The Unravelling of Anil Ambani’s Empire

On 2 June 2017, Anil Ambani, the younger son of Reliance Group founder, Dhirubhai Ambani, walked into his group’s headquarters in Mumbai to address a news conference.

Ambani, a marathoner and fitness freak who is usually cheerful and talks impromptu with reporters, was visibly tense and not his usual self. Ambani had some bad news to deliver. For the first time, an Ambani group company would not be able to repay bank loans and had sought significant debt restructuring from the banks.

The Indian lenders had decided to let go of interest and principal payments from the wireless telephony venture R.Comm Ltd for 18 months so the company could sell its assets and repay its debt.

‘We are undertaking two transactions to sell our assets, which would be the largest ever debt reduction by any Indian company,’ Ambani promised.

As the first step, the company would hive off its wireless telephony business, which would be then merged with the loss-making Aircel, owned by Malaysian billionaire Ananda Krishnan. The merger would reduce R.Comm’s debt by `14,000 crore. Subsequently, the company would also sell its majority stake in its telecom tower business to Canadian financial powerhouse, Brookfield, for `11,000 crore, and hold an economic interest of 49 per cent (receiving dividend but no voting power).

‘We plan to complete both the transactions by September this year and we will be out of the debt restructuring plan much before the December deadline,’ Ambani, who was pushing 60 at the time, said.

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Earlier in the day, R.Comm’s bankers had decided to opt for the Strategic Debt Reduction (SDR) plan on the R.Comm account, which would treat the loans as standard assets and not a bad debt for the next 18 months. This would help banks to not make any large provisions for the R.Comm debt, which would have otherwise reduced their profits. R.Comm had reported debt worth `45,733 crore as on March 2017 and had already defaulted on payments to a few lenders.

The sale of these two assets would take care of `25,000 crore of debt. Apart from the two transactions, Ambani also promised to sell R.Comm’s stake in its undersea cable company, Global Cloud Xchange (GCX), and land near Mumbai and in New Delhi to pay off the banks.

Ambani blamed the financial crisis of R.Comm to the tariff war triggered by Reliance Jio, owned by his older brother Mukesh, which offered free voice and data services for six months—leading to an industry-wide financial hemorrhage.

‘The only way we can compete with a free service is by offering a free service,’ Ambani said. ‘The free service and high spectrum fees have led to a deterioration in the entire industry’s financial metrics.’

R.Comm was to also present to the lenders its sustainable long-term plans for servicing the remaining debt of `20,000 crore. In the event the transactions were not completed within six months, Ambani said that the lenders had the option to 130 Meltdown convert their debt into equity—as per applicable debt recast guidelines.

Ambani claimed that his company started losing money mainly due to external factors and not due to any mismanagement of the company.

‘Our merger with Shyam Sistema was delayed for nine months only because one shareholder moved the court against the merger. This shareholder just owned 10 shares in the company which was not even worth `1,000. But he managed to delay the process,’ Ambani said. ‘I assure all investors that once our debt restructuring is over, the company will get back into shape.’ Within days of Ambani’s dramatic news conference, the RBI came out with new guidelines to restructure debt. The banks that bet on R.Comm’s asset sale plan, however, would get a surprise after the 18-month period was over.


Just a decade ago, in 2008, Ambani’s net worth was pegged at a massive $31 billion—placing him among the top three billionaires in India. Married to former film actor Tina Munim, Anil Ambani was the face of the undivided Reliance Industries Limited (RIL). While his father and older brother Mukesh built the Reliance empire, Anil was tasked with raising funds from all over the world to set up its mega projects, which made Reliance Industries what it is today.

As RIL’s Joint MD, Anil would often address the media and use his sense of humour to buttress a point. With his wide-ranging contacts in the world of politics, media and banks, Anil would know what was happening in almost all rival business houses, and used it to RIL’s advantage.

