THE VIEW FROM ANIL'S CAMP... » Shareholders need to be rewarded with bonus shares and higher dividends » Sale of 23 per cent of IPCL equity by Reliance Capital to privately-owned companies has cost shareholders Rs 1,000 crore » Anil refuses to sign RIL accounts because of apparent irregularities » Anil opposes appointment of Ashok Misra as Independent Director and of H.S. Kohli as Executive Director » All Reliance Group company shares are substantially undervalued because of a lack of transparency and disclosure » Buyback initiated by RIL isn't working, with RIL shares continuing to be undervalued ...AND THE COUNTERVIEW » Substantial progress has been made towards a settlement, with all crossholdings of major companies in the group being disentangled » Sale of IPCL equity is legal; government/SEBI approvals not necessary as it has happened within the same promoter group » Anil has no shareholding of his own in RIL, and brother Mukesh is making a "supreme sacrifice" by offering Infocomm to Anil to "broker family peace" » Before the buyback, RIL stock price was underperforming the Sensex by 6-8 per cent (in November). Today, it is 8 per cent above the Sensex. Rs 150 crore has already been utilised on buyback, and RIL is today "overperforming" » Anil is trying to talk up the RIL share, in a bid to increase the value of his share of the family holding in RIL

Give them another five weeks. Even as Mukesh Ambani, Chairman, Reliance Industries Ltd (RIL), and younger brother Anil, Vice Chairman & Managing Director, RIL, enter the last lap of negotiations for an agreeable division of the assets of the Rs 1,00,000-crore Reliance Group, the final dash to the finishing tape is turning out to be not much different from the way the six-month fracas first shot into full public view: The sparring is mostly in the shadows, with newsprint of various hues offering a willing platform for give and take. Although the broad contours of the settlement have been in the public mindspace for over a month now-with Mukesh set to own and manage RIL and IPCL (the gas to textiles businesses), and Anil the service-oriented activities (Reliance Energy, Reliance Capital and Reliance Infocomm)-arriving at a final draft of the separation saga isn't proving as straightforward as going into the last lap of a long-distance run (although few will doubt it's being as furiously contested). That could well be because not too many are sure where the finishing tape lies. But with RIL's annual general meeting (AGM) on the horizon (for many years now it's been held in the mid- to end-June period), the RIL top brass wouldn't exactly be comfortable facing up to a bunch of aggrieved shareholders without a compromise in hand.

The good news, however, as of last fortnight, as observers close to the settlement from both camps stress, is that considerable progress had been made in the journey towards the settlement. For one, all crossholdings across every major group company-Reliance Capital, Reliance Energy and Reliance Infocomm-have been disentangled. For instance, Reliance Capital no more holds IPCL equity, RIL's holding in Reliance General Insurance is now with Reliance Capital and sundry firms like Smart Enterprises are no longer a part of Reliance Infocomm. What now has to be ensured is that both parties have enough opportunities to grow, with total ownership and management control of their respective companies. Over the next 30 days or so, the various elements of the settlement process will play out. For starters, the family's holding in RIL, of 34-odd per cent, will be equally divided between Mukesh, Anil and their mother Kokilaben, with the two sisters getting 5 per cent each. Anil's holding of just under 10 per cent would then be swapped in a virtual "moneyless transaction" for a controlling interest in Reliance Infocomm, Reliance Energy and Reliance Capital. RIL currently controls half of Energy and Capital's equity, and 42.3 per cent of Infocomm plus Rs 8,100 crore worth of preference shares (at the time of writing, an independent committee was working on what RIL's holding in Infocomm would stand at post-conversion of the preference shares; Mukesh and associates own 55 per cent of Infocomm). The total value of each group-Mukesh's holding in RIL (after buying out Anil) and RIL's stake in IPCL on the one hand, and Anil's stakes in Infocomm, Energy and Capital (after buying out RIL) on the other-will then be totted up, and depending on how much higher the valuations of the Chairman's companies are (he's got the flagship after all), Anil could be handed out a cash compensation to bridge the difference. Anil will, of course, then have to step down as Vice Chairman & Managing Director of RIL, and Mukesh as Chairman of Reliance Infocomm.

The family's holding in RIL will be equally divided between Anil, Mukesh and mother Kokilaben

Sounds simple? It may, but then simple isn't always easy-surely not in this tangle. The key, of course, is the valuations of RIL and Infocomm-which investment banker Nimesh Kampani is supposed to be working out-which will eventually determine how much cash Anil will be left with on the table. The higher RIL's valuation climbs, the more Anil stands to gain. Conversely, the more Infocomm is worth, the less will Mukesh have to compensate his younger brother with. Last fortnight, if the RIL Vice Chairman & MD made a point that all group company shares are undervalued, and that RIL should compensate shareholders with a bonus or a dividend payout, it was with good reason: After all, every increase in the market capitalisation of RIL will mean a proportionate increase in Anil's personal holding in the flagship; and a dividend payout, for instance, could make him richer by a few thousand crore more, which will go a long way in helping him fund the gargantuan projects he's blueprinted for Reliance Energy, calling for investments of close to Rs 25,000 crore (debt of course will be a large chunk of that). Anil's view is also that the buyback hasn't worked in improving RIL's market value, although the counter view is that the RIL share is overperforming the Sensex by 8 per cent post-buyback, with Rs 150 crore already going into the scheme; in November, when the ownership battle came to light, the RIL stock was underperforming the Sensex by 6-8 per cent.

Meantime, Reliance Infocomm appears to be all dressed up to catch the valuer's eye. The company has declared a profit for the first time, subscribers have crossed the 10million mark, in the current fiscal the service is expected to enter 5,700 towns and cities, and 400,000 villages (as per the original blueprint), market share in the remunerative pre-paid segment is 75 per cent, all bad debts have been cleaned up, huge cash flows are projected for the current year, and the project is fully funded with Rs 25,000 crore. The question then: If Reliance Infocomm is indeed looking so attractive as it's being made out to be, is it likely that Anil may not be left with much of a cash compensation worth talking about?

Whilst Anil stands accused for moving from "need to greed", even after his brother has made the "supreme sacrifice" of offering him Infocomm to "broker family peace", one way or the other a settlement is imminent. For the Chairman, dragging the matter on till the AGM may prove disastrous, although marketmen ponder whether Anil might revel in such a scenario. For the younger brother, though, who appeared to be destined for zilch till a few months ago, Infocomm (along with Reliance Energy and Reliance Capital) in one pocket and some cash in the other should do just fine. Or will it?