FIs set to discuss RIL board representation

Admitting that the Reliance boardroom feud involving the Ambani brothers was 8216;8216;totally unexpected8217;8217; and had caught them ...

Admitting that the Reliance boardroom feud involving the Ambani brothers was 8216;8216;totally unexpected8217;8217; and had caught them off-guard, domestic financial institutions FIs are now expected to discuss the crucial issue of institutional representation on the Reliance Industries Ltd RIL board, when they take up the Reliance issue in the coming week. Currently, FIs don8217;t have a nominee on the RIL board.

Officials at all the key institutions which have debt and equity exposure in the Reliance group said they would take a common approach on the Reliance crisis, and jointly decide the future course of action.

8216;8216;Yes, representation on the RIL board is an issue. We will discuss it among ourselves and decide,8217;8217; the chief of a leading investment institution said on Sunday. 8216;8216;Now that the boardroom issues have come to our notice, we need to take a view on representation8217;8217;.

The independent directors on the RIL board are M.L. Bhakta, T.R.U. Pai, Y.P. Trivedi, D.V. Kapur, M.P. Modi and S. Venkitaramanan. General Insurance Corporation GIC nominee U. Mahesh Rao ceased to be a director with effect from June 17, 2003, when his nomination was withdrawn by GIC, the RIL FY04 annual report says.

Banks, FIs and insurance firms have just under 7 per cent in RIL, with mutual funds and UTI holding 1.8 per cent. LIC has a 4.44 per cent stake, while the Administrator of the Specified Undertaking UTI has 1.15 per cent.

Top officials at the government-owned investment institutions said often the holdings were a result of secondary market operations and weren8217;t strategic in nature. Hence, with small holdings, the issue of seeking a representation on the board didn8217;t come up thus far. 8216;8216;But now that these problems have broken out, we8217;ll have to look at the issue of representation seriously,8217;8217; the chief of one FI said.

FI sources added that the feud between Mukesh and Anil Ambani, both MDs, were not anticipated at all by the institutions. 8216;8216;Generally, we have been comfortable with our exposure in RIL since it is a very well-managed company. None of us expected all this to happen,8217;8217; the chairman of an FI said.

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On REL, which has also been affected by the feud with six REL directors quitting last week, FIs will call for a detailed report from its nominees, sources said. GIC is represented on the REL board by Gautam Doshi, and LIC by V.R. Galkar. No official reason has yet been made public about why the directors chose to resign. 8216;8216;The nominees will give us their reports. We will go through the report of the nominees in detail and then decide what is to be done,8217;8217; an FI official said. Banks, FIs and insurance firms hold a 21.5 per cent in REL.