Ambani Brothers peace pact

Reliance Industries Ltd. (RIL), led by Mukesh D. Ambani, and Reliance ADA Group companies, led by Anil D. Ambani, approved and signed an agreement canceling all existing non-compete arrangements entered into between the two groups in January 2006 pursuant to the scheme of reorganization of the Reliance Group and entered into a new simpler, Non Compete Agreement with respect to only Gas Based Power Generation. The above agreements have been approved by the Board of Directors of RIL and the respective Reliance ADA Group companies.

The cancellation of the existing non-compete agreement will provide enhanced operational and financial flexibility to both groups, and greater ability to participate in high growth sectors of the Indian economy, such as oil & gas, petrochemicals, telecommunications, power, and financial services. However, RIL has agreed not to enter into Gas Based Power Generation Business for the period upto March 31, 2022. An appropriate exception has been made in respect of RIL’s captive gas based power plants.

These developments will eliminate any room for further disputes between the two groups, on matters relating to the scope and interpretation of the non-compete obligations. RIL and Reliance Natural Resources Ltd. (RNRL) will expeditiously negotiate Gas Supply arrangements in accordance with the orders of the Supreme Court of India. We hope to conclude these negotiations very soon. RIL and Reliance ADA Group are hopeful and confident that all these steps will create an overall environment of harmony, co-operation and collaboration between the two groups, thereby further enhancing overall shareholder value for shareholders of both groups.

Separately, reports said that RIL could reportedly buy equity stakes in gas-based power plants run by ADAG companies and that the Government may give preference in gas allotment to power projects of the ADAG group if RIL picks up equity stakes in them. RIL and RNRL may enter into a new gas supply and purchase agreement in two week's time, according to reports. In case the Government approves the deal, it would ensure gas to power plants owned by Anil Ambani's companies for 10 years commencing 2012. Reports added that RNRL might get gas at US$4.23 till 2014, but silent about the price that would be charged after that period.