At about 9 p.m. on June 20, Anil Ambani walked into Mumbai's Taj Mahal Hotel with his wife Tina. The couple looked relaxed as they made their way to Zodiac Grill, the city's most expensive restaurant. They could afford to look relaxed. Barely 24 hours earlier, the junior Ambani had triumphantly announced the creation of a new mega-business group, the Anil Dhirubhai Ambani Enterprises, following the formal division of the Reliance empire. At that moment, elder brother Mukesh was in Goa with his family, attending the wedding of Neha, daughter of close buddy and right hand man Anand Jain. He, too, must have been a relieved man. The battle with his younger brother had been ugly, but now that was behind them.

The bigger picture of the settlement, announced by their mother Kokilaben on June 18, was simple enough: "Mukesh will have responsibility for Reliance Industries (RIL) and IPCL while Anil will have responsibility for Reliance Infocomm (RIC), Reliance Energy (REL) and Reliance Capital (RCL)." At the Reliance board meeting that followed, an internal panel was set up to propose "a suitable scheme of reorganisation" under which the interests of shareholders and the company would be "paramount".

But several questions remain unanswered. How will the partition be structured? It has been reported that Reliance's shareholding in the three Anil Dhirubhai Ambani Enterprises companies will be given to RIL's existing shareholders on a pro-rata basis. The Ambani family's shareholding then will, presumably, be transferred to Anil, thus, giving him control over his group. In return for these shares and an undisclosed cash settlement, he will, again presumably, give up his shareholding in RIL to Mukesh.

Reliance owns 50.2 per cent, 47.2 per cent and 43 per cent, respectively, in REL, RCL and RIC. Given the Ambani family's direct and indirect stake in the flagship of 46 per cent, Anil will get 23 per cent in REL, 22 per cent in RCL and 20 per cent in RIC. What happens to Mukesh's personal stake of 55 per cent in RIC? Will Anil have to buy it with part of the cash settlement he gets? Or is it part of the swap deal? How will Mukesh generate the cash he needs to pay off his younger brother? Will it come out of his personal resources, or will it come out of Reliance? Mukesh Ambani's office did not respond to requests for an appointment. Sources close to Anil, who was on a pilgrmage to Badrinath and Vaishnodevi, declined to discuss "family matters". Analysts, however, are quite bullish about the settlement (see What Analysts Feel).

The terms of settlement make it clear that both brothers can use the Reliance name and logo. But who owns them? Again, no answers are forthcoming. K.V. Kamath, CEO and MD of ICICI Bank, who brokered the deal in his capacity as a family friend, is abroad. His office said he wouldn't discuss the Reliance issue with the media, while Nimesh Kampani, Chairman of J.M. Morgan Stanley (see Dramatis Personae), who helped carry out the valuation of the Ambani empire, declined to take questions.

During the course of the battle, Anil had made serious allegations against Reliance relating to corporate governance (see Anil's Charges). In the euphoria that followed news of the settlement, these seem to have been brushed under the carpet. "At this moment, I don't think there is any need for an inquiry," Finance Minister Palaniappan Chidambaram told a television interviewer.

Dhirubhai Ambani's Reliance redefined India's corporate landscape in the 1980s and the 1990s. Now, there are two Reliance groups, each headed by the founder's sons. Can they replicate the success of their father? The world is watching.

Like Father, Like Son

His response to the settlement is the same as his response to the fight: studied silence Mukesh Ambani Chairman/Reliance Industries

He's known to be staid and media-shy. That's probably why he has not spoken a word to the media since the formal announcement of the division of the Reliance Group. He's also known as a hands-on manager with phenomenal project implementation skills. Now that he's no longer involved with Reliance Infocomm, the market is eagerly awaiting his next move. "His companies are the ones with the big cash flows. His next move is bound to be decisive," says a Mumbai-based investment banker who has known the Ambani family for a while. Reliance and IPCL generate over Rs 11,000 crore of cash every year; the two companies are sitting on reserves of almost Rs 39,000 crore. Already, the markets have taken the Reliance stock beyond the Rs 600 mark. The question is: what next?

