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RCOM woes worsen. Anil Ambani held guilty by the top court

Equity Right Reliance Communications

Reliance communication Chairman, Mr. Anil Ambani was held guilty by the supreme court on 19th February, 2019 for not clearing the dues of ₹550 crores. Anil Ambani will be sent to jail for 3 months if he fails to make the payment of ₹453 crore to Ericsscon India within 4 weeks. Supreme Court has also imposed charges on the Directors of Reliance Group – Reliance Telecom Chairman Satish Seth and Reliance Infratel Chairperson Chhaya Virani a penalty ₹I crore each. If they fail to pay the fine, 1 month of jail will be imposed on them. In addition to this, the amount of ₹118 crore already deposited by Reliance Group with the Supreme Court for registry, will be discharged to Ericsson.

HISTORY

Ericsson India Private Limited (Ericsson) is a Swedish based telecommunication and networking company. In the year 2013, it entered into agreements for providing various technical services to 3 Reliance companies. These were, Reliance Infratel Limited (RILT), Reliance Telecom Limited (RTL) and Reliance Communications Limited (RCom). On 15th May, 2018 Ericsson filed its first petition against RCom for an outstanding amount of ₹I,000 crore approximately. Mr. Ambani gave a personal guarantee for the repayment of the due and tried to merge with Aircel for the same, which didn’t work out. As a result, the first deadline of 30th September, 2018 was missed. The supreme court hence extended the deadline till 15th December, 2018 which was also missed.

EFFORTS OF RELIANCE LIMITED

Reliance was hoping to sell its spectrum to Reliance Jio, but it was rejected by the Department of Telecommunication (DoT). This was their only hope to make the payments to Ericsson and other creditors. However, due to the failure, Ericsson decided to file a second petition against RCom. Subsequently, the second petition was filed on 20th December, 2018.

FAILURE OF RELIANCE LIMITED

On 13th February, 2019 Ericsson argued that the Reliance Group had the money to invest in the Rafale jet deal but they were unable to clear the outstanding dues. Due to the failure of the deal with Mukesh Ambani, RCom had become insolvent and had no control over the funds. As a result of which, they were not in a position to settle their dues.
There has been a constant fall in the shares on Reliance. As on 20th February, 2019 the shares in NSE fell by 6.67% and by 7.14% in BSE at 2:23 pm. Reliance Infrastructure also went down by 5.03%. Reliance Communication is currently trading at ₹5.60 and Reliance Infrastructure at ₹117.10.

 

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