How has the Ambanis split fared?

How has the Ambanis split fared?

Two years after Mukesh and Anil Ambani separated, many who have associated with the family still find it difficult to believe the fact.

"Under their father, they complemented each other so well. They seemed inseparable," recalls one whose family has known the Ambanis for four decades, his eyes misting over.

The eyes begin to sparkle once the conversation veers to business. "The split has created enormous wealth. There is not a soul in the country who won't bless them," he says.

That is the leitmotif of any conversation on the subject in business and market circles. The regret quickly gets erased by joy over how much the "dhandha" has grown.

Of the two Reliances, one agreed to participate in this article without being quoted but later went quiet. The other refused at the outset.

However, facts in the public domain script a story that destroys the notion that family businesses sooner or later become the bane of shareholders.

Soon after Kokilaben brokered the split of the group between her sons on June 18, 2005, the Sensitive Index of the Bombay Stock Exchange, which had until then remained depressed on account of the seven-month feud, soared to a record high. That, in retrospect, was just the flag-off.

In the ensuing 24 months, the combined market capitalisation of the two groups has increased four times to Rs 4,24,805 crore (Rs 4248.05 billion), net worth just under four-fold to Rs 1,28,091 crore (Rs 1280.91 billion), net sales 70 per cent to Rs 1,26,671 crore (RS 1266.71 billion) and net profit 87 per cent to Rs 15,635 crore (Rs 156.35 billion).

"It is difficult to say whether they would have done better had they not split. They may not have missed much because of it," says Deepak Kapoor, executive-director, PricewaterhouseCoopers India .

It has helped that the different qualities of the brothers, which complemented so well earlier, have not really been put to each other's detriment.

The only real thorn in the flesh is the supply of oil and gas from Mukesh's group to Anil's.

"While there has been a fair degree of success for both, it is good that there is not much dispute in public anymore," says Jigar Shah, director, K R Choksey Shares & Securities.

It has also become visible how one is distinct from the other. Mukesh, who retained control over the mother company, Reliance Industries, continues to aspire for the global scale for which Reliance is known.

To deploy the cash being generated, he has made a humongous foray into retail and set up Reliance Petroleum to establish a $6 billion refinery in Jamnagar .

Anil, whose share included the telecom (Reliance Communications or RCom), power (Reliance Energy) and finance (Reliance Capital) businesses, has placed a number of smaller bets, the more notable being Adlabs and AMP Sanmar.

RCom is the company through which he can aim for the skies, but its one big gambit, a bid to take control of Hutchison-Essar, was trumped by Vodafone.