group "unilaterally", as claimed by the Anil Ambani group.

The Reliance Anil Ambani led group (R-ADAG) is protesting that the 2,000-MW plant and a cargo airport of Reliance Industries (RIL), both proposed as part of its SEZ in Haryana, violate the `settlement and agreement' of June 2005 between the two groups.

Under that agreement, which was akin to a memorandum of understanding, telephony and related services, power, financial services and airport infrastructure were to be reserved for R-ADAG.

The Mukesh-led RIL group says that power plants and airports in SEZs are "incidental" to an SEZ project as a whole, a vital and integral part of it. "It is incidental to our business in the same way that oil and gas is to R-ADAG. They are bidding for oil and gas fields, a sector which is reserved for us. But we understand that this is incidental to their power business," said an RIL source.

R-ADAG sources said that neither a power plant nor an airport in an SEZ can "by any stretch of the imagination" treated as being for captive use for RIL's own businesses, because it would obviously be used by all occupants of the SEZ.

To which RIL sources' retort is that the entire SEZ is indeed its business. Not only that, according to them, a non-compete agreement of January 2006 between the two groups says that RIL can enter the airports business "in certain situations." And an SEZ qualifies as such.

The R-ADAG feels that this January 2006 non-compete agreement is "irrelevant," said sources. The RIL/MDA (Mukesh Dhirubhai Ambani) group suddenly and unilaterally executed a non-compete agreement on January 12, 2006, while the ADAG companies were still under the control of the RIL/MDA group, according to the sources.

According to them, the non-compete agreement was pushed through by virtue of an RIL/MDA majority on the then board of directors of Reliance Energy Ventures Ltd and despite the protests of R-ADAG's sole nominee. The non-compete agreement did not regard the understandings arrived as part of the memorandum of understanding between the two groups in 2005.

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