Mukesh Ambani and Anil Ambani divided their companies under the Reliance empire in 2005. Brothers continue to use the same Reliance brand. Reliance is known for malpractices as explained in books like Ambani & Sons and Polyester Prince by Hamish Macdonald, No Regrets by Dr. D.N. Ghosh (former Chairman, SBI), Feast of Vultures by Tony Joseph, Exposure by Auditor Gurumurthy, who is now in RBI Board, Gas Wars by Paranjoy Thakurta and many others.  

Now Anil Ambani declares his companies bankrupt and Mukesh Ambani buys them at throw away prices but banks lose a lot in the name of haircut blessed by National Company Law Tribunal.

Take one example of Reliance settlement. Though the Indian banks were not allowed to go to NCLT, a Chinese bank, Exim Bank of China, went to the NCLT against Reliance Communications. The lenders agreed for a resolution plan for Rs.23000 Cr against loan of Rs.49000 Cr. Now UV Asset Reconstruction Company has placed bids for Rs.14700 Cr for assets of R Com and Mukesh Ambani’s, Reliance Jio has made an offer of Rs. 4700 Cr for tower and fiber assets. Both are closely connected. Together they bought Alok Industries with 82% haircut. Earlier Reliance Jio had offered Rs.7300 Cr. Anil Ambani owes SBI 4800 Cr, BOB 2500 Cr, Syndicate Bank 1225 Cr, PNB-1127 Cr, China Dev Bank 4900 Cr, Exim Bank of China-3356 Cr and Standard Charted Bank Rs. 2100 Cr.

Anil Ambani’s Reliance has 6 major Companies. Reliance Power, Reliance Infra structure, Reliance Capital, Reliance Entertainment, Reliance Home Finance and Reliance Health. The subsidiaries of Reliance Infrastructure are 56, along with 8 associates and 2 joint ventures. The EPC division of the company bagged Rs.7000 Cr Versova-Bandra sea link project, Rs.3647 Cr Upper Thermal Power Project, Rs.1881 Cr NHH Project in Bihar & Jharkhand, Rs.1585 Cr Mumbai Metroline Project, Rs.1081 Cr Kudankulam Nuclear Power Project, etc. in 2018.

Reliance Power was given sole distributorship in suburbs of Mumbai in 2017 but sold it to Adani Power. It has 50 subsidiaries. It has many thermal gas based Power projects and renewable energy projects.

Reliance Capital has asset management, mutual funds, life insurance, general insurance, commercial finance, stock broking, wealth management etc. It claimed to have 20 million customers as on 1st May 2017. It also has a NBFC. There are many subsidiaries too.

Reliance Entertainment is into fitness, web series, TV, animation, digital and gaming. It has 25 subsidiaries.

Reliance Health owns Kokilaben Dhirubhai Ambani Hospital, Mumbai and Reliance Hospital, Navi Mumbai.

Reliance Media work has Big Cinemas, Big Synergy, Lowry Digital and Reliance Media works UK. Its ventures include Kaun Banega Crorepati, Indian Idol etc.

It also has external links with RMW Vimeo Showreel. Reliance group of Anil claimed assets of US$ 43.6 billion in 2016 and 750,000 employees in 2018.  His net worth is shown as US$1.78 billion (Rs.133.5 billion) as on April 2019. He was voted as best role model among business men by India Today in 2006, also best business man of the year by TOI. Now he has claimed his net worth as zero in a London law suit filed by Chinese banks.

The Company has acquired few companies abroad also. The Accounts of Anil Ambani had become stressed assets for long but came to the surface in 2017. The outstanding loans exceed Rs.1 lakh crore. In 2015, France waived € 143.7 million to a French registered telecom subsidy of Reliance communications. This was after the Raphael deal was initiated. Without any experience in aeronautics Reliance Defense became part of the Raphael deal which is forgotten now. With insolvency, will Anil complete the deal?

Lot many things require to be answered:

1. Why Banks did not declare the loans as NPA in time?

2. Why RBI closed its eyes?

3. What are the investments abroad by Anil Ambani and his family members?

4. Why Anil’s Companies are sold to Mukesh with huge haircut? Is it not a vested interest?

5. Is the division of Reliance empire into two done with an aim to loot the country?

6. What guarantee is there that Mukesh Ambani’s companies will not default? They are the biggest borrowers in the country.

The government has to answer! RBI has to answer! Banks have to answer. Journalists have to probe.  Are the brothers together looting the country’s finance?  What Mr. Gurumurthy, director RBI has to say?

Are the brothers having the last laugh at the cost of banks and people’s money?

Viruses will come and go but we cannot remain mute spectators to the day light robbery. Ghanti Bhajao!

