The Supreme Court verdict and the fall of Anil Ambani?s non-empire

By Adhirath Sethi

It takes a special kind of idiot to land up in the predicament that Anil Ambani currently finds himself in. To be able to take a billion-dollar business that was effectively one half of one of India’s largest corporate empires, and dwindle it down to nothing is no mean feat. It’s the kind of financial mismanagement that Vijay Mallya puts on his vision board and sighs wistfully at every morning.

For those not in the know, Mr Ambani (Jr) is currently being held in contempt by a Supreme Court verdict. As per the rulings, he had refused to pay dues to Ericsson to the tune of some ?550 crore, despite having the money to do so. In a strange twist of fate, he now needs to pay close to this amount, despite not having the money to do so. Failure to repay will land him in jail for three months. I’m not sure where the Supreme Court equated three months with ?550 crore, but if that is the conversion rate, I’m happy to spend four hours in prison for the ?1 crore payout it offers.

On its own, this story isn’t quite that juicy. Everyone knows that Anil Ambani’s business empire is in tatters. It’s been spiralling downwards faster than the drill in the movie Armageddon (if you don’t get that reference, I should also point out: Ericsson used to make mobile phones). So other than seeing a long-standing poster boy for the corporate elite finally get a sour verdict, what more is there for us common folk to fill our quotas of schadenfreude with?

There are two, possibly three, offshoots of this that deserve to be analysed.

The first is rather sad. Regardless of petty, billion-dollar rivalries, one always assumes our siblings are going to have our backs when things get rough. When the Ambani brothers split in 2006, it was obvious to anyone (except, apparently, Anil), that Mukesh was getting the better end of the deal. Although Anil did get Reliance Telecom (a company that Mukesh would have parted with grudgingly, considering he built it), Mukesh held on to most of the cash cows.

Regardless of petty, billion-dollar rivalries, one always assumes our siblings are going to have our backs when things get rough.

As expected, Mukesh continued his empire building, eventually getting back into telecom via Jio and becoming India’s richest man. When it came to light that RCom was entering bankruptcy proceedings, it was expected that Mukesh would make a pity-acquisition of RComs assets and allow Anil to use the proceeds to keep the creditors off his back. However, Mukesh declined, for reasons mainly financial but also tinged with some typical elder-brotherly one-upmanship. It is possible to argue that RComs’ massive ?18,000-crore debt is something even India’s richest man cannot clean up, but it is sad nonetheless that Anil was left out in the cold, when all he was asking for was a ?1,400-crore hug to see him through the winter.

The second issue with all this is that RCom is only one of a bunch of Indian companies that are driving up bad debts faster than a gambling addict with only three days to live. Overall, bank NPAs in India have crossed an astronomical ?4,00,000 crore, which tells you that Anil Ambani’s ?18,000-crore debt is only a small part of the problem. Although our wise and capable RBI director does claim the crisis over NPAs is easing out, this is the same man that insists that demonetisation was a great idea, so let’s not relax just yet. It is apparent to everyone (including Anil, in this case) that RCom is being made an example of as a way to send a warning to other corporates looking to take it easy on the matter of debt repayment.

The possibly third point relates to the other place Anil Ambani’s name keeps popping up. No, not the marathon. Although if he does plan a Nirav Modi-type exodus from India, the running practice will certainly come in handy.

I speak, of course, of the Rafale deal. If there’s any argument in support of Narendra Modi with regards to ill-doings on the part of procuring the fighter jets, is it this: Why would anyone risk their political career to help Anil Ambani? As if we haven’t known for years that he was dwindling away his half of his father’s fortune and would be scarcely in a position to bolster anyone’s political fortune.

Why would anyone risk their political career to help Anil Ambani?

It may be wild speculation to draw any connection, but the verdict seems oddly well-timed for the Modi government, who will no doubt use this example to highlight that they owe no favours to Mr Ambani (Jr). Conspiracy theories be damned – in an election year, we can’t rule out any possibilities.

We can’t say for sure whether Anil Ambani is a scapegoat being waved about to benefit the government’s election agenda, or a genuine case of corporate greed finally getting its comeuppance. Whether he will actually face any retribution also remains to be seen. As we’ve noticed in the case of Subrata Roy, the ultra-rich in India have a way of getting air-conditioned prison cells and ample leeway to absolve for their wrongdoings. Either way, the road does seem to be ending for the younger Ambani. It is likely that history will merely remember him as Mukesh’s unsuccessful brother.

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The article was published in Arre`