After his father’s death in July 2002, Mukesh Ambani became the chairman of the company and Anil was tasked with managing the government and the media. In 2004, Anil also became a Member of Parliament in the Rajya Sabha as an independent candidate. This was not liked by Mukesh, as he wanted Reliance Industries to remain neutral when it came to politics. Soon the fissures between the two brothers became the talk of the town and in November 2004, the fight between the two brothers exploded in the media. Allegations and counter-allegations were made by both, and an exasperated media had a tough time covering the feud. With the nasty all-out war giving a bad name to both brothers, their mother Kokilaben Ambani decided to step in and initiated a settlement between the warring siblings. In June 2005, Anil received the telecom, infrastructure and financial services businesses as part of a family settlement. Like his father Dhirubhai, the founder of Reliance, Anil Ambani was ambitious enough to set up mega projects—funded mainly by Indian banks. He was also a man in a hurry. By 2006–08, Anil was busy bidding for the largest infrastructure projects in India, including a mega gas-based power project in Dadri, road projects across India, metro railways and coal-based ultra-mega power projects. He was also investing in the entertainment business in a big way by buying stakes in Hollywood filmmaker Steven Spielberg’s company, DreamWorks, for $835 million, apart from making movies in India.

In 2007, Anil launched the share sale of Reliance Power, which received overwhelming response from investors in spite of very high premium sought by the company. The share sale and the listing of Reliance Power helped Ambani become 132 Meltdown India’s most sought-after billionaire, and he was just a few billions below his older brother in the Rich List rankings in 2007–08. At the same time, Anil was busy fighting for his company’s share of gas from Reliance Industries to fuel his gas-based Dadri power project. He ultimately lost the legal battle in the Supreme Court in May 2010, as the Court ruled that the gas reserves were owned by the Indian government and RIL need not sell gas to Anil’s company at a lower price than what was fixed by the government. The judgement sealed the fate of Ambani’s mega Dadri power project, which consequently did not take off. A few months later, Anil signed a peace agreement with Mukesh which allowed Reliance Industries to enter the wireless telephony industry. In 2010, Mukesh Ambani’s Reliance Industries acquired Infotel Broadband, which had a nationwide license to launch telecom services, for `4,800 crore. Starting with this acquisition, Mukesh began gearing up for one of India’s biggest investments in the telecom sector.


R.Comm and other Indian telecom players had some serious competition coming, considering that Reliance Industries Ltd was not only cash rich but had experience in setting up telecom services—as it was Mukesh who had set up R.Comm in 2003 as his pet project. By September 2016, Jio had launched its much-awaited services, which offered free voice and data facilities to Indian customers for the first six months, making it the most successful launch of any start-up in India. As an immediate fallout, it was not only the big three players of the Indian R.Comm: The Fastest Implosion 133 wireless telephony sector—Bharti Airtel, Vodafone India and Idea Cellular—who lost their customers; smaller players like R.Comm and others also had to look for options to survive.

In September 2017, Ambani informed R.Comm shareholders that the falling rates had led to ‘creative destruction’ of the sector and Jio’s entry was not necessarily a ‘disruption’.

‘The sector needs `1 trillion to expand and maintain quality of service and expand. Where will the money come from? Do we want oligopoly, duopoly or monopoly in the sector?’ Ambani asked at the shareholders’ meeting. This was also the time when the RBI warned banks to tread with caution towards the telecom sector. ‘As far as R.Comm is concerned, we have a transformation program in place and running. We have received the full support of our lenders. To reiterate, only wireless business is in trouble; other businesses are robust and growing well,’ Ambani informed the shareholders.

With banks stopping all funding of R.Comm, its suppliers turned impatient. The Indian unit of Swedish telecom equipment maker Ericsson AG, which had maintained telecom equipment for R.Comm, sent repeated reminders seeking its dues of `1,555 crore. As no reply was forthcoming, Ericsson finally moved the bankruptcy court for recovery of its dues. The litigation delayed the merger and finally, on 1 October 2017, R.Comm said that its lifeline merger with Aircel had collapsed. ‘Legal and regulatory uncertainties, and various interventions by vested interests, have caused inordinate delays in receipt of relevant approvals for the proposed transaction,’ R.Comm announced in a stock exchange filing.

