Government has demanded 2,940 crore bank guarantee from Anil Ambani led Reliance Communications for its liabilities on spectrum. The debt laden telecom operator quit the business in December 2017 and sold its assets to Mukesh Ambani led Reliance Jio. But the government is not ready to clear RCom-Jio before Anil Ambani led company clears dues and has moved to Supreme Court of India to fight the case. Earlier Telecom Disputes Settlement and Appellate Tribunal (TDSAT) rejected Department of Telecom (DoT)’s plea for bank guarantee. However, Additional solicitor-general P.S. Narasimha filed a petition in apex court to make the claim of 2,940 crore ban guarantees. “There is no precedent for the center to accept land/buildings as security towards unpaid dues…the land provides no such securitization and cannot be monetized on demand. Undertaking not to alienate property worth 1,400 crore is not in compliance with trading guidelines,” the government said.
Kapil Sibal, senior Congress leader and former Minister of Communications and Information Technology is representing Anil Ambani led reliance Communications in the Supreme Court of India. “I can’t give a bank guarantee. If this deal is not allowed to go through, a lot of entities will suffer. Banks who are secured creditors will be in jeopardy and the deal falls through,” told Sibal to the apex court. The assets of RCom which include 122.4MHz of 4G spectrum 43,000 towers, 178,000 route km of fiber were to be sold to Jio by March 2018. The fibers worth 3,000 crore, convergence nodes and related infrastructure worth 2,000 crore was sold to Jio but given legal proceedings the spectrum is not finalized yet. “The Hon’ble Supreme Court will have to ascertain the consequence of allowing the petition filed by the government as that could have a negative impact on the companies’ ability to pay off the banks and also scuttle the asset sale of RCom to Jio. Furthermore, it is patently clear that any amount that RCom plans to raise to effectively service its debt will be through the proposed route of asset sale”, said Simranjeet Singh, principal associate at Athena Legal, a law firm.
Congress has blamed Modi government for corruption in Rafale case and Rahul Gandhi accused PM of awarding 30,000 crore offset deal to Anil Ambani. But its hypocrisy is evident in the fact that its senior leader is fighting the case of Reliance Communications in the Supreme Court of India. According to government estimates, 1,00,000 crores were awarded to Anil Ambani’s businesses in last seven years of Congress government. The data has been collated from key ministries such as power, telecom, road transport and highways as well as government entities like the National Highways Authority of India, Mumbai Metropolitan Region Development Authority and Delhi Metro Rail Corporation. Officials have found many discrepancies in the deals awarded to Anil Ambani’s companies in the field of infrastructure and telecommunications. The deals to these companies were awarded in record time and the companies grew exponentially in the infamous second term of the Congress government.
“The biggest spurt in growth was in Reliance Infrastructure, which by 2011 had transformed from an electricity distribution company to India’s largest infrastructure company within five years. Nearly 12 projects worth over Rs 16,500 crore were initiated, making Reliance Infrastructure the largest private developer of roads in the country. All this is being looked into,” said the government official.
The government is also seeking the details of the contracts awarded to the group by Maharashtra government in more than decade a of Congress rule in the state. The deals awarded to major companies of Anil Ambani led Reliance Group which includes Reliance Communications, Reliance Capital, Reliance Power, Reliance Infrastructure, Reliance Natural Resources and Reliance Media-Works are being examined. Reliance group won 70,000 crore deal in power sector alone including power plants in Madhya Pradesh as well as many deals in infrastructure like Mumbai Metro’s line 1, Delhi Airport Metro Express line and road construction on Delhi-Agra, Bengaluru-Chennai, Pune-Satara and Jaipur-Bikaner segments.
In 2007, a few months after splitting the family business, Anil Ambani had a net worth of $45 billion according to the Forbes Richest List. His biggest asset was a 66% stake in telecom venture Reliance Communications. Elder brother Mukesh had a net worth of $49 billion. In the 2017 Forbes Rich List, Anil’s net worth had shrunk to just $3.15 billion while Mukesh’s fortune stood firm at $38 billion. In the period of one decade, while the elder brother has expanded his empire throughout the country, the younger brother could not handle family fortunes and shrunk to the bottom line. The group of companies reflected this trend as well. The 10-year compounded annual growth rates (CAGRs) of Mukesh’s Reliance Industries have been 11.2 (sales), 9.4% (profit) and 17.8% (returns), according to a Bloomberg report. The same rates for Anil’s Reliance Group have been 9.4%, -12.6% and -1.7%. The market capitalization of Reliance Industries rose six times to nearly Rs 6 lakh crore, while the combined market value of Anil’s firms—Reliance Capital, Reliance Infrastructure, and Reliance Communications—declined about 17% to 47,017 crores. Anil Ambani has started summing up his business and planned to sell operations of Reliance communication to his elder brother Mukesh Ambani.
