Ambanis spar over yet more

Rift spreads from gas supply to brand sharing, non-compete pact.

The agreement on supply of gas is not the only bone of contention between Mukesh Ambani-controlled Reliance Industries Ltd and Anil Ambani's Reliance-ADAG (RADAG).

Differences seem to have cropped up on non-compete and brand sharing agreements too with RADAG deciding to write letters to RIL seeking amendments on agreements related to non-compete and brand agreements beside gas supply.

These agreements were signed by RIL with Reliance Energy Ventures, Reliance Capital Ventures, Reliance Natural Resources and Reliance Communication Ventures, when they were under the RIL control.

Sources in RADAG said the boards of four companies, which were now under RADAG, found that the agreements deviated from the original settlement between the Ambani brothers, Mukesh and Anil, and their mother Kokilaben Ambani.

When contacted, an RIL spokesperson said: "We have not received any formal letter. Therefore, we can't react to this."

RADAG sources pointed out that the original settlement proposed that RADAG would have the first option to get 40 per cent of gas from the entire future reserves of RIL, including new discoveries and bids.

"However, the agreement signed between RIL and Reliance Natural Resources restricted the option to the discovery of blocks, which were acquired by RIL till June 18, 2005," they said, adding that this exclusion was one of several such variations in the gas supply agreement.

RADAG sources said RIL had not honoured the original settlement formula while signing non-compete agreement with the four companies. The original settlement formula proposed that the business relating to airports and airport infrastructure was exclusively reserved for RADAG, without any exceptions.

"Now, RIL has signed agreements with the four companies. RIL can enter the business of airports and airports infrastructure on two grounds: one, if that is incidentalintegral for any of its business and two, where RADAG has failed in privatisation of airport."

Under the non-compete agreement entered on January 12 by RIL and the off-shoot companies, both the Ambani brothers would not engage in competition between each other for next 10 years. In addition, one group would have the first right of refusal in case the other sell any business.

RADAG is engaged in telephony and related services, infrastructure, power and financial services. The reserved businesses for RADAG are media and entertainment, theme parks, airport infrastructure, distribution of city gas in Mumbai and Delhi.

The businesses reserved for RIL are petroleum and petroleum retail and petrochemicals business. All other businesses are of free competition.