Even as negotiations over splitting the empire were on, the group opened discussions with Bechtel, the US-based construction major that built its 33-million tonne Jamnagar refinery, to increase its capacity to 60 million tonnes. The tab: Rs 15,000 crore. Reliance officials declined to set a time frame for the project. Industry sources feel that prospects are bright for the company as this business is on the growth curve.

Currently, the Jamnagar refinery produces 11 million tonnes of diesel, 4 million tonnes each of naphtha and petrol, 3.6 million tonnes of aviation turbine fuel and 2.3 million tonnes of LPG, but Reliance doesn't do much marketing on its own. It has an agreement with Indian Oil Corporation (IOC) under which the public sector giant buys Reliance's throughput and sells it through its own network. This agreement is dependent on IOC's requirement and is valid till April 1, 2009. Thereafter, Reliance will be on its own. This is what makes it imperative for the Mukesh Ambani flagship to roll out its petrol pump network on a war footing. Like everything else connected with Reliance, this plan, too, is gargantuan in scale: 5,849 petrol pumps are planned all over the country in phases over the next three-to-four years. Once in place, this network will fill a critical marketing gap in Reliance's overall value chain.

MUKESH AMBANI IN A NUTSHELL

Reliance HQ: Scene of action STRENGTHS » Phenomenal project implementation skills and ability to think big » Never say die spirit a la his father WEAKNESSES » Over-dependent on some people. Anil's allegation on the 3Cs-chamchas, chelas and cronies-is said to be fairly accurate OPPORTUNITIES » Huge growth potential in refining business with healthy margins » Healthy cash flows will allow him to think even more ambitiously THREATS » Lack of professionalism in his group may prove to be costly Reliance as a pure play becomes susceptible to industry cycles

The company has also committed Rs 11,000 crore for developing its gas reserves in the Krishna-Godavari Basin off the coast of Andhra Pradesh. It has made a commitment to supply a portion of this gas to Reliance Energy's Dadri power project.

Mukesh is also expected to merge IPCL into his flagship, though no one is willing to commit a timeline for this. The two companies have considerable synergies and a merger is expected to improve valuations. Says Amit Rathi, Managing Director, Anand Rathi Securities: "RIL on its own generates huge amounts of cash every year. IPCL will be in a position to use that cash flow. It makes sense to integrate the companies since they have similar product lines and huge marketing synergies."

There have been reports that Reliance is eyeing the retail busineess and is planning to invest Rs 30,000 crore on a chain of retail stores styled after Wal-Mart. It is believed that Manoj Modi, who implemented the Reliance Infocomm rollout on behalf of Mukesh, has been asked to study the feasibility of the project and submit a report. A source close to the management, however, denied the existence of any such plan.

RELIANCE GROUP

Oil's well: RIL's Jamnagar refinery Mukesh Ambani has got responsibility for the Old Economy oil exploration-to-textiles businesses of the undivided Reliance Group. His group, the largest private sector business house in the country, straddles the entire petrochemical value chain. Reliance Industries Limited (RIL) has businesses in the areas of oil and gas exploration, petroleum refining and marketing, textiles and petrochemicals. It manufactures polymers, chemicals and fibre intermediates. RIL has plants at Hazira, Jamnagar and Patalganga. It is India's largest private sector company and is among the 10 biggest global producers in almost all its product categories. Indian Petrochemicals Corporation began as a government-owned company. Reliance acquired 26 per cent in the company when it was privatised in 2002. IPCL manufactures polymers, solvents, surfactants and industrial chemicals. It has three petrochemical complexes at Vadodara, Nagothane and Dahej and a catalyst manufacturing facility in Navi Mumbai.

