Wages of ambiguity

Ten days after Reliance Industries Limited (RIL) was rocked by speculation that it was heading for a split, the issue remains as opaque as ever, its resolution as uncertain as ever. A rift of this nature would normally have been only a matter of passing interest if the company concerned did not happen to be India’s largest petrochemical and oil refining company in the private sector; if the market value of the group was not a whopping Rs 99,000 crore; if the company did not happen to account for an estimated 3 per cent of India’s GDP. Indeed, it could have been ignored as a private family spat if the fortunes of RIL did not impact so directly on the lives of so many — from the share-holder to the worker to the consumer. Ever since the controversy broke on November 17, market capitalisation of the shares of the Reliance group fell from 6.33 per cent to 5.76 per cent. This downward spiral is likely to persist as long as the contentious issues remain unresolved.

We need to therefore set down for the record that the implications of this dispute go far beyond the personal concerns, ambitions and egos of two brothers, or the Ambanis as a family. It, in fact, involves the interests of the country. The time, therefore, has come to urge all parties to this dispute to either resolve — once and for all — the “ownership issues” that seem to be plaguing the corporate giant or come clean on what the sticking points really are. There is no scope for half-measures any more. An assurance here, or a statement there, may steady the market for a spell but the long-term damage to a vibrant company that is set to transform itself from a petrochemical major to a market leader in fields like telecom and gas exploration would be certainly decisive and possibly permanent.

Any dispute that is left unresolved tends to get out of control, fuelled by unsubstantiated rumour and speculation. Take, for instance, the buzz created by the resignation of the board members of Reliance Energy. It reached the markets before it did the media and set afloat innumerable and sometimes fanciful theories about the inner workings of RIL. The chairman, Mukesh Ambani, going by his public statement, appears conscious of the problem. He has himself observed that “it is necessary to remove confusion caused by deliberate misinterpretation or genuine misunderstanding”. He has assured all stakeholders of RIL that the “foundation of Reliance is, and will, remain very, very strong”. But words clearly are insufficient. Everything now hinges on the ability of those who are responsible for the company either addressing the vexed issues that are presently undermining it, or being transparent about them.