One of the biggest sibling rivalries in the corporate world has apparently come to end with Anil Ambani publicly thanking elder brother Mukesh and his wife Nita for throwing a lifeline at the last minute that saved him from going to jail in the Ericsson case. The nearly two-decades-long struggle for one-upmanship between the billionaire brothers started when their rags-to-riches father Dhirubhai Ambani died without leaving a will in 2002.
When India's biggest ever corporate satrap died, he left his gigantic company in the hands of his sons Mukesh and Anil, whose personalities were a study in contrast. A long saga of internal conflicts wracked the company for years, with bad blood between the brothers occasionally spilling out in the open. After years of pushing and shoving, which was worsened by the coteries of professional managers loyal to each of the Reliance scions, the matriarch, Kokilaben Ambani, stepped in and brokered a truce between them in 2005.
The formal division of the empire left both Mukesh and Anil evenly rich but their onward journey was destined to witness different tones of success and fortune. Mukesh got control of the flagship oil-refining and petrochemicals business, while Anil got the newer businesses such as power generation, financial services and telecom.
Quirks of destiny
In one of the quirks of destiny, while the wealth of Mukesh grew exponentially, Anil saw his riches dwindling over the years. His ranking in the international rich list suffered first and what we saw next was that he slipped horrendously in the India rich list as well.
Anil was still leading a charge in the new businesses of the Reliance empire but Mukesh saw future threats in his core business, with crude oil prices climbing, threatening to erode refiners' margins. He waited for the end of a non-compete clause with the brother, which had kept him out of the telecom arena. When the agreement was scrapped in 2010, Mukesh quickly returned, pumping in more than $34 billion over the next seven years to build a speedier 4G wireless network for his Reliance Jio Infocomm Ltd.
And thus, finally, the killer blow to Anil's business empire came from Mukesh himself. The elder Ambani's re-entry into the telecommunications business with Reliance Jio Infocomm served a grim notice not just to Anil's Reliance Communications, but a lot of other competitors as well. His nationwide 4G network, which debuted with free services in 2016, disrupted the business, forcing rivals including RCom to bleed, merge or exit the industry.
"It was a very, very big bet," said James Crabtree, a professor at the Lee Kuan Yew School of Public Policy in Singapore. Jio also gave Mukesh the chance to forge his own legacy beyond the shadow of the businesses he had inherited. "Jio in that sense was an all-in bet," he added.
Like his elder brother, Anil had also invested billions to expand his portfolio, but the younger brother didn't have a cash cow like the oil refinery to finance growth. Instead, like other businesses in India and elsewhere, many of his firms increased debt. The Jio onslaught was the proverbial last straw on the camel's back. The already indebted Anil had to seek ways to shed assets in order to service debts and pay them off eventually. Under pressure from lenders, Anil broached selling RCom assets to quell investor concerns and deal with a sinking stock. The shares of Reliance Naval & Engineering Ltd saw the worst decline last year, losing 75 percent. Bought in 2015 as part of his bet on defence as the next engine of growth, the warship and submarine maker has proven hard to turn around.
First signs of a thaw in sibling rivalry
Another of Anil's defence firms also came under scrutiny over the 2016 negotiations between France and India for the $8.7 billion deal for Rafale warplanes from France. In a statement on August 20, Anil and his firm denied allegations from opposition lawmakers that the Rafale deal unfairly benefited his firm, saying the lawmakers had been "misinformed, misdirected and misled by malicious vested interests and corporate rivals."
Amid all this crisis, the first signs of a thaw in the sibling rivalry emerged when Mukesh agreed to buy the wireless assets of RCom for a whopping Rs 18000 crore, a deal that would help Anil lighten his debt load and stay in the business. However, it was not meant to be a fairytale ending for Anil Ambani. The wireless asset deal went into a tailspin after the DoT insisted it that its liabilities would be passed off onto the buyer, who would have to pay off the creditors and associates.
Meanwhile, Swedish telecom equipment maker Ericsson was tightening the noose around the neck of the fallen business magnate. Back in 2017, Ericsson moved a bankruptcy court alleging it had not been paid dues of around Rs 1,600 crore after signing a deal in 2013 to operate, maintain and manage the telco's nationwide network. It extracted a personal guarantee from Ambani to pay the dues.
Ericsson later earned a verdict from the Supreme Court that signalled immediate crisis for cash-strapped Anil Ambani. The court ordered Anil and two RCom directors to clear Ericsson's dues worth Rs 4.5 billion within four weeks or face a three-month jail term for contempt of court. The last date of making the payment was March 19.
With the wireless sale deal stalled, Anil frantically sought other ways to pay off the debt and escape impending jail term. But he suffered another blow when National Company Law Appellate Tribunal (NCLAT) refused to free up to Rs 260 crore tax refunds withheld by lenders saying it did not have jurisdiction to do so. Banks had opposed the release of the tax refunds. Anil was now looking down the barrel.
However, a day before the expiry of the apex court's deadline, RCom said it paid a whopping Rs 458.77 crore to Ericsson, clearing outstanding dues. The money came from Mukesh. A long-standing rivalry apparently ended with the victor bailing out the one who fell.
Anil then profusely thanked Mukesh, his brother and Asia's richest man, and his wife Nita, for extending timely support. "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," Anil said in a statement issued by Reliance Communications. "I and my family are grateful we have moved beyond the past, and are deeply grateful and touched with this gesture."