Anil Ambani suffers another setback

He was ranked the sixth richest person in the world in 2008, but a series of setbacks — the latest being the Supreme Court's setting aside of a Rs 8,000 crore arbitral award granted in favour of a firm in his group — have caused a distinct reversal in the fortunes of Anil Ambani.

A Wharton MBA, Ambani (64), younger son of legendary business tycoon Dhirubhai Ambani, was known as much for his flamboyant nature — he married Bollywood actress Tina Munim and was a Rajya Sabha MP for two years — as for his business acumen. But over the past few years, multiple setbacks across businesses have pushed him out of the billionaires list.

The Supreme Court on Wednesday set aside a Rs 8,000 crore arbitral award granted in favour of Delhi Airport Metro Express Pvt (DAMEPL). The award was in relation to a dispute arising out of a "concession agreement" entered into between DAMEPL (a subsidiary of Ambani's Reliance Infrastructure) and Delhi Metro Rail Corp in 2008.

The court asked DAMEPL to refund all sums previously paid by Delhi Metro Rail in accordance with the arbitral award. DMRC had paid Rs 3,300 crore to the Reliance Infra arm, which now needs to be refunded.

In a stock exchange filing, Reliance Infrastructure Ltd stated that no liability has been imposed on it by the Supreme Court order. "Reliance Infrastructure wishes to clarify that the Order dated April 10, 2024, passed by the Supreme Court does not impose any liability on the company and the company has not received any money from DMRC/DAMEPL under the arbitral award," it said.

While DAMEPL is a subsidiary of Reliance Infrastructure, it is a separate entity and the liability accrues to it.

After Dhirubhai suffered a stroke in 1986, Anil took on the day-to-day management of Reliance's financial relationships under his father's supervision. He and older brother Mukesh assumed joint leadership of the Reliance companies after their father's death in 2002.

But a feud over control broke out soon after, leading to a split — Mukesh got control of the flagship oil and petrochemicals, while Anil gained control of newer businesses such as telecommunications, power generation, and financial services through a 2005 demerger.

The brothers, who had diverging fortunes thereafter, did not stop feuding however. They fought over supply of gas from fields operated by Mukesh's company to the power plant of Anil's group. The older Ambani eventually won his case in the Supreme Court, which said a family pact could not override government allocation policy.

Anil borrowed money to fuel an expansion into infrastructure, defence and entertainment. In 2009, Allahabad High Court quashed a land acquisition deal for a proposed mega gas-based power project at Dadri in Uttar Pradesh by his group.

A non-compete clause between the brothers had kept Mukesh out of telecom, but that was scrapped in 2010. Mukesh acted quickly, pumping in more than Rs 2.5 lakh crore over the next seven years to build a speedier 4G wireless network, which drove out competition, including Anil's Reliance Communications (RCom).

Anil's venture into the entertainment business with a USD 1.2 billion deal with Adlabs in 2005 and DreamWorks in 2008 did not work either. In 2014, his power and infrastructure companies plunged into huge debt. Anil sold assets to quell investor concerns around the indebtedness of some of his companies, including companies like Big Cinema, Reliance Big Broadcasting, and Big Magic. RCom, which ushered in a telecom revolution in the country, was sent to insolvency proceedings to repay debt.

His bets on defence manufacturing failed too. In 2019, the Supreme Court threatened Anil with prison after RCom failed to pay Rs 550 crore to Ericsson AB's Indian unit. The court gave him a month to find the funds, and Mukesh bailed him out at the last moment by pitching in with the amount required.

In 2019, three Chinese banks dragged Anil to a London court over a USD 680 million loan default. Industrial & Commercial Bank of China Ltd, China Development Bank and the Export-Import Bank of China had in 2012 agreed to loan USD 925 million to RCom on a personal guarantee. RCom defaulted, and the three banks sued Anil, who said he agreed to give a non-binding "personal comfort letter" but never a guarantee tied to his personal assets. The matter is still in court.

Reliance Capital filed for bankruptcy in 2021 after defaulting on bonds worth Rs 24,000 crore. Reliance Infrastructure Ltd, which built Mumbai's first metro line, missed a bond payment as it waited for proceeds from the sale of power transmission assets to Gautam Adani's unit to cover the amount.