Ambani vs. Ambani: It was all gas!

In a severe blow to the Anil Ambani group (Adag) seeking cheap gas from elder brother Mukesh-led RIL, the Supreme Court on Friday (today 7th May, 2010) said that the Government of India has the right to the last word on pricing and utilisation of national assets like gas. The court held that all the parties are bound by government policy and RIL does not become ‘owner’ of the gas.

Giving its verdict on the gas dispute, a three-judge bench of the court headed by Chief Justice K G Balakrishnan said the Ambani family MoU dividing the gas was not binding, both legally as well as technically. This was perhaps visible to most legal experts – after all the Chairmen of 2 companies cannot enter into a personal agreement and say it is applicable to the company. For an agreement to be legally binding it has to be accepted and ratified by the Board – in fact preferably by the shareholders in a general meeting. So RIL wins and RNRL loses….

Be that as it may, the winner is Reliance Industries Limited – however the impact may be muted on the immediate term. The long term impact is likely to be good for the elder brother and bad for the younger brother. Adag is also in some trouble over the number of people in Mumbai walking over to Tata Power – helped by another S C ruling saying Tatas need not sell power to Reliance Energy.
Not sure whether everything is in the price -but things are not going too well for India’s 3rd richest man – or has he already slipped lower?

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4 Responses to “Ambani vs. Ambani: It was all gas!”

  1. Dear Subra, I have no soft corner to Anil (ADAG) but in this whole saga of Gas battle, I’m not at all happy with the way Govt. has taken it’s stand. Sample this –
    The same Govt. is supporting RIL for a Gas pricing of 4.2$ & the very same Govt. is fighting against RIL to get Gas @ same 2.34$ for state run NTPC.

    Now interestingly, if the MoU between these 2 bro was not binding being a private one, how can Govt. justify it’s claim for NTPC’s 2.34$ for which RIL bid earlier & this very same pricing was taken as base for RNRL pricing.

    Now there is more to it, On one hand, Govt. is exercising it’s right to sell gas @ 4.2$ but the same govt. is going to lose a huge amount than what it ‘ll gain from this higher price in the form of subsidy given to Fertilizer units to sell fertilizer (specially Urea) @ below production cost.

    It’s like Referee shifting the Goal every time, I’m hitting in.

    Disclosure – I personally work in a fertilizer unit (of course Urea manufacturing), so in that sense, I have better idea than those anchors/analysts sitting in AC studios of Biz. channels regarding the impact of Gas pricing on Fertilizer.



  2. Hardik Vania on May 7th, 2010 at 5:47 pm


    If am not incorrect – Govt. has never intentionally wished to help NTPC for their case with RIL (for 2.32$).

    However they were Forced(Say Dragged) in Battle because of the fierce media campain from ADAG.

    what i feel is – SC judgment now makes things bad even for NTPC Now.

    My 2 Cents

  3. The law once laid down by SC will be applicable to all – so NTPC will also not get gas at 2.32$. However it does not matter – after all according to the Power Secretary NTPC is not here to make profits :). See my post on killing a psu jewel…it will appear in a few days.

  4. Sansarchandra on May 7th, 2010 at 7:44 pm

    Dear Subra, I don’t really know who is right or wrong between the two brothers. But believe me rather than worry about the gas price Anil should pay more attention to the ever growing list of dissatisfied customer of his telecom and electricity utilities or else the day may be not far away when he will no longer figure on the list.

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