Court battles are both time consuming and costly and who would know better than the Ambani brothers, as their group firms, fighting over gas, are showing multi-fold increase in legal expenses over the years.
Anil Ambani group firm RNRL first filed a case against Reliance Industries Limited in Bombay high court in November 2006, alleging violation of a family pact about supply of gas from elder brother Mukesh led RIL's Krishna-Godavari gas fields.
Since the financial year 2006-07, RNRL's legal and professional fees have surged nearly five-fold from Rs 3.12 crore (Rs 31.2 million) to Rs 15.27 crore (Rs 152.7 million) in the latest fiscal 2008-09.
On the other hand, RIL's 'professional fees', which includes legal fees, rose from Rs 550.22 crore (Rs 5.5 billion) in 2006-07 to Rs 675.84 crore (Rs 6.75 billion) in 2007-08. The figures for the year 2008-09 could not be ascertained as the company's annual report has not been released for the fiscal.
When contacted, both the companies declined to disclose the specific legal fees related to their gas supply dispute, which has now reached the Supreme Court.
"As a policy we do not comment on fees for specific legal cases," a spokesperson for Reliance Natural Resources Limited said. Asked about the legal expenses incurred by RIL during the past three years and those towards the company's legal battle with RNRL as also in the case against state power utility NTPC, a Reliance Industries spokesperson said: "As a policy we do not comment on details of any specific fees."
"Various expenses incurred towards professional services as a part of our operations, including legal services, are recognised under the head of Professional Services in our financial statements," RIL spokesperson added.
In case of RIL, the professional fees more than doubled from Rs 259.33 crore (Rs 2.59 billion) in 2005-06 to Rs 550.22 crore (Rs 5.5 billion) in 2006-07. Thereafter, it increased by nearly 23 per cent to Rs 675.84 crore (Rs 6.75 billion) in 2007-08.
For RNRL, it doubled from Rs 3.12 crore (Rs 31.2 million) in 2006-07 to Rs 7.81 crore (Rs 78.1 million) in 2007-08 and then again to Rs 15.27 crore (Rs 152.7 million) in 2008-09. RIL incurred Rs 155.01 crore (Rs 1.55 billion) in professional fees in foreign currency during 2007-08, which was down from Rs 197.33 crore (Rs 1.97 billion) in 2006-07, but higher than Rs 134.68 crore (Rs 1.34 billion) in 2005-06.
For RIL, the professional fees accounted for about 3.5 per cent of its net profit of over Rs 19,500 crore (Rs 195 billion) in 2007-08, while it was just about 0.56 per cent of total expenses at Rs 1,19,007 crore (Rs 1190.07 billion)during the year.
RNRL's professional and legal expenses during the latest fiscal, 2008-09, accounted for 5.6 per cent of total expenses of Rs 270 crore (Rs 2.7 billion) and over 21 per cent of the net profit of Rs 71.55 crore (Rs 715.5 million).