‘Unprecedented competitive intensity in the Indian telecom sector, together with fresh policy directives adversely impacting bank financing for this sector, have also seriously affected industry dynamics. As a result of the various 134 Meltdown factors aforesaid, the merger agreement has lapsed. The board approved the same,’ the company said. The board would now evaluate an alternate plan for its mobile business, through optimization of its spectrum portfolio and adoption of a fourth generation technology focused mobile strategy.

‘The company will also sell real estate worth `10,000 crore,’ it said. This was not the only setback R.Comm suffered. The sale of its telecom towers to Brookfield also failed to take off. By November 2017, other overseas lenders like China Development Bank, which had lent close to $1.78 billion to R.Comm, also filed insolvency suits at the NCLT’s Mumbai bench. The Indian lenders, however, opposed China Development Bank’s petition, as they claimed to be already working on a debt resolution plan with R.Comm. China Development Bank had earlier moved a petition against the R.Comm–Aircel merger in May 2017 to seek a roadmap from the company on loan settlement terms. After the R.Comm– Aircel merger fell through, R.Comm withdrew the merger petition. But as both the transactions failed to materialize, R.Comm had to shut down its wireless telephony services by February 2018. The SDR plan had been based on the R.Comm–Aircel merger and sale of telecom towers to Brookfield. The Indian lenders and R.Comm then started negotiating the rate at which R.Comm’s debt would be converted into equity shares by lenders.

While lenders said they would take into account the current market price for debt conversion, R.Comm insisted that the debt conversion should be at the rate of `24.71 a share, which had been decided on 2 June 2017—the reference date of the SDR. This was the time when R.Comm’s shares had already lost 61.6 per cent value since 1 January 2017, and banks could not convert the debt at that rate when the stock price was very high. By December 2017—six months after R.Comm won the reprieve from the banks—Anil addressed another news conference to announce that R.Comm had exited the SDR scheme of the lenders by agreeing to sell telecom towers, real estate and other assets worth `39,000 crore and getting strategic investors in the ‘new R.Comm’.

With March as a deadline to complete all the transactions, Ambani said banks would not have to take any haircut. Post restructuring, the new R.Comm would be left with only `6,000 crore of debt. Ambani said that the plan also had the blessings of China Development Bank. ‘This [debt reduction] is historical for any group or company in India and is the largest debt reduction in India. This will also be a showcase [for managing debt] for the rest of corporate India,’ said Anil. He further said the company had fallen into bad times mainly due to the crisis in the telecom sector, which saw many top companies losing money. ‘This is a crisis of India’s wireless telephone sector. It’s a cash guzzler and one has to have unlimited supply of cash to keep the business running. If a mighty group like the Tatas has to sell its wireless business for free then you can imagine the condition of the rest of the players,’ he said.

As per the plan approved by all Indian lenders, R.Comm would raise `25,000 crore by selling its spectrum and 43,000 towers. It would also sell its fiber optic network spread across the country and several Media Convergence Nodes, covering 5 million square feet, used for hosting telecom infrastructure. The company would also sell prime real estate located in New Delhi, Chennai, Kolkata and Tirupati.

The commercial development of the Dhirubhai Ambani Knowledge Centre (DAKC) campus would lead to reduction of R.Comm’s debt by a further `10,000 crore, with the special purpose vehicle holding the real estate assuming non-recourse long-term debt financing of the said amount, Ambani said.

The company received many offers from the potential buyers and an independent committee led by former RBI deputy governor S.S. Mundra oversaw the sale process. Ambani said that R.Comm’s bondholders would be put on a par with all other lenders, and even they wouldn’t have to take any haircut. The company would resolve all issues with unsecured creditors as well. Ambani, who was visibly happy as compared to the day of the news conference, on 2 June, said that he had not been aware of the IBC, the NCLT and even the SDR process till the company actually faced it.

‘I had no clue what an IBC, NCLT or SDR process was. Now that I have reasonable experience, we would work towards the goal that we will never, ever, ever face an IBC, an NCLT or an SDR process,’ Ambani said in the presence of his wife Tina and sons Jai Anmol and Jai Anshul.’ Immaterial of legal documents, the one mode of financing that is important is moral financing. I want to make sure that no one loses money and I firmly believe in protecting my name and the name of my father,’ Ambani said.

