Reliance Industries vice-chairman and managing director Anil Ambani was likely to ask the Reliance Industries Ltd board to direct the company's auditors, D N Chaturvedi & Company, to vet all RIL accounts for the past few years to see whether "fit and proper disclosures were made" in regard to investments in subsidiary companies and to take remedial action to make disclosures, a source close to Anil Ambani told Business Standard on Friday.

The board would also take on record a report received by the audit firm of Deloitte, Haskins & Sells on RIL's investments in Reliance Infocomm, the source said. Deloitte is believed to have certified that RIL complied with all legal requirements when investing in Reliance Infocomm.

The Reliance 'ownership issue'

The audit firm was first asked by RIL to examine the "terms of its investments in Reliance Infocomm" and whether these were "fair and proper". The audit firm refused to take up the assignment noting that it was not qualified to comment on commercial decisions.

Subsequently, it was asked by RIL to examine all "compliance issues and legal ramifications" of its investments in Reliance Infocomm. The audit firm is believed to have given a clean chit to the company.

However, Anil Ambani is believed to be readying to challenge this. Approving the terms of the proposed buyback will only be one of the issues on the agenda of the RIL board meeting on Monday.

Even though the official agenda had not been circulated till this evening, a Reliance group executive confirmed to Business Standard that issues related to Reliance Energy and Reliance Infocomm would be extensively discussed at the meeting.

In other words, RIL chairman and managing director Mukesh Ambani's decision to give up his sweat equity in Reliance Infocomm and the board meeting may not signal the end of the battle.

But an RIL executive categorically denied that the board would ask Anil Ambani to quit the company. "The board of directors represents the shareholders. So far, the RIL shareholders have not asked for anybody's resignation," he added.

Mukesh Ambani's sudden decision to give up his 12 per cent stake in Infocomm, which he got as sweat equity, has taken the other camp by surprise. However, sources close to Anil Ambani have indicated that there will be many more issues to discuss with the senior Ambani.

The board meeting will be the first after the spat between Mukesh and Anil Ambani over the ownership of the Rs 99,000 crore (Rs 990 billion) group became public in mid-November. The meeting will take place a day before the birth anniversary of the group's founder, the late Dhirubhai Ambani.

Anil Ambani had recently drawn the RIL board's attention to three specific issues: the resignation of the company's most senior board member, M L Bhakta; the letter sent by two independent directors of Reliance Energy (of which Anil Ambani is chairman) to the RIL board on the company's future prospects; and matters concerning Reliance Infocomm.

According to the RIL executive, the buyback price will serve a dual purpose: the company intends to reward its shareholders from its capital reserve and at the same time wants to offer an exit option to those who are sceptical about its future.

He indicated that the buyback price would be set in line with the stock's price before the rift over ownership became public. On November 18, the RIL stock was priced at Rs 545.54. The board will also decide on the size of the buyback. Under the Companies Act, a company can buy back up to 10 per cent of its paid-up equity capital from the open market.

He indicated that the RIL board would also discuss the withdrawal of Bhakta's resignation. It may be recalled that Mukesh Ambani tried to persuade Bhakta to withdraw his resignation.

This is the second buyback programme in the company's history. On June 2000, RIL shareholders approved a buyback of the company's shares of Rs 10 each, for an amount not exceeding Rs 1,100 crore (Rs 11 billion), up to a maximum price of Rs 303 per share, through open market purchases.

However, the company did not buy back a single share as the share price did not drop below the maximum specified buyback price of Rs 303. The buyback price effectively served as a floor for the company's share.

Battle not over

• The RIL board will place on record a report received by Deloitte on RIL's investments in Infocomm
• Deloitte is believed to have said RIL's investments in Infocomm were legally compliant. Anil is believed to be readying to challenge this
• Mukesh's decision to give up his sweat equity may not signal the end of the battle. Sources close to Anil say there will be many more issues to discuss with Mukesh
• On Friday, Anil met Finance Minister P Chidambaram; he refused to comment on what was discussed in the hour-long meeting