But given Mukesh Ambani's fascination with technology, Reliance Life Sciences, a privately-held biotechnology company, is expected to be the next big thing at Reliance. The company is building a massive life sciences complex in Navi Mumbai, and is developing business opportunities in the domains of medical biotechnology, including stem cell research, plant biotechnology, industrial biotechnology, contract research and clinical trials. Reliance has spoken of investing Rs 1,000 crore to ramp up capacity at the company, but so far, progress has been slow. "Life sciences is a good bet and is clearly the next big sector from India after software. And Reliance is well positioned to capitalise on the opportunities that this sector throws up," says Rathi.

The group's plans are definitely ambitious, but that's what the world has come to expect of Reliance. Also, unlike in the case of his younger brother, no one doubts Mukesh's ability to realise his grand vision. In a massive vote of confidence for Reliance, 83 per cent of fund managers polled by market research agency Synovate on behalf of BT said they expected RIL's valuation to increase after the split (See What Analysts Feel).

Lots To Prove

Money is not an issue. Foreign and Indian financiers are keen to invest in my companies Anil Ambani Chairman/Reliance Energy & Reliance Capital

Anil Ambani is a man in a hurry. Just a day after the formal announcement of the division of the Ambani empire, he announced that Anil Dhirubhai Ambani Enterprises (ADAE) will invest Rs 1,000 crore in Reliance Energy (REL) and Rs 2,000 crore in Reliance Capital (RCL). The much-awaited way forward for Reliance Infocomm Limited (RIC) will be unveiled later. Incidentally, ADAE is not yet a legal entity. But once it's registered as a company, Ambani Junior will probably be annointed its first Chairman.

REL is on the growth path, Ambani told the media on June 19, with plans for coal-, gas-, hydro- and wind-based power generation projects. The proposed Rs 11,000-crore, 3,740-mw gas-based power generating station in Dadri and the more-recently announced Rs 50,000-crore investment in Orissa to develop a 12,000-mw coal-based power plant are typically gargantuan Reliance projects. But where will the money come from? Finance won't be a problem, according to Ambani, as foreign and Indian investors are keen to invest in his companies. As if to prove that such claims are no empty bravado, foreign investors submitted bids worth over $1 billion (Rs 4,400 crore) for a $75-million (Rs 330 crore) preferential offer from RCL. But can he pull off such complicated, long gestation projects without Reliance's battle-hardened project management team? "With his reputation, it will not be difficult to raise money. Both brothers have been involved in virtually every Reliance project for about 20 years now. So, managing long-gestation projects should not be a problem either," says Amrish Baliga, VP, Karvy Stock Broking.

RCL, meanwhile, seems tailor-made for Anil Ambani's skill sets. It is the fifth-largest player in the mutual funds space, having moved up an impressive eight notches in the last one year. "The opportunity lies in the fact that the financial services industry ranks among the three largest globally," says Ambani, adding that he may consider setting up a bank if the Reserve Bank of India permits. "RCL appears to be serious about the financial services business. If it does well, banking seems like the next move," says an analyst with a leading foreign brokerage house.

ANIL AMBANI IN A NUTSHELL

Anil's office in Ballard Estate STRENGTHS » Huge ability to raise money-the Yankee bond issue being a case in point » Possesses a strong marketing orientation » Said to be very good at handling the government and politicians-his status as an MP will only make things easier WEAKNESSES » Limited exposure to project implementation » Limited technology skills » Said to be very impulsive in nature OPPORTUNITIES » His three businesses-telecom, power and financial services-are all on a high THREATS » Eroding levels of customer faith in RIC » Close ties with the Samajwadi Party and Amitabh Bachchan may cramp his style under present regime

But it's Anil's handling of RIC that will be most closely watched. "RIC still needs more investments," say RIC insiders. There is speculation that RIC is planning an initial public offering (IPO) sooner rather than later. "One will have to wait and watch since no details are available. It appears as if Reliance Infocomm will have to go in for a listing; otherwise, it will attract long-term capital gains tax of 22.44 per cent," explains tax consultant Homi P. Ranina.