The Indian banks, who had not received any money from R.Comm for several quarters, were happy with the plan. Within days of Anil’s news conference, R.Comm and Reliance Jio announced a historic deal on Dhirubhai’s 85th birthday—that Reliance Jio would buy out R.Comm’s wireless infrastructure assets, including towers and spectrum. In a statement, both companies said that they had signed binding agreements and the proceeds would be used to repay bank loans.

‘RJIO emerged as the highest bidder in a transparent process conducted under the supervision of a high-powered bid evaluation committee, comprising experts from banking, telecom and law. The company will utilize the proceeds of the monetization of this cash deal solely for pre-payment of debt to its lenders,’ R.Comm said in the statement.

Jio agreed to acquire all telecom-related infrastructure. These assets were expected to contribute significantly to the large-scale roll out of wireless, fiber-to-home and enterprise services by them. Both companies said that the transactions would close in a phased manner over the next three months, ending in March 2018, subject to approvals from lenders. The deal would comprise cash payments, including deferred spectrum instalments payable to the Department of Telecommunication (DoT). By January 2018, R.Comm announced that it had exited the wireless telephony business as it was unable to run it anymore. This was the end of a strenuous chapter for Indian banks, who had been waiting for a long time to get their dues.


In spite of the March 2018 deadline to close the deal with Reliance Jio, there was no sign of the deal closing. While Indian public sector banks kept their cool, Ericsson lost its patience and moved the NCLT. In May 2018, the NCLT admitted Ericsson’s petition to start bankruptcy proceedings against R.Comm. NCLT Mumbai ordered R.Comm to pay `550 crore to Ericsson by the end of September 2018. R.Comm immediately moved the NCLAT in New Delhi, which stayed 138 Meltdown the proceedings in the NCLT. But the Tribunal reiterated that by September-end, Ericsson must be paid, or the entire deal with Jio would be reversed.

Ambani then decided to take the fight to the Supreme Court to appeal against the NCLAT observation. On 3 August 2018, a two-judge Supreme Court bench cleared the sale of telecom infrastructure assets of R.Comm to Reliance Jio. But the top court also made it clear that R.Comm would have to pay Ericsson, and Ambani would have to give a personal undertaking that R.Comm would pay its dues to Ericsson. The Supreme Court subsequently extended the deadline to 15 December after R.Comm sought an extension. When R.Comm applied to the DoT to clear the transfer of spectrum to Jio, the DoT showed no urgency to clear the application. On 31 December 2018, both R.Comm and Jio extended the validity of their one-year-old transaction to June 2019, as DoT clearance was still awaited. As the company failed to meet its deadline, Ericsson moved a contempt petition in the Supreme Court. On 7 January 2019, R.Comm said the Supreme Court had given four weeks’ time to file its response to the contempt petition filed by Ericsson.

Thereafter, Ericsson was given one week’s time to file its rejoinder. R.Comm deposited a partial payment of `131 crore to Ericsson from the operational funds available with the company and began taking all steps towards enabling the settlement. It claimed to remain fully committed to make the payment to Ericsson from the proceeds of the spectrum sale. But time was clearly running out for Anil.

In February 2019, the Supreme Court warned Anil that if Ericsson’s dues were not paid within a month, he would be sent to jail. The transaction with Reliance Jio had not closed and there was no cash flow to R.Comm to pay off Ericsson’s dues. Anil then had to dial his brother for help. On 19 March, Mukesh Ambani stepped in and made the `550 crore payment to Ericsson. The payment helped Anil avert a stint in jail. Ambani thanked his brother and his sister-in-law, Nita Ambani, for bailing him out. ‘My sincere and heartfelt thanks to my respected elder brother, Mukesh, and Nita, for standing by me during these trying times, and demonstrating the importance of staying true to our strong family values by extending this timely support. I and my family are grateful we have moved beyond the past, and are deeply grateful and touched with this gesture,’ Ambani said in a statement. Within weeks, the company headed to the NCLT as bankers realized that they had no chance of getting their money back.


