6 Directors of Reliance Energy Resign

6 Directors of Reliance Energy Resign

Thursday, November 25, 2004 (Mumbai):

The clash between the Ambani brothers is now at a decisive stage.

The first battle lines were drawn today with six directors of Reliance Energy Limited (REL) resigning.

REL is run by Vice Chairman of Reliance Industries Limited, Anil Ambani.

Breaking his silence for the first time since the controversy erupted, Anil Ambani told reporters that the Reliance Energy Board will consider the resignations at an appropriate time.

"I am not going to comment at this stage on any other issue. I have not spoken on other issues and I will continue in that mode. When the appropriate time comes, when it is necessary and if necessary I will make comments on other issues," he said.

Sign of dissent

The resignation of the directors, believed to be close to Anil Ambani is being seen as the first sign of dissent against the Chairman and Managing Director of Reliance Industries, Mukesh Ambani.

Those who resigned include:

Satish Seth

S C Gupta

J P Chalsani

K M Mankad

Prof. J Ramachandran

Amitabh Jhunjhunwala

Satish Seth is the Executive Vice Chairman and is seen as a strategist.

He is also on the board of other Reliance companies like Reliance Power Ventures Limited, Reliance Industrial Investments and Holdings Limited and Reliance Telecom Limited.

J P Chalasani has been the CEO of Reliance Energy and also heads the Delhi operations.

S C Gupta, who has been one of the longest-serving board members has been actively involved in the design and implementation of power plants in crucial Reliance plants in Hazira, Patalganga and Jamnagar.

K H Mankad has been Director, Finance of Reliance Energy since 1995 and arranges the funds for big projects.

While J Ramachandran, an independent director is a professor at IIM Bangalore, Amitabh Jhujhunwala is considered the financial whizkid of the entire Reliance group.

Boardroom games

With half of the REL board members resigning, the controversy has clearly spilled over into the boardroom.

The family feud has started affecting the day-to-day management of the companies, something that Mukesh Ambani had insisted would never happen.

The stock markets too went into a tailspin as investors resorted to heavy sell-off reacting to the news of the resignations.

Knee-jerk reaction

In a knee-jerk reaction, the Sensex nosedived to an intra-day low of 6014.98 before ending the day at 6035.03 as against yesterday's close of 6035.95.

"The company has been thrown into uncertainty and nobody knows what is going to happen next. I think that time will tell. What happens is that a lot of people are very nervous and will pull the trigger on any kind of bad news," said market analyst, Pashupati Advani.

Huge losses

The uncertainty did cause huge losses to Reliance investors once again as shares of all group companies crashed.

Reliance Energy received a major battering, tumbling nearly six per cent to close at Rs 549.10.

While Reliance Industries shed over two per cent or Rs 11 to Rs 503, Reliance Capital lost Rs 4 to close at settle at Rs 136. Another group company IPCL lost Rs 7 to close at Rs 175.

With today's crash, over Rs 2,000 crore of shareholder value has been wiped out with investors losing over Rs 7,000 crore in the last five days.

And this may not be the end of trouble for them as the tussle between the brothers is now clearly heading for a much intense phase.

news from ndtv.com

(With PTI inputs)