Adani Group enters into a no-poaching pact with Mukesh Ambani led Reliance Industries

• A no-poaching agreement will prevent employees of both groups from joining each other.
  
• Legal eagles say no law prevents conglomerates from entering into such pacts.
  
• Pact will prevent a talent war in media and new energy businesses.

The Adani Group, led by the world’s third richest man Gautam Adani, has entered into a no-poaching agreement with Mukesh Ambani-led Reliance Industries, such that both groups will be restricted from hiring talent from each other. The agreement has come into effect from May this year and will be applicable to all their businesses. Queries sent by Business Insider to both groups remained unanswered.

What makes this pact interesting is that it is between two of India’s largest conglomerates and of late both have entered sectors where the other has a big play. Last year, Adani Group announced its entry into the petrochemical space with Adani Petrochemicals Limited, which is where Reliance has a large presence. The other area where their paths cross is the high-speed data services, for which Adani has bid for 5G spectrum.

No poaching agreements have always been around in India as a practice and are increasingly becoming prevalent in India, 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. A senior professional with a global executive search firm that works with both conglomerates, said on grounds of anonymity, “These pacts have always existed and they continue to be informal in nature. From here on both groups cannot poach from each other.” No poaching agreements are legal as long as they do not restrict an individual’s right to seek employment.

One partner at a corporate law firm said 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. 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.

The Adani Group has interests in renewable energy, power generation & distribution, ports, airports, solar and natural resources. The Adani Group is also testing waters in petrochemicals and enterprise broadband space for which it has acquired spectrum worth ₹212 crore in the recently concluded auctions. The Adani Group seeks to serve enterprise customers in six licensed service areas through Adani Data Networks. Reliance Jio Infocomm is the world’s third largest mobile network operator with a subscription base of 426 mn and has emerged as the largest bidder for 5G spectrum.

Given that Adani Group and Reliance Industries have global ambitions in several businesses, this pact allows them to ring fence their respective talent pools both in India and outside.


Reliance, on the other hand, also has massive ambitions in the new energy and solar space, where Gautam Adani has a lead. Given that both groups are present in several sectors, where talent is scarce in India, this pact could help prevent a war for talent. Media is another sector where both have a presence and there too employees down the line have been informed that they cannot accept offers from the other group. 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.

Most of these agreements are informal and may not hold up in the court of law, claim experts. However, with two large conglomerates entering into a no poaching agreement may prove to be restrictive for employees across the board. Business Insider has also learned that after the pact was actioned, letters have also been withdrawn in certain cases for junior employees.

Between them, 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.

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