It was not only R.Comm that was in trouble. The other companies of the Anil Ambani group soon started feeling the pinch. Reliance Naval and Engineering Ltd, which was taken over by Ambani from SKIL Infrastructure, was also falling behind in repayment of bank loans. As his telecom empire was imploding, Ambani had seen a big opportunity in the defence business. The Narendra Modi government, which came to power in May 2014, wanted Indian 140 Meltdown companies to set up defence equipment manufacturing units in India and promised orders worth billions of dollars from the military forces. Modi’s idea was to save precious foreign exchange, as importing high cost equipment was draining the country’s resources. Reliance Naval and Engineering had a huge shipyard in Gujarat and was already manufacturing ships for the coast guard and the Indian navy. Anil saw huge potential in the company and decided to buy it from Nikhil Gandhi, the founder of SKIL Infrastructure.

As Anil started his journey into the defence business, a controversy erupted in the media in 2018 that the Modi government favoured his newly set up defence company to get contracts worth billions of dollars with Dassault Aviation of France, which sold Rafale fighter jets at a cost of $8.6 billion to India. By the summer of 2018, not just Anil but the Modi government itself was under attack from the opposition parties. The main opposition party—the Indian National Congress (INC)—alleged that rules related to defence ministry approvals and audit reports were ignored in the offset contracts between Dassault and Reliance. The Congress said that the government-owned Hindustan Aeronautics Ltd (HAL) was also ignored in the process, although it had won the earlier contract. An offset contract requires a foreign manufacturer that wins a defence contract in India to spend a certain portion of the deal value locally to promote local manufacturing. Anil immediately denied the allegations made by the then Congress Party President, Rahul Gandhi, who alleged that the Anil Ambani firm would benefit by ‘thousands of crores’ with the signing of the defence offset contract between Dassault Aviation and Reliance Defence Ltd.

In a letter sent to Gandhi in August 2018, Anil said the Congress party was ‘misinformed, misdirected and misled’ by vested interests and corporate rivals on the Rafale offset exports and work share. Ambani said that the allegations were ‘baseless, ill-informed and unfortunate’. He also expressed his deep anguish over continued personal attacks against him by Gandhi.

The agreement to buy 36 Rafale jets was signed between Prime Minister Narendra Modi and the French government in 2016, after an earlier agreement to buy 126 aircraft was scrapped by Modi soon after coming to power, he said. Gandhi had repeatedly accused Modi and the then Defence Minister Nirmala Sitharaman of not divulging the purchase price of the Rafale Aircraft and favouring Anil. Gandhi said the deal signed by the Modi government increased the cost of each aircraft by `1000 crore and offset contracts were given to the Anil firm, which had no previous experience in the military aviation sector. Anil said the the Rafale fighter jets were not being manufactured by Reliance or by the Dassault Reliance joint venture, and all 36 planes would be completely made in France and exported from there to India.

Besides, Anil had mandated that no component, worth even a single rupee, was to be manufactured by Reliance for these 36 Rafale jets. ‘The allegations relating to “lack of experience” are, thus, irrelevant,’ the embattled industrialist said. ‘There is no contract from the MoD to any Reliance Group company related to the 36 Rafale aircraft. Allegations of Reliance benefitting by thousands of crores is a figment of imagination,’ Anil said. ‘Our role is limited to offset exports/ export obligations.

Anil Ambani (left), Eric Trappier of Dassault (fifth from the left), with Maharastra chief minister Devendra Fadnavis and Union minister for transport and Nagpur MP Nitin Gadkari at the foundation laying ceremony for the Reliance-Dassault joint venture plant in Nagpur, 2016. Credit: Dassault

Anil Ambani (left), Eric Trappier of Dassault (fifth from the left), with Maharastra chief minister Devendra Fadnavis and Union minister for transport and Nagpur MP Nitin Gadkari at the foundation laying ceremony for the Reliance-Dassault joint venture plant in Nagpur, 2016. Credit: Dassault

More than 100 medium, small and micro enterprises (MSMEs) will participate in this, along with 142 Meltdown public sector undertakings like BEL and Defence Research & Development Organization (DRDO). This role strengthens Indian manufacturing capabilities, and is in pursuance of the Offsets Policy introduced by the Congress-led UPA Government itself from 2005,’ he said. Gandhi’s allegation that Reliance Defence was set up just 10 days before the 10 April 2015 announcement in Paris by both the Indian and French governments with the intention to purchase 36 French-manufactured Rafale jets linked factually incorrect information and was thus irrelevant and completely false, claimed Anil. ‘The Reliance Group announced its decision to enter the defence manufacturing sector in December 2014 and January 2015, months before the intention for purchase of Rafale aircraft. In February 2015, we informed the Indian Stock Exchanges of the companies we have incorporated,’ he said. The Modi-led government came to power on May 2014 and re-negotiated the Rafale $11 billion jet contract with France in 2015.

