6 directors quit Reliance Energy, the rift widens

The six directors who resigned were considered to be close to Anil Ambani. Apart from executive vice-chairman Satish Seth, the other directors who resigned are: Director (operations) S C Gupta, Director (Business development) J P Chalsani, Director (finance) K H Mankad, independent director Prof J Ramachandran and Reliance representative Amitabh Jhunjhunwala. The 14-member REL board is now left with eight directors.

No reasons were given for the resignations. Reliance Energy chairman and managing director Anil Ambani said: “The resignations of the six directors would be considered at an appropriate time.”

He later told journalists outside his office that he would make a statement on other issues at an appropriate time, if necessary.

Mukesh Ambani’s Reliance Industries holds a 50.15 per cent stake in the company which supplies electricity to Mumbai and Delhi suburbs. Reliance Industries officials said the company is awaiting a formal notification from Reliance Energy and would not like to “precipitate matters.”

Significantly, the resignations coincided with the release of a letter written by Anil Ambani questioning RIL board’s decision to vest more powers with Mukesh Ambani. An REL spokesperson said: “We cannot offer any comment beyond whatever has been informed to the BSE by the company secretary.”

The directors in question did not issue any statement and chose not to comment when contacted. The company reported all the six resignations to the stock markets at around 2.15 pm, which led to heavy selling by FIIs and local operators in all Reliance group shares.

The BSE Sensex declined by 65 points from the peak levels to close down by 0.92 point at 6035.03.

Reliance Energy fell by 5.83 per cent to close at Rs 549.1 while group flagship Reliance closed at Rs 503.55 — down 2.22 per cent. Reliance group stock lost market capitalisation worth Rs 8,000 crore after the controversy broke out on November 17 with Reliance Energy alone losing investors’ wealth of Rs 1,434 crore.

Four of the six directors — Seth, Mankad, Gupta and Chalsani — are executive ones, while Jhunjhunwala and Ramachandran are non-executive directors.

Seth has been in RIL since the days of the late Dhirubhai Ambani, as has been Gupta, who is also a director of Reliance Power. Mankad, whose directorship had come to an end at the time RIL acquired more than 50 per cent in BSES, had been persuaded by Anil Ambani to continue as the director (Finance) and also take care of REL’s Orissa operations. Chalasani, who was appointed on the erstwhile BSES board when RV Shahi (who is now union power secretary) was BSES chairman, was handling the business development portfolio since then. He was also initially involved in REL’s distribution venture in New Delhi.

Ramachandran, who is Chair Professor of business policy at the Indian Institute of Management, Bangalore, was also brought in by Anil Ambani.