India's government, markets welcome Ambani brothers' truce
Tuesday, 25 May 2010
MUMBAI, May 24 (AFP): India's government, stock markets and analysts today welcomed news that the warring billionaire Ambani brothers had called a truce in their feud over their father's empire.
Shares in both Anil Ambani's Reliance Natural Resources Ltd (RNRL) and the Mukesh Ambani-led Reliance rose in morning trade, helping the benchmark 30-share Sensex index gain 1.53 per cent by noon, to reach 16,696.91.
RNRL soared 23.03 per cent to 54.75 rupees and Reliance was up 3.64 per cent at 1,032 rupees after both stocks had taken a battering in recent weeks from the brothers' long-running court battle over gas supplies.
India's finance minister, Pranab Mukherjee, greeted the news as a "positive development".
India's financial newspapers also gave a thumbs-up, the Economic Times declaring on its front page: "Blood is thicker than Gas", in reference to the very public mud-slinging between the brothers.
The two Reliance groups announced on Sunday that they would scrap contentious business pacts signed in 2006, which had fuelled the row. They also pledged to create "an environment of harmony" between the two groups.
The pact came after India's Supreme Court ruled two weeks ago in favour of Mukesh Ambani, the country's richest man, in his spat with Anil over a family deal to share the nation's largest gas find.
Crucial deals had been stalled by the feud, which at one point saw the Bombay High Court tell the Ambanis' mother to intervene to resolve the dispute.
The two brothers live in the south of India's financial capital, Mumbai, but had not been on speaking terms after the group split in 2005.
"Sentimentally this is good news, as uncertainty over disputes ends," said Gaurav Dua, head of research with Mumbai- based brokerage Sharekhan.
The seeds of the Ambanis' war lay in the carve-up of the Reliance empire built by their father, Dhirubhai Ambani, a rags- to-riches entrepreneur who died in 2002 without leaving a will.
In the subsequent asset split, Mukesh kept the oil, gas and petrochemical businesses of the group's flagship Reliance Industries, while Anil got its power utility division, mobile phone company and financial services arm.
Under an agreement thrashed out between the brothers, Anil was to buy gas from Mukesh for 17 years from the Krishna Godavari basin at 2.34 dollars per million British thermal units (BTUs) -- far below the government-stipulated price.
Shares in both Anil Ambani's Reliance Natural Resources Ltd (RNRL) and the Mukesh Ambani-led Reliance rose in morning trade, helping the benchmark 30-share Sensex index gain 1.53 per cent by noon, to reach 16,696.91.
RNRL soared 23.03 per cent to 54.75 rupees and Reliance was up 3.64 per cent at 1,032 rupees after both stocks had taken a battering in recent weeks from the brothers' long-running court battle over gas supplies.
India's finance minister, Pranab Mukherjee, greeted the news as a "positive development".
India's financial newspapers also gave a thumbs-up, the Economic Times declaring on its front page: "Blood is thicker than Gas", in reference to the very public mud-slinging between the brothers.
The two Reliance groups announced on Sunday that they would scrap contentious business pacts signed in 2006, which had fuelled the row. They also pledged to create "an environment of harmony" between the two groups.
The pact came after India's Supreme Court ruled two weeks ago in favour of Mukesh Ambani, the country's richest man, in his spat with Anil over a family deal to share the nation's largest gas find.
Crucial deals had been stalled by the feud, which at one point saw the Bombay High Court tell the Ambanis' mother to intervene to resolve the dispute.
The two brothers live in the south of India's financial capital, Mumbai, but had not been on speaking terms after the group split in 2005.
"Sentimentally this is good news, as uncertainty over disputes ends," said Gaurav Dua, head of research with Mumbai- based brokerage Sharekhan.
The seeds of the Ambanis' war lay in the carve-up of the Reliance empire built by their father, Dhirubhai Ambani, a rags- to-riches entrepreneur who died in 2002 without leaving a will.
In the subsequent asset split, Mukesh kept the oil, gas and petrochemical businesses of the group's flagship Reliance Industries, while Anil got its power utility division, mobile phone company and financial services arm.
Under an agreement thrashed out between the brothers, Anil was to buy gas from Mukesh for 17 years from the Krishna Godavari basin at 2.34 dollars per million British thermal units (BTUs) -- far below the government-stipulated price.