New Delhi: Having benefited handsomely from soaring valuations of his stakes in various Reliance Anil Dhirubhai Ambani Group (R-Adag) companies, Anil Ambani now stands to reap a hefty, steady income from letting various companies use the group name and other Reliance trademarks in their businesses.
It turns out that the R-Adag trademark is held by Anil Dhirubhai Ambani Ventures Ltd (Adav), which is part-owned by Ambani. And Adav is set to receive up to Rs160 crore for the use of the R-Adag trademark, along with the use of Reliance Infratel and Reliance Power trademarks, names and logos, according to the public share offer documents of these two firms of the group.
Last month, Reliance Power Ltd mopped up some Rs10,000 crore in India’s largest public offer, which was fully subscribed in the first minute it opened to the public.
Reliance Infratel Ltd, a towers unit of Reliance Communications Ltd, the country’s second biggest mobile phone services firm, has filed documents for an initial public offer to sell 89 million shares.
According to the respective offer documents, Adav has entered into brand licensing agreement with Reliance Power and Reliance Infratel in return for up to Rs80 crore each for a period of 10 years.
“On 19 July 2007, we entered into a brand licensing agreement with Adav, a company owned by our chairman, Mr Anil Dhirubhai Ambani. The agreement allows us to use the trademark and the ‘Reliance Infratel’ trademark, name and logo...for our services and products on a non-exclusive basis, for a period of 10 years. We are required to incur expenditure up to Rs800 million for these rights and the timing and amount of the payment (subject to this limit) will be determined in Adav’s sole discretion,” the Reliance Infratel draft prospectus reads.
In the Reliance Power filing, the trademark referred to in the first instance is Reliance Adag. Mint couldn’t ascertain whether Adav gets paid by other R-Adag group companies for trademarks as well.
It appears that Adav itself doesn’t yet own rights on the Reliance Infratel and Reliance Power trademarks and logos, which have to be given by Registrar of Trademarks in India, according to the offer documents of the two firms.
It is unclear when the registrar will formally approve the trademark and related applications.
Ambani directly owns around 19% in Adav, while Swan Consultants Pvt. Ltd holds nearly 80% stake in the company, according to latest information with the Registrar of Companies on the website of the Union ministry of corporate affairs.
Other stakeholders in Adav include Swan Ventures Pvt. Ltd, Parrot Consultants Pvt. Ltd, Tiger Trustees Pvt. Ltd and Zebra Consultants Pvt. Ltd. The last three firms, incidentally, are also named as owners—direct and indirect—of Swan Telecom Pvt. Ltd, as Mint reported first on Thursday in relation to new companies entering the Indian telecom space.
Mint could not establish the equity pattern in Swan Consultants, the majority owner of Adav.
Apart from Ambani, other individual shareholders in Adav include Gaurang Shah, Ramesh Shenoy, Hasit Shukla and Nilesh Doshi.
Late Thursday, an R-Adag spokesperson said the up to Rs80 crore payment noted in the regulatory filings “represents estimated expenditure that (Reliance Infratel) may incur on its marketing, brand building, and advertisement exercise... Trademark fees is not paid/payable by any of the group company to Adav.”
The spokesperson couldn’t immediately explain the discrepancy between his statement and the regulatory filings from both those companies that clearly note the payments are to Adav.
Ambani, the estranged brother of Mukesh Ambani, India’s richest person, is ranked 18 on the Forbes magazine’s list of the global rich published in August last year.
His business interests span telecommunications, power, entertainment and finance.
This is not the first instance of promoters benefiting from the ownership of the brands used by their own units, ensuring income that tops what they earn as directors fees and through dividends on their stakes.
Omaxe Ltd, a New Delhi-based real estate company, gives money to its promoter, Rohtas Goel, who has registered the brand Omaxe and has entered into an agreement with the company for the use of the name.
Omaxe has to pay a lump sum of Rs1.2 crore and a royalty of 2% of the real estate turnover every year to Goel. The agreement is valid until March this year.
It couldn’t be established how these firms arrive at the value of the brands registered, nor was it immediately clear which other trade names are held by Adav and how much the company earns in such fees every year.