Thomas Franco is former General Secretary of All India Bank Officers’ Confederation.

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S Vanmeekanathan
1 year ago

If the information is perused by our Finance Minister, she will take strict action and recover the loss incurred by the PSU Banks and will take action against those higherups of the Banks, RBI and concerned govt departments.
I thank Mr.Thomas Franco for his hard work in compiling the particulars and his concern for our country’s interest.

Thomas Chacko
1 year ago

When the whole ruling system of the country,is with the looters,viz.govt., the court,RBI,etc,etc.,which God will save us.

P. V. Ramanaiah
P. V. Ramanaiah
1 year ago

If this trend is allowed to continue what will happen to Indian economy. Respected Sri Gurumurthy reputed Charted Accountant should suggest some solution for these NPA s of all Big Industrialists.As a RBI board member he must be in a position to advice Govt of for necessary action.

Anil Kaul
Anil Kaul
1 year ago

It’s Reliance Energy not reliance power for power distribution in mumbai

NAGARAJAN R
NAGARAJAN R
2 months ago

FALSE PROPAGANDA – “Alok Industries obtained loans worth Rs 30,000 crores from different Banks. When it failed, the properties were taken in auction for Rs 5000 crores by Reliance Industries. Anil Ambani’s loans of 30000 crores taken over by Mukesh Ambani for 5000 crores, thereby cheating the Banks of Rs 25000 crores.”

TRUE STORY – Failure of Alok Industries, how, when, why and during whose rule at the Centre, the Company was sanctioned favours with thousands of crores of money.

 

This happened entirely during the governance of the great economist Prime Minister Manmohan Singh, with senior Lawyer cum economist as the FM and other eminent personalities in the Governemnt and the RBI.

Analysts’ reports –

1)  Inefficient expansion. Not only did the company over-invest, it also over-produced.

2) Large capex and high inventory maintained in anticipation of demand impacted the company.

3) The demand scenario in the textile industry keeps on changing very quickly so very few companies can address it efficiently.

4) Alok Industries’ choice of investments was also questionable. For instance, Alok Industries invested in the spinning business which already had excess capacity in India. This failed to generate commensurate revenues for the company.

5) The company failed to read the sector well.  

6) In the textile industry, companies need to have periods of consolidation and expand only once the existing capacity is well utilised. Alok Industries ignored this fact and expanded its capacity continuously.

7) As a result, Alok Industries failed to utilise its assets well. Its asset turnover ratio, which indicates the efficiency of deploying assets to generate revenue, remained way low and declined sharply over the last few years.

8) Diversification Gone Wrong. 

9) Alok Industries’ ambitions did not end with expanding capacity. The company also wanted to get into new business lines – some related, others unrelated.

10)                It aggressively expanded into the retail market in India through ‘H&A Stores’. It also forayed into the U.K. market with ‘Store Twenty One’. At its peak, in financial year 2011-12, the company had nearly 350 retail stores in India and 221 stores in the U.K.

11)                  The strategy did not pay off and the company had to close down all its stores in India. In the U.K., the company was planning to ‘exit this business at the earliest opportunity.’

12)                In 2007, the company also entered the real-estate business by acquiring commercial property in Lower Parel though its real estate subsidiary – Alok Infrastructure Ltd. This locked up large amounts of capital.

13)                ICICI Securities which dropped coverage on the stock in November 2013, had cautioned against the weight of subsidiary operations on the already stretched finances of the company.

14)                With tapering down revenue growth and lower margins, we now fear the company will begin to face profitability issues.

15)                 Also, its subsidiaries (real estate and retail) are facing losses, which will further weigh on the group. With lower revenue growth and pressure on the operating margin we remain fearful of the company’s ability to service debt. ICICI Securities On Alok Industries (2013)

16)                Debt Comes Home To Roost. The unbridled expansion led to a build-up of debt.

17)                 Between March 2007 and September 2013, the company saw its debt jump six times to Rs 20,230 crore.

18)                However, during the same time period, company’s cash flow from operations was much lower, putting its ability to repay in doubt.

19)                To add to company’s woes, interest rates started to rise. Between 2009 and 2011, the benchmark repo rate rose from 4.75 percent to 8.50 percent. The company’s own interest costs jumped to about 13 percent from 7.5 percent. This put pressure on the company’s ability to service debt.

20)              Over time, interest costs became the second largest expense for Alok Industries after raw materials.

Inevitably ALOK INDUSTRIES FAILED DUE TO MISMANAGEMENT.

Now, you draw your own conclusion.

Anyone with latest information on sale/settlement of Alok Industries through NCLT ruling may please update the post to its logical conclusion.