Ambanis in talks on Kamath plan

Kicking off the process of a possible settlement of ownership issues within the Reliance empire, Kokilaben, widow of group founder Dhirubhai Ambani, has started consultations with her warring sons, Mukesh and Anil, on the basis of a valuation report submitted to her by ICICI Bank chief and family friend KV Kamath.

Kokilaben is understood to have met each of them at least twice to discuss a solution on the basis of certain recommendations made by Kamath along with the valuation of the family assets in the Reliance group of companies.

In his report, Kamath is believed to have assessed the value of the family's assets at over Rs 80,000 crore. Sources close to the family said he had made recommendations for both the division of equity held by the company in different entities and the control of group firms, including Reliance Industries (RIL).

Kamath is said to have suggested that while one of the brothers be given the control of RIL along with IPCL, a petrochemical company in the Reliance stable, the other be handed over Reliance Infocomm and the other group companies. It is, however, not clear as to which of the brothers will opt out of RIL.

Neither Mukesh's camp nor Anil's is forthcoming on Kamath's valuation report. Kokilaben is believed to have discussed the suggestions with her two daughters Dipti and Neena and their husbands.

On the division of equity, Kamath is believed to have come up with two options. In the first, he is said to have suggested that the two brothers be given 30 per cent each from the holding of the family, while Kokilaben gets the rest and takes care of the daughters.

According to the second option, the family holding can be divided equally between the two brothers with the consent of Kokilaben, in tandem with a defined line of control of different companies of the group.

As per the proposed line, the brother who gets control of RIL can buy out the other from the company and a sequence of transactions will have to follow to change the family equity in group companies to give both a clear control of the entities they get.

The control of the flagship company had become a bone of contention between the two brothers with sources in Mukesh's camp suggesting in December that a negotiation was possible on group companies other than the Reliance Industries, prompting an immediate reaction from the other that there would be no compromise on it.

While RIL, accounting for most of the family assets, including the 29 per cent stake held by persons-in-concert, has a market capitalisation of about Rs 82,000 crore, the other major entity, Infocomm, has been valued at over Rs 50,000 crore by bankers engaged by the group.

However, RIL, with profits of over Rs 5,200 crore during first nine months of current financial year, accounts for bulk of the group's cash flow and profitability, while Infocomm still requires about Rs 10,000 crore investment for the completion of the entire project before the venture starts paying dividend.