CASE STUDY -

The row between Reliance tycoons Mukesh and Anil Ambani has reached such a level that the Indian government has pleaded with them to end their fight for the good the national economy.

Mukesh Ambani, is India's richest man with a personal fortune of 12 billion, while his younger brother Anil is worth 6 billion and recently became one of the biggest players in Hollywood with a deal to bankroll Stephen Spielberg's new studio.

But despite their global success they are locked in a bitter dispute over a simple gas contract which has sent a wave of fear through the government to the prime minister's office.

The brothers' feud dates back to the 2004 death of their father, the self-made Indian billionaire Dhirubhai Ambani.

Mukesh the eldest brother assumed control of their Reliance empire, with Anil as his second in command, but they soon fell out and Mukesh sought to oust his brother from the Reliance board.

Ministers were relieved when they agreed to divide the empire in 2005, but their feud has been reignited over an agreement for Mukesh's exploration company to sell gas to Anil's power company at a discounted rate. The deal was vetoed last year by the Petroleum Minister Murli Deora who said neither company had the right to trade the government's gas at discounted rates.

In the resulting row, Anil accused the minister of being in league with his brother and carving up a deal which would double Mukesh's gas profits to 6 billion. Last week he bought newspaper advertisements each day in 33 national newspapers making new allegations and inviting his shareholders to comment. In one, he wrote: "Typically the government intervenes to bring down consumer prices or increase its own revenues. The Petroleum Ministry's actions unfortunately do neither. The lone beneficiary is Reliance Industries."

Commentators described the public accusations as "unprecedented" in India. The capital Delhi is literally sweating over the outcome - Anil's proposed 4,000 Megawatt gas power station, which will end power cuts in the city, is on hold until the gas dispute is settled. Last night India's finance minister Pranab Mukherjee said it was a matter of "national interest" for the brother's to resolve their dispute privately. He said they had become so big as corporate players in India that their dispute would have an impact in the capital markets. "I saw the boys growing up. Because they are sons of Dhirubhai it is very difficult for me to make a distinction between the two. They should try to sort out their issues," he said.

A friend of the family said the dispute was a "Shakespearean tragedy," which had its roots in tensions between Anil and Mukesh's wife Nita. He said after their father's death, Mukesh and Anil had fallen out over whose wife was next in line to the Reliance empire.

The brothers still live in the family block "Seawind" in Mumbai, and occasional meet at family gatherings or conferences, but do not talk to each other. "There's no conversation, let alone warmth. Sometimes they are forced to shake hands, but they do not look at each other," said the friend. "It's a tragedy because they were a class act. One used to start a sentence and the other would finish it. How does that kind of chemistry go wrong?"

Since the empire was divided, Mukesh, who has a reputation for modesty, has surprised observers by building the world's most expensive home, a 27 story tower block in Mumbai which overlooks the Arabian Sea. It has car parking for 300, several helipads and an "oxygen room". He has also bought his wife a Boeing executive jet as a birthday present.

Reliance Industries Chairman Mukesh Ambani, right, and Reliance Communications... (Rajesh Nirgude/AP )

NEW DELHI For eight years, the two billionaire brothers at the heart of one of India's most powerful business families waged a bitter public battle in the courts, the media and the corridors of political power.

Now, Mukesh Ambani and his younger brother, Anil Ambani, have taken the first baby steps toward doing business together. The move by the estranged heirs to the country's largest corporate empire has not only surprised everybody, but also shed light on new developments in the history of family-run enterprises here.

Mukesh Ambani, worth more than $21billion, is ranked by Forbes as the richest person in India. Among his many businesses, he owns the license to launch fourth-generation telecommunications and high-speed broadband services.

His brother's company, worth about $6billion, has more than 150million cellphone subscribers, has built 75,000 miles of fiber-optic cable network, and has erected tens of thousands of cellphone towers across India.

In many ways, a business tie-up was a no-brainer. So when the news broke Tuesday that the siblings had struck a $220million deal to share the vast fiber-optic infrastructure network, many appeared ready to believe that they had finally put their painful 2005 split and years of mutual recrimination behind them.

Within minutes of the announcement, their companies' share prices rose. Powerful ministers in the national government phoned the brothers with congratulations. Bankers and fund managers have analyzed the news seemingly nonstop on TV.

"Ambani brothers strengthen their bond on fibre-rich diet," read the lead headline Wednesday in the Economic Times newspaper Wednesday, which hailed the move as the "dawn of a new era."

