Reliance Industries' chairman and managing director Mukesh Ambani acquired his 12 per cent stake in Reliance Infocomm as sweat equity. The equity option was given to him by the Infocomm board in July, 2000; Ambani exercised his option in March/April, 2004.

The Infocomm board, which granted the stock option consists of Mukesh Ambani as chairman, employees of Infocomm and close associates of Ambani (like Anand Jain and Manoj Modi).

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There is no board representation available to Reliance Industries other than through Ambani himself (since he is also chairman of Reliance Industries).

Reliance Industries has been the largest investor in Infocomm, and was apparently not informed of the sweat equity given to Ambani, even though Ambani is also the chairman of Reliance Industries.

While Ambani has been known to be the prime mover of the project, and has been mentioned in recent company documents as the promoter of Infocomm (with Reliance Industries as the 'lead investor'), other documents filed with a bank in December, 2003, do not mention him as the promoter; there it is Reliance Industries that is described as the promoter of Infocomm.

Explaining the transaction, a Reliance official said the Infocomm board had decided to offer Ambani the right to acquire shares amounting to 12 per cent stake of the company for his "contribution" to the company. The price of the 12 per cent stake at that point of time was decided at Rs 50 crore (Rs 500 million), valuing Infocomm at the time at Rs 417 crore (Rs 4.17 billion).

When asked whether the Reliance Industries board had approved the sweat equity deal, the executive said Mukesh Ambani was not required to get the approval of the Reliance board, nor was the Reliance board required to endorse or approve the deal.

"The deal was between Infocomm and Mukesh Ambani. It (the deal) required the approval of the Infocomm board, which was received in July 2000," he added. He was not forthcoming when asked whether Mukesh kept the Reliance Industries board informed of this development.

Both Mukesh Ambani and Reliance got the shares of Reliance Infocomm at the same price. While Mukesh Ambani was given an option price of Rs 50 crore for a 12 per cent stake, Reliance Industries paid Rs 31 crore (Rs 310 million) for its 7.5 per cent holding in March 2000, before the project took off.