Mother of all settlements

A week back, the ambani settlement was announced, putting months
of speculation to rest.In the days that followed, lot was said
and reams of words have been written...

Everybody will be aware of the broad details of the settlement
but i simply cant resist the temptation....so here i am with a post
on corporate indias first family.

Anil gets to keep his favorites REL,reliance capital.He also gets
infocomm.Interestingly, Anil boycotted the inaugaration of infocomm,
a ceremony that had the prime minister in attendance.In addition to this
,if newsreports are to be believed Anil also gets ad agency MUDRA,
a travel biz and DA IICT.Mukesh takes for himself Reliance industries and
IPCL.Clearly, in terms of market cap Mukesh gets approx. 60% of the Ambani empire.
But actual numbers will be difficult to arrive at because any value assigned to
infocomm is only hypothetical..Anil will also get a some dough from mukeshs personal
resources.

When the ambani feud became public..Anil was painted as the bad boy.All media
reports said Anil will get REL and capital plus a good amount of cash.
The final deal is not all that bad for Anil.At this point ,i will stop
talking of history and will try to make a few intelligent guesses about the
future prospects of both the brothers..

Historcally, demergers have been very good(AT&T being a case in point).
So the deal will see a lot of value being created..Mukesh gets RIL and IPCL..
Unlike the enterprises with his brother,Mukesh gets businesses that are mature.
These are also cash rich ventures.But news in the grapevine, suggests that
while Infocomm will be carved out, RIL will have to take its debt.
This will affect the debt equity ratio..assets will come down significantly
but corresponding debt will remain..

More imporantly,Mukesh has always had his plate full.In the early 90s it was the jamnagar refinery .after that ,he over saw the merger of reliance petrochemicals with RIL.Then
it was infocomm..It will be interesting to see the path that Mukesh takes..
Mukesh also has all his top lieutenants with him.Kamal nanavathy,anand jain,manoj modi,
the meswani cousins are all still with him.The capabilities that this team brings to the
table is amazing to say the least.

There are 2 important areas that will probably attract 1)biotech 2)retail
Reliance lifesciences is a big player in stem cell research..The biotech sector
is in a very nascent stage and I for one ,am very eager to see what Mukesh
does to indian biotech..Retail presents huge opportunities.Reliances mantra of
large scale could drastically change the face of indian retail..Given Indias size
the 1500 crores that pantaloon generates as turnover is small change.

Anil should be a very happy man.Hes not only got a good deal.He has also
got the more glamorous businesses.Infocomm, energy ,advertising and finance ,
if Anil does things the right way he will find himself in the covers of magazines
every week..and if things go wrong, he will find himself in the front pages
of newspapers practically everyday.Anil has his task cut out.Whether he finds
enough time to maintain his reported relationships with miss worlds and
miss universes is a question to ponder.He needs a good team of executives.
Thankfully amitabh jhunjhunwala and tony are still with him.

Hes already committed few thousand crores to Reliance capital,so most of the money
he gets from Mukesh will go there.How he will raise money to finance the huge
projects that REL envisioned remains to be seen.Also infocommm ,needs money if
it has to stay competitive..Anil is a master ,when it comes to raising money
and he certainly will prove it one more time..


If all goes well, we will have two enterprises marching upwards in the forbes
list of companies..and I join others in praying that things go only well