Adani Group, Mukesh Ambani’s Reliance sign no-poaching pact
Gautam Adani-led Adani Group and Mukesh Ambani’s Reliance Industries have entered into an agreement of not hiring talents from each other, reported Business Insider on Thursday. According to the report, the no-poaching agreement has come into effect from May this year and will be applicable to all their group companies.
Both Adani Group and Reliance Industries have neither commented nor confirmed the claims made by the report. “These pacts have always existed and they continue to be informal in nature. From here on both groups cannot poach from each other,” a senior professional of a global executive search firm that works with both conglomerates told Business Insider.
Rivalry beginning to play out
Mukesh Ambani (net worth $88.8bn) and Gautam Adani ($150bn) account for 59% of wealth held by the top 10 billionaires in India. While RIL’s market cap stands at ₹16,94,143 crore, The Adani Group’s listed companies have a combined market cap of ₹21,28,656 crore.
With presence across sectors, the two groups are rivals in a few industries. The world’s second wealthiest billionaire and the 8th richest duo had been avoiding each other’s territory for over a decade. However, with Adani’s entry into the telecom business, along with his recent acquisition of media houses such as The Quint and NDTV, and Ambani’s foray into clean green energy, their rivalry is beginning to take root.
Of late, India’s largest conglomerates have entered sectors where the other is a big player. Last year, Adani Group announced its entry into the petrochemical space with Adani Petrochemicals Limited — but it’s a space where Reliance has a large presence. The other area where their rivalry has cropped up is the high-speed data services, for which Adani has bid for 5G spectrum. In August, Ambani announced that the group will infuse Rs 2 lakh crore to build its Pan-India true 5G network. Reliance Jio Infocomm, he said, had prepared an ambitious and fastest ever 5G rollout plan for the country.
No-poaching agreements not new
No-poaching agreements among companies in India are not new. They have always been around in India as a practice and are increasingly becoming prevalent as the war for talent intensifies and wage costs are soaring. Rising wage costs are a risk to companies, especially where talent is scarce and a potential bidding war can exacerbate this risk. No poaching agreements are legal as long as they do not restrict an individual’s right to seek employment.
In the past, several corporations have built in such clauses into contracts of their employees, which prevent them from joining competition. And in some cases, employees could not join rivals even after the contract had expired. In these cases, there is a cooling period before which employees cannot join rivals.
A legal expert was quoted as telling Business Insider that there is no law that prevents two entities from entering into such agreements, so long as they are not dominant players in that sector. Currently, both these entities do not have a dominant combined market share in any sector.
Fortifying their talent pools
Since Adani Group and Reliance Industries have global ambitions in several sectors, this pact allows them to fortify their respective talent pools both in India and abroad.
The Adani Group has interests in renewable energy, power generation and distribution, ports, airports, solar and natural resources. It is also testing waters in petrochemicals and enterprise broadband space for which it has acquired spectrum worth ₹212 crore in the recently concluded auctions. Through Adani Data Networks, it seeks to serve enterprise customers in six licensed service areas. Reliance Jio Infocomm, the world’s third largest mobile network operator with a subscription base of 426 million, has emerged as the largest bidder for 5G spectrum.
Reliance, on the other hand, also has massive ambitions in the new energy and solar space, where Gautam Adani has a lead. Media is another sector where both have a presence; their employees have been informed that they cannot accept offers from the other group. According to the report, senior management personnel, who were in talks with either side for possible opportunities, have now been informed by the executive search firms about the pact and have had to retract their candidatures.