Money apart, there are ethical issues dogging the company. The allegation that international long-distance calls were being routed as domestic ones-with the primary objective of circumventing the Access Deficit Charge-was a big blow to RIC's reputation. If the Department of Telecom slaps penalties-which could run into hundreds, maybe even thousands, of crores-RIC will have to pay up. The alleged wrongdoing took place under his elder brother's management. Is there a clause in the settlement agreement that indemnifies him against such claims? Neither camp responded to calls from BT for answers to this and other questions. A rival telecom operator maintains that Ambani Junior is very good at handling the government and related regulatory issues. "This could take some steam out of this," he maintains. His surprise meeting with the Telecom Regulatory Authority of India Chairman Pradip Baijal earlier this year did not go unnoticed.

RIC has big plans for the data and video segment. Insiders say Anil's flair for marketing will almost certainly put some zing into the company's somewhat lackadaisical interface with consumers.

But for now, his immediate problem is to find senior personnel to run RIC. K.P. Nanavaty, who was till recently coo, Wireless Business at the company, and several other top managers have reverted back to RIL and IPCL following the change in management. Sources close to Anil, however, deny that there is an exodus. "Nanavaty apart, only Mukesh Ambani, Manoj Modi and Y.P. Trivedi are leaving in line with the settlement deal," they say.

Anil is also keen on entering the infrastructure sector and retail. He's placed bids for the modernisation of the Delhi and Mumbai airports and has held preliminary talks with Wal-Mart for the latter. Is he spreading himself too thin? A leading businessman says it will be incorrect to underestimate Anil Ambani. "He has a point to prove and he will go all out to do that." Does Dhirubhai Ambani's younger son have his father's chutzpah? Watch this space.

Dramatis Personae

MUKESH AMBANI
Chairman/ Reliance Industries
The elder son of Dhirubhai Ambani is a nuts-and-bolts organisation man. Known to be studious, meticulous and technology-oriented, he has been personally involved in implementing all of Reliance's mega projects. Mukesh fired the first salvo in this battle with his brother, but in the end, gave up his baby, Reliance Infocomm, for the sake of family peace.

ANIL AMBANI
Chairman/ Reliance Energy and Reliance Capital
The younger of the Ambani siblings has for long been the public face of Reliance. Flamboyant and brash, Anil is considered a financial wizard. He led Reliance's entry into the global financial markets and was the driving force behind Reliance's 100-year bond issue. Widely considered to have received an extremely favourable settlement from his brother.

KOKILABEN AMBANI
Matriarch of the Ambani family
Dhirubhai's widow has always steered scrupulously clear of business matters, but was pitchforked to the centre of l'affaire Reliance when her sons declared that they would abide by her decision on the "ownership dispute". Her patient, behind-the-scenes persuasion paid off when her sons accepted her formula. Of course, it helped that they respect her tremendously.

NITA & TINA AMBANI
Wives of Mukesh and Anil Ambani
Nita Ambani runs the Dhirubhai Ambani International School in Mumbai and was closely involved with the Infocomm project. Tina Ambani was a glamorous filmstar who married a corporate prince. The alleged differences between Dhirubhai's two daughters-in-law are said to have contributed in no small measure to the Ambani split.

HITAL & NIKHIL MESWANI
Executive Directors/ Reliance Industries
They've acquired the reputation of being the second most powerful brothers in India Inc. Sons of Dhirubhai's nephew Rasikbhai Meswani, Hital and Nikhil are firmly in Mukesh's camp. Anil recently accused Nikhil of trying to sabotage the family settlement.

SATISH SETH
Executive Vice Chairman/ Reliance Energy
An old Reliance hand, Seth threw in his lot with Anil. His resignation from his position on November 25, 2004, was widely seen as a move to help Anil in his battle with his brother. He earned his spurs strategising and steering Reliance's forays into petrochemicals, power and telecom.