After scrapping the order for 126 jets, which the Rafale manufacturer had won in a decade-long global tender, Modi’s administration bought 36 jets off-the-shelf to speed up the process as Russian-made MiG fighters were phased out. At a press conference in New Delhi on 8 August 2018, veteran BJP leaders and former ministers, Yashwant Sinha, Arun Shourie and senior lawyer Prashant Bhushan charged Modi of ‘gross misuse of office’ in ‘personally orchestrating’ the purchase of the 36 Rafale jets. They said that the total price of 36 aircraft was about `60,000 crore, which worked out to be `1,660 crore per plane. ‘This is more than double the price of each aircraft among the original 126 Medium Multi-Role Combat Aircraft (MMRCA) and almost `1000 crore R.Comm: The Fastest Implosion 143 more per aircraft than the price furnished by the government itself to Parliament on November 18, 2016,’ they said in a joint press statement.

Though Dassault, Ambani and the Modi government denied any preferential treatment to Anil’s companies, the fate of Ambani’s defence business was sealed. While the Rafale project of Anil failed to take off due to controversy, its shipyard company also fell into a financial abyss. ‘There is an acute cash-flow crunch as the expected debt resolution is yet to be actualized,’ Reliance Naval’s CEO Debashis Bir said in the company’s annual report for the financial year ending March 2019. ‘This is impacting the progress of the existing projects leading to extended timelines and thereby leading to erosion of confidence amongst clients.’ The CEO blamed the policy changes brought in by the government, which had dried up shipbuilding contracts for private companies.

In January 2020, Reliance Naval announced that it had defaulted to bank loans worth `9,492 crore and was also sent to the NCLT for debt resolution under the bankruptcy law.


The year 2019 did not start well for Anil. Several financial companies like Edelweiss and L&T Finance, which had lent money to Anil Ambani’s personal entities, started selling his pledged shares in the market by early February—leading to the share prices of his group companies falling like nine pins.

‘A few NBFCs, substantially L&T Finance and certain entities of the Edelweiss group, have invoked pledge of listed shares of Reliance Group and made open market sales of the value of approximately `400 crore,’ the Reliance Group said.

‘The illegal, motivated and wholly unjustified action by the above two groups has precipitated a fall of `13,000 crore, an unprecedented nearly 55 per cent, in market capitalization of Reliance Group over just these four short days.’

Edelweiss and L&T Finance said that they had sold Anil Ambani’s companies shares as per the contracts, and it was completely legal. As several lenders started pressuring Ambani to repay loans, and with his group companies’ share prices falling, Anil had already started selling assets. He sold the electricity distribution business in Mumbai to the Adani Group for `18,800 crore in August 2018.

On 11 June 2019, Ambani announced that his group had repaid `35,000 crore of loans in 14 months by selling assets. He also promised to raise another `21,700 crore by selling road projects and radio stations in a bid to cut debt. Reliance Infrastructure said it would sell its nine road projects for `9,000 crore and Reliance Capital said it would raise `1,200 crore by selling the radio business. The financial services business decided to sell shares in the mutual funds and insurance business to raise `11,500 crore.

Excluding Reliance Communications, the four biggest group companies had about `93,900 crore of debt as on July 2019.

Despite Ambani’s efforts to save his other companies, the debt pile was too big to settle. In a court filing in London in February 2020 following a lawsuit by China Development Bank, Anil shocked the world by pleading poverty.

‘My net worth is zero after taking into account my liabilities. In summary, I do not hold any meaningful assets which can be liquidated for the purposes of these proceedings.’

One of India’s most aggressive former billionaires is down. But is he out?