The Reliance Imbroglio

It is on every business magazine and on every stakeholder’s mind – what would the Reliance imbroglio lead to, both in terms of brand equity and of internal issues like decision-making and control. Having emerged as one of India’s leading business families, the Ambanis now find themselves in a predicament not too alien for the Indian audience. Succession and ownership issues in family-owned businesses have more often resulted in souring of relationships than amicable settlements. The Bajaj family, Modis of Modi Rubber and the Nandas of Escorts were confronted with such issues in the recent past and just about managed to sail past the storm. As Reliance joins this unenviable list of troubled companies, it has thrown open debates on issues like corporate governance and professional management which were being discussed in forums and academic circles.

The most prominent outcome is the comparison of family-run and professionally managed companies especially in succession planning and control issues. Surprisingly it is not the performance of key people which is the core problem in any of the cases. Especially in the Reliance story, the Ambani brothers are exceptionally qualified – both having completed their Masters in Business Administration from reputed institutes in USA. But when it comes to future initiatives and hence the control over critical resources they seem to be unprepared to resolve conflict of interests. Rumours are around that the whole affair is orchestrated with some malicious intention or the other even as the company has resorted to recovery measures which can sustain employee and shareholder trust. Reliance share prices continue to be wobbly even as this article is written and it remains to be seen whether the Ambanis settle their differences amicably before too much damage is done to the stakeholders of the company. After all businesses are resilient, but individual investors still stay highly vulnerable to such uncertainties.