Headlines are screaming Anil Ambani Faces Jail Due To Non-Payment Of Dues.
Will Mukesh Ambani again feature in Anil Ambani’s story — this time to ‘bail’ him out?
DKODING Newsline: Feb 21, 2019
For an average Indian, Reliance Communication filing for bankruptcy and Anil Ambani facing time behind bars can seem unreal. It is even tougher to digest for anyone who has in the past witnessed the grandeur of the Ambani clan and the sway they held over businesses in the country.
But two starkly different narratives have emerged since the family patriarch Dhirubhai Ambani’s demise in 2002. What followed was a
bitter rift between his sons – Mukesh and Anil Ambani, and the eventual division of the family business between them in 2005.
After the split, as per the Forbes Rich List, in 2007 Anil had a net worth of $45 billion, while his elder brother Mukesh had a net worth of $49 billion. But by 2018 the picture had drastically changed. The same List was now topped by Mukesh with a $47.3 billion fortune, while Anil was
tottering at 66thposition with a net worth of $2.44 billion. Anil Ambani’s fall from grace looks even worse when pitted against his elder brother’s spectacular rise.
But how did this happen?
It all stems from the fact that after the Ambani property was split between the brothers, Anil Ambani’s biggest asset was telecom venture Reliance Communications (RCom), where he held a 66% stake.
Tracking Anil Ambani’s Fall
- In 2013, Ericsson, a Swedish telecom equipment maker, entered into an agreement to operate and manage assets of Anil Ambani-owned Reliance Communication
- In 2017, Ericsson claimed it had not been
paid the duesreportedly to the tune of Rs 1,500 crore and challenged RCom before the National Company Law Appellate Tribunal (NCLAT).
- In May 2018, NCLAT admitted insolvency petition against RCom and after settlement talks ordered RCom to pay Ericsson Rs 550 crore by September 30as settlement. RCom chairman Anil Ambani took an undertaking that payment deadline would be adhered to, but his company moved Supreme Court seeking quashing of insolvency proceedings.
Supreme Court upheld that RCom should stick to the payment deadline. RCom pleaded before NCLAT and the Supreme Court seeking relaxation in the deadline and missed the September 30 deadline.
The next day, that is October 1, Ericsson filed a contempt of court case against RCom and Anil Ambani in the Supreme Court. RCom on the other hand argued that it could repay only when the deal to sell its assets to Jio and Brookfield went through.
On October 23, Supreme Court gave Anil Ambani some relief and extended repayment deadline to December 15.
RCom again missed this deadline, and sought extension, which SC firmly rejected.
A month after the
second deadline was breached, Ericsson again filed a contempt of court case against Anil Ambani on January 20 this year. The Apex Court ordered Anil Ambani to appear before it. Before SC, RCom offered to repay Ericsson provided the petition against Anil Ambani was withdrawn. Ericsson refused and RCom moved bankruptcy court on February 1.
Supreme Court’s order on February 20 rang the death knell for Anil Ambani. SC held Anil Ambani responsible of contempt of court.
How Mukesh Ambani Fits Into This Story
When it was being hounded by lenders, RCom had charted a monetisation plan that would have helped cut its debt by Rs 18,000 crore. But it all hinged on a deal where elder brother Mukesh Ambani’s Reliance Jio would buy RCom’s spectrum assets.
It seemed Anil Ambani could breathe a sigh of relief after all. But herein lies the twist.
Before the deal went through, Mukesh Ambani’s Jio wrote a letter to the Department of Telecommunications (DoT) asking whether buying RCom’s assets also meant footing its dues related to airwaves. As it turns out, spectrum trading norms stipulated by the government hold a buyer responsible for dues and liabilities previously held by the seller. In light of this, DoT refused to okay the deal to sell airwaves and the deal between the Ambani brothers fell flat.
What Lies Ahead For Anil Ambani
Supreme Court held Anil Ambani and two other directors guilty of contempt of court, and ordered RCom to clear its dues of Rs 453 crore in four weeks or Anil Ambani would face three months behind bars.
Mukesh Ambani’s Jio could have once rescued Anil Ambani – but it wasn’t to be. Will he bail out his younger brother the second time around? – Deepak Kaistha | DKODING Newsline