When Dhirubhai Ambani, a small-time trader with big-time dreams, embarked on building the biggest Indian corporate entity, Reliance Industries, few believed he would succeed, given India's pre-liberalisation controlled economic regime that rested on tightly controlled licences, permits and quotas.

Yet, in his lifetime, he built an industrial empire whose business ranged from polyester yarn to petrochemicals. Last year, it posted sales of $22.6 billion and a net profit of $2.8 billion. That is more than what Coca-Cola had to show by way of performance.

Also during his lifetime Dhirubhai Ambani placed his two sons, Mukesh and Anil, in key managerial positions, and oversaw the generational transfer of ownership and control over the Reliance group whose frontiers kept on expanding to include energy and telecommunications. He died convinced that Reliance was in safe hands; such was his faith in his family that he did not leave behind a will.

But the best laid out plans of men can, and often do, go wrong. And that has been proved by the dispute between Mukesh and Anil Ambani who, till recently, were compared by industry watchers to Ram and Lakshman, the inseparable brothers of Ramayana. Such was their apparent bonding.

What is being witnessed now is not the sibling loyalty of Ramayana, but the sibling rivalry of Mahabharata. At stake is the ownership of Reliance Industries, the flagship company of the Reliance group - and the fate of millions of investors who profited enormously by investing in Reliance, but whose luck could soon run out.

The family feud has already had an adverse impact on the market capitalisation of Reliance with nearly a tenth of it wiped out in a fortnight. Foreign investors, who have invested $900 million in Reliance shares - 13 percent of total foreign investment in Indian equities - could trigger a major wipeout if they were to decide to sell rather than retain shares in an enterprise that appears increasingly vulnerable.

Till the row between Mukesh and Anil Ambani became public, Reliance appeared to have immunised itself from the disease of family feud that has afflicted every major family-held business in the past. And this apparent stability in the Ambani family was seen as a major contributing factor to the unstoppable growth of Reliance.

That faith, in hindsight, appears to have been misplaced. Today, the family that owns Reliance appears no different from the families that have in the past built and owned vast business empires only to see them collapse with the splintering of the families.

As many as 461 of India's 500 most valuable companies are family-owned; many of them were once under single ownership, but with the break-up of families after the passing away of the first generation, they are now individual entities. And most are pale shadows of their past glory.

The best-known Indian business families, the Birlas, the Modis, the Bajaj, the Singhanias, the Ruias, the Walchands, the Shrirams and the Sarabhais have seen brothers battling brothers for control and ownership. With the collapse of these families, their business empires have splintered into smaller entities. Many have disappeared altogether.

Profitable businesses around the world are family-owned. But there is a vast difference between the manner in which family-owned enterprises are run in India and elsewhere. Instead of limiting themselves to boardrooms and strategic decision-making, Indian owners involve themselves in the day-to-day running of their businesses and invariably they are control freaks.

As a result, there is little corporate governance in family-owned Indian companies. Instead, there is rampant cronyism (Mukesh Ambani's top managers are also his social friends), nepotism (cousins and relatives get precedence over professional managers) and opaque decision-making systems that shut out all but the chosen few.

Coupled with this is the inevitable clash between family interests and business interests. Professionally run companies are able to insulate one from the other. Not so in Indian family-owned companies. There is little that separates the owner's bedroom from his company's boardroom - often one is the extension of the other.

Last, but not least, is the convoluted holding pattern of Indian family-owned enterprises. For instance, the Ambani family directly controls 46 percent shares of Reliance: Five percent are held in individual names and personal investments companies; 12 percent by trusts and Reliance associates; and 29 percent by a spider's web of investment companies which are directly controlled by Mukesh Ambani.

What this means is that a break can never be clean. There is no scope for a velvet divorce. The holding pattern ensures that separation among owners is messy and long-drawn. By the time it is over, the enterprise is drained of resources and sapped of its energies.

If the Ambani brothers fail to kiss and make up, then it is anybody's guess which way the fortune cookie will crumble. But it is entirely possible that Reliance will take a severe beating at the bourses and millions of stakeholders will discover that their share certificates are no longer bestowed with magical powers of fetching ever-increasing returns.

Only the naïve will hold on to hope in the belief that the family cannot allow the situation to spin out of control as it would stand to lose the most. The history of Indian business is replete with instances that show families have not suffered on account of their business suffering. Most have lived happily ever after while investors have faced ruination and worse. Ambanis and Reliance cannot be any different.

(Kanchan Gupta, an analyst on contemporary issues, has worked in the previous Vajpayee administration. He can be reached at mail12gupta@yahoo.co.in)

--Indo-Asian News Service