This could be the worst year of 60-year-old Anil Ambani’s life. Within two months of Reliance Communications heading to bankruptcy, yet another company Reliance Marine was today admitted for insolvency proceedings, as per an ET report.
The group’s telecom venture, Reliance Communications went bankrupt in May with massive unpaid dues of around ₹46,000 crore.
Reliance Marine and Offshore is a subsidiary of Reliance Naval, whose shares are trading at a mere ₹1.22. The debt of Reliance Naval is a 100 times that of the company’s market value of ₹90 crore today (August 22).
Reliance Naval’s subsidiary Reliance Marine has debt of around ₹1,000 crore and the lenders include government firms like NBFC and IFCI, who filed the bankruptcy petition as early as 2017, which has been accepted today.
A company spokesperson has not responded to Business Insider’s queries on the development.
Anil Ambani had bought over Pipavav Defence, a struggling company in 2015 and renamed it Reliance Naval, hoping to bag defence engineering contracts from the government. And he did. The company had contracts worth ₹2,500 crore from the Indian Navy, but as the deadline was overshot by 4 years, it decided to encash the bank guarantees that RNaval gave.
Crisis of confidence
A second group company going bankrupt will add to crisis of confidence in connection with Anil Ambani.
Auditors have been pointing out discrepancies in the financials of his companies, or even quitting his companies. In June, PriceWaterHouseCoopers has quit as the auditing firm of Reliance Capital and Reliance Home Finance saying that it “ impaired its independence”. Recently, Reliance Capital’s board gave a clean chit to the management over the allegations.
Added to that, yet another of its company Reliance Infrastructure’s auditors Pathak HD& Associates who pointed out that there was money missing fromtheir balance sheet, and that the audit was hence incomplete.
Lack of confidence has hurt the share prices of all the group companies, and in turn, the small investors who hold the stock.—Business Insider