The Reliance Group Saga - Break-up of the Largest Family-owned Business in India

            
 
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Case Details:

Case Code : BSTR182
Case Length : 19 Pages
Period : 2002-2005
Organization : Reliance
Pub Date : 2005
Teaching Note :Not Available
Countries : India
Industry : Diversified

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This case study was compiled from published sources, and is intended to be used as a basis for class discussion. It is not intended to illustrate either effective or ineffective handling of a management situation. Nor is it a primary information source.



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"One plus one will be more than two. The uncertainty in the Reliance group was over now with this split or change of management guards. Earlier there was only one horse (Dhirubhai). Now you have two -- Mukesh and Anil. Both the brothers are hard workers, they have vision, they can add value." 1

- Nimesh Kampani, Chairman, JM Financial Group, 2005.

"The brothers might have put on a brave face, but the undivided group was much stronger than the two bits separated." 2

- Paranjoy Guha Thakurta, Director, School of Convergence,3 Delhi, 2005.

The Settlement

On June 18, 2005, Kokilaben Ambani (Kokilaben), wife of Late Dhirubhai Ambani (Dhirubhai) - the founder of Reliance Group, announced that the dispute relating to the division of Rs. 1000 billion Reliance Group had been amicably settled.

She announced that the elder son -Mukesh Ambani (Mukesh) would have the 'responsibility' for Reliance Industries (RIL) and IPCL, while the younger son - Anil Ambani (Anil) would have the 'responsibility' for Reliance Infocomm, Reliance Energy and Reliance Capital.

With this announcement, the seven-month-old dispute with charges and counter-charges between the brothers Mukesh and Anil came to a close. The settlement was expected by many to bring about more transparency and professionalism in the Reliance Group. The shareholders of the Group, the Indian government and the stock markets reacted positively to the resolution of the dispute.

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Expressing optimism, The Indian Express wrote, "There may well come a time when it can be said that India was better off having two Reliances rather than just one."4

In a span of three decades, RIL, the flagship company of the Reliance Group, had come a long way - from a synthetic yarn trader, to the only private company in India figuring in the Fortune 500 list.5

Reliance Group was the largest industrial house in India in 2004 with total group sales of Rs. 900 billion.

Reliance had over 80,000 employees, accounted for 3% of India's GDP and 9% of all indirect tax revenues paid to the Government of India.

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1] "Reliance Will Continue to Drive Market," www.rediff.com, June 20, 2005.

2] "Mother of All Rows is Over at Reliance," The Guardian, June 20, 2005.

3] The School of Convergence imparts education and training in content creation and management for all media: print, radio, television, cinema and the Internet.

4] "Splitsville and After," The Indian Express, June 20, 2005.

5] According to the 2005 Fortune 500 list, Reliance was ranked 417, ahead of Bharat Petroleum (429), Hindustan Petroleum (436) and ONGC (454). Indian Oil was ranked at 170.

 

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