Family-run businessesare the backbone of Indian commercial life, accounting for 85 percent of the country's companies. Some originated during the colonial period, some around the time of independence in 1947, and others, like the Ambanis', in what is called the "License Raj" era, from the 1960s to the 1980s, when entrepreneurs operated under strict government constraints, according to Gita Piramal, author of "Business Maharajas."

But the entrepreneurial families an offshoot of India's traditional joint-family system are changing, business historians say, because of a new generation of heirs, many of them with business degrees from the West and unprecedented exposure to foreign competition.

"All these business families are working in a very, very competitive business environment today competing with private, public and global players," Piramal said in a telephone interview from Mumbai. Mukesh Ambani has bought several shale gas assets in the United States, and Anil Ambani has invested in media and entertainment businesses there.

The Ambani siblings "have taken the legacy of their father and expanded their business to global standards," she said. "But coming together to do business after a split, that, too, at this scale...is unusual."

The split occurred soon after the death of the siblings' father and the patriarch of the business empire, Dhirubhai Ambani. The two sons were nothing alike. Anil, the younger, was flamboyant, schmoozed with politicians and raised the public profile of the businesses. Mukesh was publicity-shy, busying himself with backroom business strategies. What seemed at first to be complementary traits ultimately led to the rift.

In recent years, however, their battle has bruised both their businesses and their reputations, analysts say.

Anil Ambani's telecom business is struggling with debt, his power plants are still under construction, and profits from infrastructure investments in highways and metro rail will be long in coming.

Mukesh Ambani's gas-exploration, oil and petrochemical business remains one of the most cash-rich companies in India, and his wealth is embodied in thehead-turning homehe built in Mumbai a billion-dollar, 27-floor ode to opulence with three helipads, floating gardens and six floors just for parking, in a city characterized by miles and miles of slums. But his retail and gas-station businesses have floundered.

Is it business logic or brotherly love that brought the Ambani brothers back to the table?

"It is a win-win business deal for both," said Pradip Shah, chairman of IndAsia Fund, an investment advisory group. "While it is the helping hand that Anil Ambani needs, it also benefits Mukesh Ambani, who gets ready-made telecom infrastructure cheap."

Family ties played a role as well. The siblings' mother had made an earlier attempt to bring about a reconciliation, including a family visit to their ancestral village where everybody danced together wearing traditional attire. But the wheels of peace really began to turn during the run-up to the recent wedding of their sister's daughter.

"The preparations for the marriage began about eight months ago and acted as a thaw, and that is also the time when the telecom discussions started," said a family observer, who spoke on the condition of anonymity because he is not authorized to reveal details. "It was the first wedding in the family in 22 years, a happy occasion. The two brothers met frequently to plan the wedding, to discuss who will organize and host which event. There was plenty of opportunity for private meetings minus the acrimony."

Then he added: "Anybody who was looking for a hint of a patch-up could have spotted it at the wedding."

Question 1 : - The level of effect the Ambani Brothers can have on the Indian economy is

Select one:

a.acceptable and India should only see the benefits the Ambani's provide

b.excessive and the Indian Government should seek to regulate their influence and direct effects

c.appropriate for men of this status and standing and the government should not be concerned with their ability to shutdown the Indian economy

d.reasonable and should be allowed to continue

Question 2: - The Ambani brother's relationship is

Select one:

a. Based on the principles of equity

b. Cooperative

c. Peaceful

d. Harmonious

e. Adversarial

Question 3: - The relationship between the Ambani brothers provides

Select one:

a. Significant stability for the Indian economy

b. High levels of government control within private industry

c. Significant risks for the Indian economy

d. Significant opportunities for risk reduction within the Indian economy

Question 4: - The Ambani brothers signed a joint deal to

Select one:

a.share a single gas exploration, oil and petrochemical business

b.share the vast Indian fiber-optic infrastructure network

c.share media and entertainment businesses in the United States

d.share several shale gas assets in the United States

e.share a network of retail petrol stations

Question 5: - The level of control held by the Ambani brothers, and the volatility of their relationship, provides Western corporations seeking to undertake ventures in India with

Select one:

a.No risk of instability with the supply of essential business needs such as fuel, electricity, communications, transport, and construction needs

b.A high risk of instability with the supply of essential business needs such as fuel, electricity, communications, transport, and construction needs

c.Excellent opportunities for investment and growth

d.A low risk of instability with the supply of essential business needs such as fuel, electricity, communications, transport, and construction needs