Succession issues overshadow Ambani court showdown

Blame the parents is an all too familiar refrain if next generation members run into problems when working for the family business, but in the case of India's Ambani brothers they may just have a valid point, writes Katie Barker

In the ultimate sibling rivalry showdown, Anil and Mukesh Ambani go head to head in court next week to finally settle a feud that has been simmering away since they split their father's company in 2005.

The current court case is over the price Mukesh's company will supply gas to Anil's company, but this problem is just one in a series of feuds the brothers have had, which have often been played out on a very public stage. Last week saw Anil seek reconciliation with his brother via a press statement, while in August he launched a newspaper campaign asking for public opinions on the gas price row. (Click here to read our coverage of the stories)

However, the problems both face in their ability to get along may stem from the legacy their father left them and the influence he had on how they now run their businesses.

Mukesh, 52, and Anil, 50, are the sons of Dhirubhai Ambani, who founded the Reliance Group. Dhirubhai was a self-made businessman from a small Gujarat Village who rose to become one of India's most successful leaders and, as with many business founders, was known for his entrepreneurial spirit and autocratic leadership style.

Both Dhirubhai and his wife Kokilaben were keen to keep their children grounded, while also fostering in them an entrepreneurial spirit. The business acumen of both Mukesh and Anil, who have been very successful in growing their respective conglomerates, is surely linked to the entrepreneurial spirit fostered in them by their parents.

Although it may have made them successful in business, an autocratic leadership style has only served to exacerbate their feuding as siblings, Kavil Ramachandran, professor of family business at the Indian School of Business, explains. "The Ambani brothers have inherited the leadership style of their father. Both Mukesh and Anil have a clan kind of mentality, which limits the benefits of a collaborative style of leadership. This may have added to their feuding," he told www.campdenFB.com.

Upon their father's death in 2002 Mukesh and Anil were left in charge of the family business. What Dhirubhai did not leave them was a succession plan.

The bickering began in 2004 and eventually led to the Reliance Group being split between the brothers in 2005. However, it took the work of some of India's leading bankers and their mother, Kokilaben, to broker a deal both were happy with. Mukesh took control of Reliance's petrochemical arm, under the name Reliance Industries, and Anil took over IT, telecommunications and banking, also using the Reliance name with his Reliance Anil Dhirubhai Ambani Group.

It was during this period that it was agreed Mukesh's company would supply below-market-price gas to Anil's business. However, this agreement was never upheld and has continued to cause problems for both since then. It has already been through several court cases and comes before the Indian Supreme Court for the final time next week.

Ramachandran believes their disagreements are linked to a lack of proper succession planning by their late father. "The Ambani family didn't have proper mechanisms in place for a smooth transition. The father didn't think the time had come to move on but in reality most family business empires break up because of a lack of succession mechanisms. Normally, by the time they need it, it's already too late," he told Campden FB.

The business prowess of the Ambani brothers is often overshadowed by the public nature of their family fall-outs. And who knows how these disagreements will manifest themselves in the next generation, if indeed the next generation take on the family business at all. It remains to be seen how the ruling next week will affect the family relationship but all involved will hope this decision can draw a line under the public nature of the family feuds so both can move forward and continue to replicate the positive aspects of their father's legacy.

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