Wednesday, July 29, 2009

The Ambanis and my last job

Years ago I briefly worked for a company called Reliance Infocomm. The firm had been set up by Mukesh Ambani; it was the first massive project he was executing independently of his pioneer father Dhirubhai. I was part of a team charged with creating online content for a chain of Web World cybercafes.
At the start, I reported to a gentleman on deputation from Intel, but he was soon replaced by a gang of four youngsters whose designations were never made clear. Three of them had a parent on the board of Reliance Industries, while the fourth, Milind Deora, was the son of the politician Murli Deora. I dubbed the website we were creating rajabeta.com because of the influence of these sons whose only qualification was to be born into the extended Reliance parivar.
It was the worst job I have had in my life. From the start, it was clear the project would never pay for itself, and we were going through a charade of creating content and business plans that were unlikely to fructify. At the end of four months, I quit and swore never to play the 9 to 5 game again.
Of the four sons, Milind Deora stood out as the brightest by far. He has gone on to become a Member of Pariament for South Bombay, and is doing an impressive job. What his presence in the rajabeta.com foursome told me was how close his father was to the Ambanis.
Those who follow the news will know where this is headed. A few years after I left the job, the two Ambani brothers went through an acrimonious split. India's largest private business group was divided, with Mukesh's baby Reliance Infocomm, already among India's top cellular networks, being handed over to younger brother Anil, along with group interests in energy, media and entertainment. Mukesh kept the core businesses of petrochemicals, textiles and oil and gas production and marketing.
Among the agreements signed as part of the divorce was a commitment to sell gas from Mukesh's exploration firm to Anil's power utility at a particular price. When production actually commenced, Mukesh's firm refused to honour its side of the bargain, holding out for a better deal. The case went to trial, the high court ruled in favour of Anil, and an appeal was accepted by the supreme court. So far so ordinary. Then, all of a sudden, the oil ministry stepped into the dispute with a strange argument of its own. It said that the brothers' fight was harming the nation by making a national resource hostage to a family dispute. It stated, further, that selling gas at the low price indicated in the contract would harm the national exchequer.
The oil minister under whose direction this claim has been made? Murli Deora.
While seeming to slap both brothers on the wrist for being immature, the government's intervention in effect entirely favours Mukesh Ambani. Mukesh wants a higher price for his gas, and that's what the government is now pleading for, after having washed its hands off the case in the past. The disingenuousness is so apparent that a furious Anil Ambani used a shareholders' meeting as a platform yesterday to have a public go at the oil ministry, making it clear there was no connection between the price of gas in the deal and government revenues from it. He didn't name names, but it is clear who he was charging with bias.
This was a disaster waiting to happen ever since Manmohan Singh handed over the petroleum ministry to a man known to be exceptionally close to the Ambanis (originally to the father, now to the elder son). The inappropriateness of having Deora in charge is so obvious, I'm surprised more has not been written about it in the past.
The supreme court will have the final say, of course, but I'm entirely on Anil Ambani's side in this matter for a simple reason: I want India to start taking contracts more seriously. Every freelancer out there knows most contracts in this country are barely worth the paper they're printed on. Everybody's been diddled of money by the rich and powerful and realised after being cheated that there is no recourse aside from a decade-long struggle through the courts with no certainty of justice at the end.
The World Bank Group comes out with an annual survey titled Doing Business that studies business regulations and their enforcement in 181 countries, and ranks each nation in ten different categories. In some of these, India does quite well. It is 21st in ease of getting credit, for example. Any guesses about the category in which we perform poorest? Enforcing contracts. India is placed 180th of 181 countries, an absolutely pathetic record. You can get details of the other parameters and our rank here.

6 comments:

Banno said...

Love the name rajabeta.com. Should be a daily soap on TV.

Contracts? As freelancers, most of the time, we don't even sign contracts.

Girish Shahane said...

True, but Teja signs contracts for most of his projects, doesn't he? I bet he's been left hanging a few times, even though he's in a relatively privileged position. It gets progressively worse as production moves to 'post'.

Banno said...

Yes, he does atleast 80% of the time, and yes, there are times when he is still left hanging. And he knows that it will be so, even when he's signing them.

Anonymous said...

GS,
You are presuming that it is inappropriate to have Deora as Pet. Min. My contention is that it is wholly appropriate in the murky world of politics. If someone shelled out a few hundred crores to fund an election, you can be sure of quid pro quo. If there is one thing UPA1&2 has been blatant about it is that the levers of govt. will be openly used for private gain - whether it be letting of Quattrochi or tailoring govt. action to benefit the UPA's moneymen. Am i cynical? Absolutely. S Anand

janaki said...

not just Deora, think about the way ministries are alloted in general. its no coincidence that the railways ministry always goes to the eastern region, or sharad pawar is in charge of agriculture, or why the Marans had the communications ministry. from the central cabinet to the membership of committees in the state legislatures, there is an unmistakable logic.

and regarding contracts, the fact that an MOU has been signed or construction has started has often been ground enough for the supreme court to allow unfair contracts to be honored.

Nimit Kathuria said...

What is the connection between eastern regions and railways?