MEDI-CAPS UNIVERSITY

INDORE

LIVE PROJECT REPORT-II /

(CONTEMPRORY ISSUES IN MANAGEMENT-II)
ON

“ BANKRUPT RELIANCE
COMMUNICATION ”

Submitted as Partial Fulfillment for

Degree of Master of Business Administration
to Medi-Caps University, Indore
2019

GUIDED BY – SUBMITTED BY –
Prof. Bhavana Bhagerwal Sneh Sharma
Viny Jain
Vidit Jain
Vibhuti Soni
Utkarsh Jain
Sonali Ishi
 INDEX

S. no. Particulars Page no.

Preface
Certificate by the Supervisor
Declaration by the Student
Acknowledgement
1. Introduction
1.1 Overview of the Topic
1.2 Rationale of the study
1.3 Objectives of Study
2. Review of literature
(Published related literature about the Title)
3. Research Methodology

Data Analysis and Interpretation

4. Suggestions and Conclusion

5. Limitations of the study

6. Implications / Scope of Study

7 References
8 Appendix (tables, graphs etc.)
INTRODUCTION
Reliance Communications (stylised as RCOM) is a telecommunications service provider in
India. Global Cloud Xchange is a wholly owned international subsidiary of Reliance
Communications. In February 2019, the company filed for bankruptcy as it was unable to sell
assets to repay its debt. It has an estimated debt of ₹42,000 crore against assets worth ₹18,000
crore.
Reliance Communications is also one of the largest IDC service providers with data centers in
four cities, with a total capacity of more than 1,100,000 square feet, that is, approximately
102,193 square metres .
Reliance communication has more than 20 million customers and serves individual consumers,
enterprises, and carriers, providing wireless, wireline, long distance, voice, data and internet
communications services through a number of operating subsidiaries. The company sells
communications and digital entertainment products and services through its chain of reliance
web world retail outlets.
The current network expansion undertaken by reliance is the largest wireless network expansion
undertaken by any operator across the world. It was with this belief in mind that reliance
communications started laying 60,000 route kilometers of a india fibre optic backbone. This
backbone was commissioned on 28 December 2002, the auspicious occasion of Dhirubhai’s 70 th
birthday , though sadly after his unexpected demise on 6 July 2002. Reliance communication has
a reliable, high-capacity, integrated (both wireless and wireline) and convergent (voice, data,
video) digital network.

History

Reliance Communications was founded in India in 2002 as Reliance Infocomm with the
introduction of its nationwide CDMA2000 service. The company introduced its GSM service in
2008. It began using MIMO technology in 2011 to improve the quality of its 3G service,
providing a data rate of up to 28 Mbit/s . In the 2010 spectrum auction, Reliance obtained
licenses for 3G spectrum in three cities at a total licensing fee of ₹58,642.9 million. The
company reduced the price of its 3G service by 61 percent in May 2012.
Reliance and Lenovo introduced their co-branded Android smartphones in India in 2013.

Acquisition of MTS india

On 14 January 2016, Reliance Communications announced that it had acquired Sistema Shyam
TeleServices Limited (SSTL, operating as MTS India) in an all-stock deal. SSTL received a 10
per cent stake in Reliance Communications after repaying its existing debt.
India's anti-trust regulator, the Competition Commission of India (CCI) approved the merger in
February 2016.[12] The Securities and Exchange Board of India (SEBI) also cleared the deal.
SSTL shareholders approved the merger on 18 March 2016. By mid-August, it was approved by
tax authorities and the shareholders and creditors of Reliance and SSTL. The merger was
approved by the Rajasthan High Court on 30 September 2016 and the Bombay High Court on 7
October 2016. In April 2017, Reliance laid off 600 employees in preparation for its mergers with
MTS and Aircel. The Department of Telecommunications gave the final approval for the
merger on 20 October 2017. On 31 October 2017, Reliance Communications announced that the
merger was complete.

Attempted merger with aircel

The company announced on 15 March 2017 that it had received approval from the SEBI, BSE,
and NSE. The deal was approved by the CCI on 20 March. Aircel and Reliance shareholders
approved the merger on 22 and 24 April 2017, respectively, and it was expected to be completed
by mid-2017.

However, on 1 October Reliance announced that it had allowed the merger agreement to
lapse.[31] The deal, which was expected to help the company repay ₹25,000 crore of debt, was
cancelled due to delays by entrenched competition. Reliance was looking at other options to
meet their obligations under the SDR agreement and avoid insolvency proceedings by banks. On
29 December 2017, Reliance discontinued voice services in India and would provide only 4G
data service.

Type Public

Traded as  NSE: RCOM

 BSE: 532712
Industry Telecommunication

Founded 27 December 2002; 16 years ago

Founder Anil Ambani

Headquarters DAKC, Kopar Khairane,

Navi Mumbai, Maharashtra
, India
 Key people  Anil Ambani (Chairman)
 Bill Barney (CEO)
Services  Business Internet
 Network Services
 Cloud Networking
 Data Center Services
 Enterprise Voice
 Cloud Telephony
 Collaboration Services
 Wholesale Voice
 Value Added Services (VAS)
Revenue Rs 4,684 crore [1] (2018)

Owners Reliance ADAG (90%), SSTL

(10%)

Members 22,138[2] (as of December 2018)

Number of employees 3,000 approximately [1] (2018)

Subsidiaries  Global Cloud Xchange

Website www.rcom.co.in

OVERVIEW:

India’s Reliance Communications Ltd (RCom) on Friday said it will seek fast track resolution
through National Company Law Tribunal, the court that deals with bankruptcy cases, to resolve
its debt position.

