Once worth at least $55 billion, India’s Anil Ambani has about a day to piece together $80 million to settle long-pending dues with a vendor or go to prison.
The tycoon’s heavily indebted telecom business had promised to pay the local unit of Ericsson AB about 5.5 billion rupees ($80 million) for past maintenance services. The repeated failure to comply and Ambani’s personal guarantee landed him in trouble last month, with the nation’s top court holding him in contempt. His companies suffered a setback last week after a lower court refused to free up tax refunds withheld by lenders.
If the payment isn’t resolved by end-Tuesday, Ambani, 59, risks a three-month jail term.
Ambani’s net worth has shrunk to about $300 million from at least $55 billion in 2008, according to data compiled by Bloomberg, as his telecom to power and infrastructure ventures struggle to deal with debt by selling assets and fending off creditors. The stunning fall is in stark contrast to the success of his elder brother Mukesh Ambani, who’s Asia’s richest man with a net worth of $52.9 billion, according to the Bloomberg Billionaires Index.
A spokesman for the Anil Ambani group didn’t respond to an email seeking comments on plans to pay the Ericsson dues.
Anil Ambani lost the vast majority of his wealth as his businesses strained to generate revenue as they battled price competition, regulatory bottlenecks and high debt that led to a cash squeeze.
In court arguments, the lawyer representing Ambani’s telecom carrier Reliance Communications Ltd., or RCom, said the group firms have no money to settle, unless lenders released 2.6 billion rupees of tax refunds — a proposal opposed by the banks. The National Company Law Appellate Tribunal, in a ruling March 15, said it can’t direct banks to release the amount.
The threat of a prison term to Ambani also came as a rare warning to some of India’s richest borrowers whose firms have turned defaulters. The nation’s policymakers and courts have been cracking down hard on delinquency to help banks saddled with the world’s worst bad-loan ratio.
The war on bad debt also allowed Ericsson’s local unit to leverage the nation’s new bankruptcy law to arm twist RCom on claimed dues of 16 billion rupees. The Swedish telecom equipment vendor started off with a bankruptcy petition and then played hardball to the point it extracted a personal guarantee from Ambani. That’s what eventually landed him a jail threat.
The Ambani brothers used to serve as executives at their father’s company. Following their father’s passing in 2002, the siblings got into a high-profile dispute over control of the sprawling conglomerate. In 2005, the two settled the feud by agreeing to carve up the empire into two. Anil Ambani got newer businesses such as telecom, power generation and financial services. Based on current foreign-exchange rate, his net worth would’ve been at least $31 billion in 2008.
As Mukesh Ambani’s oil and petrochemicals businesses flourished, he re-entered telecom with the creation of Reliance Jio Infocomm Ltd. The nationwide 4G network, which debuted with free services in 2016, disrupted the industry forcing rivals including RCom to bleed, merge or exit. The older sibling added $8.6 billion to his wealth this year alone.
(Except for the headline, this story has not been edited by NDTV staff and is published from a syndicated feed.)
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Anil Ambani Has A Day Left To Resolve $80 Million Dues To Avoid Jail – NDTV News