The truth of the proverb "blood is thicket than water" couldn't have been better established than in the Ambani family episode, where elder sibling Mukesh and his wife Nita came to the aid of beleaguered younger brother Anil. The remaining Rs 458.77 crores was paid to Swedish telecom giant Ericsson just before the Supreme Court's deadline in a contempt suit was to expire. This surprising turn in relations between the two brothers and their wives comes in a fascinating tale of intrigue and extreme sibling rivalry in business after their father Dhirubai Ambani died intestate in 2002. The rescue helps uphold the image of Indian business in settling the debt to a foreign service and network management provider even as it removed the threat of jail for Anil Ambani.
The background details of how the deal was struck in the family of India's richest man with a brother facing bankruptcy proceedings in his telecom business may be sketchy. It's quite possible that the sentiments of an elderly mother on the importance of protecting the family name may have prevailed as she was the one who always prayed for rapprochement. Of course, the issue of RCom's corprorate debt has wider ramifications in this case as the younger brother, avowedly not the most successful businessman, is also a key figure in the Rafale fighter jet deal, where his company is an offset partner of France's Dassault. The bailout from the elder Ambani's own funds, as distinct from those of Reliance Industries, may send a strong signal. An Ambani facing the worst challenges could still expect to get a helping hand, which may ease some concerns felt in banking circles on NPAs and the size of debts that Indian telecom juggles with in running mass-based and massive businesses.
The vicissitudes of competitive business couldn't have been more glaring than in two brothers' case. The elder became a petrochemical billionaire several times over and came late into telecom, in a game-changing way long after an original no-compete deal till 2015-end was scrapped in 2010 itself when their mother tried to reunite the brothers. They then signed a simpler deal under which Anil wouldn't enter petrochemicals till 2022.
What is significant is a modicum of corporate responsibility has been upheld in the telecom sector which, hunting blindly for subscriber numbers, had totally lost sight of the annualised premiums that come out of each mobile and data connection. It was in chasing success of this kind, rather than the bottomline, that led to such bleeding, suggesting only those with the deepest pockets could survive, as Jio may be proving now. The government must be relieved as another major storm over debts has blown over, for now at least. The single biggest lesson is that industry and businesses must be smarter to remain relevant, competitive and profitable in a high interest rate regime in the Indian economy.