The company said lenders had not received any proceeds from its asset monetization plans, and
that its overall debt resolution process had not made any progress.

Over twelve months, talks with forty lenders to reach a consensus has been impossible and has
driven them to the bankruptcy court, the debt-laden telecom company said.

RCom, controlled by businessman Anil Ambani, owed banks $7 billion as of March 2017 when
it last made public its debt level, and more to vendors. The company has struggled under heavy
debt and reported a string of losses during a price war, triggered by the market entry of Reliance
Industries’ telecoms venture Jio Infocomm, owned by Mukesh Ambani - Asia’s richest person
and Anil Ambani’s older brother.
The cut-price competition had prompted RCom to reduce operations by shutting down its
wireless business.

MISSION :

 To attain global best practices and become a world class communication service
provider guided by its purpose to move towards greater degree of sophistication
and maturity.

 To encourage ideas , talents and value systems.

 To be a technology driven, efficient and financially sound organization.

 To contribute towards community development and nation building.

 To consistently achieve high growth with the highest levels of productivity.

VISION :

“ We will leverage our strengths to execute complex global-scale projects to facilitate

leadingedge information and communication services affordable to all individual consumers and
businesses in india. We will offer unparalleled value to create customer delight and enhance
business productivity. We will also generate value for our capabilities beyond Indian borders and
enable millions of india’s knowledge workers to deliver their services globally.”
 VALUES :

 We will put customer first at all times, and built long term relationship with them.

 We shall believe interpretation and keep every commitment that we make.

 We will operate with honesty and integrity interpretation all our dealings.

 We treat every individual with dignity and respect.

 We will approach every endeavor with zeal & an attitude towards excellence.

ORGANIZATIONAL STRUCTURE:
RATIONAL OF THE STUDY:

RCom, controlled by Anil Ambani, also said on Friday that its lenders had not received any
proceeds from asset monetization plans, and that its overall debt resolution process had not made
any progress.

A cut-throat competition in India's telecoms industry since the entry of Reliance Jio, owned by
Anil Ambani's elder brother Mukesh Ambani, had forced RCom to shut down its wireless
business. It owed banks $7 billion as of March 2017 when it last made public its debt level, and
more to vendors.

The stock plunged as much as 54.3 per cent to Rs 5.3 apiece on Monday in Mumbai trading. It
has shed 19.4 per cent so far this year as of Friday's close. More than 120 million shares of
RCom changed hands in less than 45 minutes of trade compared to its 30-day average of 63
million shares.

The stock closed Monday's session at Rs 7.55, down Rs 4.05 (-34.91%) on the BSE.

Sectoral stresses such as price wars, heavy debt and plunging profitability that crippled India's
telecom sector also took their toll on RCom.

In May 2018, the NCLT had admitted three insolvency petitions against RCom filed by Swedish
gear maker Ericsson, which was seeking a payment of over Rs1,100 crore in dues. The
insolvency tribunal named three separate IRPs from RBSA Restructuring Advisors LLP to run
RCom and its two units, RTL and Reliance Infratel, as part of the bankruptcy proceedings.

But RCom has still not paid Ericsson, triggering contempt of court petitions in the Supreme
Court against the telco’s chairman Anil Ambani, with the spectrum sale to Jio having been
rejected by the Department of Telecommunications (DoT). The government said the deal to trade
airwaves does not conform to its guidelines after Jio wrote to DoT refusing to be held liable for
any of RCom’s past dues.

Ever since the split, Anil's fortunes have gone down. In 2007, Anil had a net worth of $45
billion, according to the Forbes Rich List. His biggest asset was a 66% stake in telecom venture
Reliance Communications. Elder brother Mukesh had a net worth of $49 billion. In the 2018
Forbes India Rich List, Mukesh topped at $47.3 billion while Anil ranked 66th at $2.44 billion.

The group companies too reflected this trend. The 10-year compounded annual growth rates
(CAGRs) of Mukesh's Reliance industries since the split have been 11.2 (sales), 9.4% (profit)
and 17.8% (returns), according to a Bloomberg report. The same rates for Anil's Reliance Group
have been 9.4%, -12.6% and -1.7%.

The market capitalisation of Anil Ambani’s companies has dwindled to less than $4 billion,
while Mukesh Ambani’s Reliance Industries stands at $98.7 billion

NSE

Shares of Reliance CommunicationsNSE -3.92 % fell 8.1% on Monday after Axis Trustee
Services, a wholly- owned subsidiary of Axis BankNSE -0.61 %, said Anil Ambani’s Reliance
Group pledged more shares of the telecom company with it.
The Reliance Group — which had accused L&T Finance and Edelweiss Group of invoking
pledged shares of its companies earlier this month, causing a sharp value erosion in their shares
— further pledged 8.15 crore shares, or a 2.95% stake, in RCom with Axis Trustee, according to
a regulatory filing. Previously the group had pledged 17.25 crore, or 6.24%, of the company’s
shares with Axis Trustee. It pledged extra shares to make up for the fall in the value of shares
given as security against loans.
BSE

All Reliance Group companies except for Reliance Nippon Life are trading 15-58% lower since
February 1. While Reliance PowerNSE -3.36 % shares declined 58% since the beginning of the
month, Reliance InfrastructureNSE -1.10 % and RCom have both lost 50%. On Monday, shares
of RCom closed at ₹6.01 on the Bombay Stock Exchange.