Ever since Mukesh Ambani, Chairman, Reliance Industries Ltd (RIL), launched Reliance Infocomm in late 2002, it naturally followed that every group official would have to opt for a Reliance CDMA connection. Pretty much everybody did that, barring one: Vice Chairman & Managing Director Anil Ambani, who preferred to hang on to his GSM phone. Then came the settlement between Anil and Mukesh, and the former took over at the helm of the telecommunications colossus. A few months before that Anil had accused individuals at Reliance Infocomm of tapping his (GSM) phone. But just when you thought the intrigue would end with the brothers agreeing to go their own ways post-June 2005, last fortnight, RIL set the cat amongst the pigeons when MTNL was given a contract to be the landline service provider-which is currently Reliance Infocomm-for the Maker IV headquarters in Mumbai's commercial district, Nariman Point. An MTNL official confirms that RIL had asked for 270 new connections for its Maker IV office and another 90 connections for another office in the vicinity (in Tulsiani Chambers).

To be sure, signs of things coming to such a pass had surfaced as early as last year, when straws in the wind indicated that Reliance Infocomm would be passed on to the younger brother. In February, some 50 senior RIL officials were given a second handset-a GSM one-in addition to their Reliance IndiaMobile connection. While some senior RIL executives still hold Reliance IndiaMobile connections, it's only a matter of time before they're terminated.

THE ART OF WAR It's no more in the open, but there's ample room for shadow-boxing.

» RIL gives up its Reliance Infocomm telephone lines in favour of MTNL: Reliance Infocomm, Mukesh's pet project, is now a chunk of Anil's empire. » RIL's proposed buyout of BP Innovene: This would have made RIL a strong global petrochemicals giant. Thanks to media reports stating that it was in the race, the confidentiality clause was breached, and the deal came unstuck. Who tipped the hack? NTPC's CMD C.P.Jain » The stand-off between RIL and NTPC: RIL is said to have asked for changes in its gas sale and purchase agreement with NTPC. RIL had apparently agreed to supply gas to Reliance Energy's proposed project in Dadri in Uttar Pradesh at terms similar to what had been agreed upon with NTPC. So, do the changes that have been asked for in the NTPC agreement point towards some tinkering with the Dadri project too? » Pramod Mahajan and Reliance Infocomm: The former Telecom Minister is said to have favoured Reliance Infocomm when Mukesh Ambani was in charge. Last fortnight, the Supreme Court issued notices to the CBI and the CVC, amongst others, after admitting a PIL regarding the matter. Should Mukesh be relieved Infocomm isn't his any more? » Retail as a future project: With both the siblings looking to make it big in this area, issues such as a non-compete clause could be decisive. Both already have a retail presence and are looking to expand in a big way.

WHAT EACH BROTHER IS PLANNING

Mukesh Ambani » Become a global petrochemicals major. » Roll-out of close to 6,000 petrol pumps. » Oil and gas production and exploration to be a huge story from 2009-10, according to Mukesh Ambani. » Life sciences to be RIL's next major initiative. Plans will be unfurled shortly. » Retail is the next big one from RIL. Expected to offer a host of services with the objective being to create a Wal-Mart-like behemoth. » Planning massive special economic zones (SEZ) in Haryana and Maharashtra. Anil Ambani » Creating a financial powerhouse out of Reliance Capital. » In the process of building the world's largest gas-based power project. » Roll-out of broadband services through Reliance Infocomm apart from giving a major thrust to the existing wireless business. » Plans to list each of his new entities. » Said to be looking at retail with the WebWorld project forming a key link here.

Tangled telecom lines aren't the only indicator of the sparring in the shadows that's under way between the two recently separated empires. Consider, for instance, RIL's reported acquisition of a British Petroleum's derivatives and refining subsidiary, Innovene, which actually wasn't meant to be reported. Apparently RIL had made a bid to buy out Innovene, which boasted $15 billion (Rs 67,500 crore) in revenues and assets in excess of $12 billion (Rs 54,000 crore), and with manufacturing facilities spread across North America and Europe. At the last RIL AGM, Mukesh had talked about a global acquisition. "RIL is striving to take the petrochemical business to the top league in the global arena. It will evaluate opportunities for acquisitions in the petrochemicals domain," he had stated. The tricky part in this acquisition, though, related to a very stringent confidentiality clause which stated that if at any stage of the due diligence process BP's intent to sell Innovene came out in the open, talks with that potential buyer would be called off. And that's exactly what happened, with the news of the acquisition duly making the headlines of a large-selling newspaper. Did whoever leak the news know about this crucial clause? The Innovene deal was finally made public in the second week of December when the UK-based Ineos acquired it for $9 billion (Rs 40,500 crore).