MANOJ MODI
Former ED/ Reliance Infocomm
Mukesh's buddy who's made it big in Reliance. Believed to have prepared the blueprint for Reliance Group's entry into CDMA mobile telephony. Modi is said to be very religious and consults the almanac ahead of every major decision. Key troubleshooter for his friend. Often handles multiple assignments for Mukesh. A sounding board for the elder Ambani, Modi has been advising Mukesh on issues relating to the family dispute.

AMITABH JHUNJHUNWALA
Director/ Reliance Capital
A tax expert, Jhunjhunwala has progressed from consultant to confidante. A key Anil aide, he resigned from Reliance Energy in order to help his mentor's cause (the precise logic behind the move still remains fuzzy). The Mukesh camp alleged that he had leaked the news of DOT slapping a fine on Reliance Infocomm to the media. Resigned as treasurer of Reliance Industries at the peak of the ownership dispute.

K.V. KAMATH
MD and CEO/ ICICI Bank
As a young officer at ICICI, he sanctioned Dhirubhai one of his first loans and went on to become an Ambani family friend for life. Accepted Kokilaben's brief to bring about a settlement between her sons in his personal capacity. His professional stature made his task only somewhat easier.

ANAND JAIN
Former Director/ IPCL
Dhirubhai often referred to him as his third son. Jain shot to fame when Anil launched a vitriolic attack on him while resigning from IPCL. His family's business ties with RIL raised issues of corporate governance.

NIMESH KAMPANI
Chairman/ J.M. Morgan Stanley
Kampani was drafted into the Ambani succession battle by ICICI chief K.V. Kamath. He conducted the all-important valuation and due diligence exercises into the assets and heirlooms of the Ambani family. That his report was accepted without too much of a demur speaks volumes for both his stature and his integrity. Considered a highly influential investment banker, he has been involved in virtually every financial exercise of the Reliance Group.

ANIL'S CHARGES

THE CHARGE: Rerouting international calls as local ones through Reliance Infocomm to avoid paying Access Deficit Charge.
AGENCIES INVOLVED: Department of Telecom and Ministry of Telecommunications.
ACTION TAKEN: The vigilance wing of dot is investigating the matter.

THE CHARGE: Sale of Reliance Cap stake in IPCL to RIL for a song.
AGENCY INVOLVED: Ministry of Company Affairs (This ministry falls under the Finance Ministry).
ACTION TAKEN: Finance Minister P. Chidambaram has said there is no need for any probe unless specific complaints are lodged. Company Affairs Minister Prem Gupta, however, has said he will take action once the Registrar of Companies in Mumbai and Ahmedabad submit their reports.

THE CHARGE: Proper procedures were not followed while accepting Anil Ambani's resignation from IPCL.
AGENCIES INVOLVED: Ministry of Company Affairs and Bombay Stock Exchange.
ACTION TAKEN: Issue resolved; no pending investigation.

THE CHARGE: Issue and subsequent cancellation of sweat equity in Reliance Infocomm to Mukesh Ambani.
ACTION TAKEN: Since Mukesh has relinquished his sweat equity, there is no investigation.

THE CHARGE: Differential pricing of Reliance Infocomm shares issued to Mukesh Ambani.
AGENCY INVOLVED: Ministry of Company Affairs.
ACTION TAKEN: Since it was an unlisted company and no shareholder interest was involved, there is no investigation.

THE CHARGE: Reliance share buyback contravenes norms on corporate governance.
AGENCY INVOLVED: Securities and Exchange Board of India.
ACTION TAKEN: After asking for some details, SEBI has cleared the buyback.

THE CHARGE: There is a conflict of interest in the financial dealings that Anand Jain's and Manoj Modi's families have with RIL.
AGENCY INVOLVED: Ministry of Company Affairs.
ACTION TAKEN: Still waiting for ROC reports from Mumbai and Ahmedabad.