The plot doesn't end there. Market men have been reading plenty between the lines of the row between RIL and the state-owned National Thermal Power Corp (NTPC). This relates to a gas sale and purchase agreement (GSPA) where NTPC has alleged that RIL's move to make changes in the original contract could lead to serious problems at its 2,600 mw plants at Kawas and Gandhar. RIL initially clinched the bid at a price of $2.9 per MMBTU (million metric British thermal unit) and has now refused to sign the deal with NTPC asking for changes in some of the conditions. NTPC sent out a terse notice to the stock exchanges on December 21 stating that RIL has not agreed to sign the GSPA based on the terms agreed during the bid process and also not proceeded to perform the contract. NTPC, since then, has filed a suit with the Bombay High Court. Since then, the hearing has been adjourned and will now take place on January 30.

A Bitter Pill For All Concerned

What's brewing? M. Ambani and Mahajan As far as a chain of events goes, few could be as bizarre: At the height of the ownership feud between Mukesh and Anil Ambani, the younger brother had levelled charges of undesirable collusion between Reliance Industries Ltd (RIL) and former union minister for telecommunications and IT, Pramod Mahajan, during whose regime Reliance Infocomm Communication (RIC) had flagged off operations. It also came to light that RIL shareholders had effectively funded the telecom venture at a cost apparently much higher than what Mukesh Ambani group companies had paid. Then, the settlement between the brothers took place, and Anil got Reliance Infocomm as his share of the Reliance empire. Then, last fortnight, appeared a public interest litigation (PIL), filed by an NGO, the Citizens Forum Against Corruption, with the Supreme Court, which says: "RIC allotted 1 crore shares of RIC to three front companies at Re 1 each, as against Rs 55 each paid by (public-listed) Reliance Industries itself for the same shares at the same time. The circumstances surrounding the allotment of these shares do raise a strong suspicion that the real beneficiary of these shares was Mahajan." One crore shares represent 0.25 per cent of RIC's capital of Rs 416.35 crore shares; and would be worth Rs 150 crore based on Merrill Lynch's valuation of Rs 50,000 crore. The SC promptly issued a notice to the Centre, the Central Vigilance Commission and the Central Bureau of Investigation to look into the charges of corruption. The PIL alleges that subsequent to taking over the charge in September 2001, Mahajan's ministry brushed aside regulatory restrictions and laid the ground that blurred the distinction between limited and full mobility. The patronage allowed RIC to offer full cellular mobility in full public gaze with a mega-ad campaign. Reliance got 5 million subscribers. Reliance's allegedly illegal entry caused a loss of Rs 1,100 crore to the exchequer vis-a-vis the fourth cellular mobile licence entry fee of Rs 1,633 crore. The PIL delves deep into the nexus: "Rahul Mahajan (son of Mahajan) went on a technical fact-finding tour of Europe in 2002, for which IOL Broadband director Ashish Deora (Rahul's friend from college days) paid the expenses of Rs 14 lakh." Mahajan may be one of the targets of the PIL, but if Reliance Infocomm too is culpable, who should be carrying the can: The founder from the past, or the owner of the present? Kumarkaushalam

If you're wondering what NTPC has to do with the Mukesh-Anil spat, read on. As per the settlement agreement between the two brothers, RIL will supply gas to Reliance Energy Ltd (REL) for its forthcoming power projects. Unconfirmed rumours also suggest that the terms for gas supply to REL's proposed project in Dadri in Uttar Pradesh will mirror those for NTPC. The upshot? Any tinkering with the terms for NTPC will also mean corresponding revisions in the agreement with REL, which might not work in favour of the younger Ambani. An RIL spokesperson declined to comment on the issue, as well as on the Innovene deal and the shift to MTNL phone lines. An ADAE spokesperson also declined to comment on any of these issues.

Observers point out that such sabre rattling is just the beginning, and more skirmishes will follow. For instance, both brothers are gung-ho on retail, RIL with its fuel pumps and Wal-Mart-like mega-blueprint, and Reliance Infocomm, which already has its WebWorlds. Sources indicate that there has been a non-compete clause between the two factions to ensure that business areas are unique and that there will be no overlap. Even if you're a betting man, that's one wager you wouldn't want to make.