Anil Ambani floated Reliance Defence 12 days before Modi announced Rafale deal

Anil Ambani floated his defence venture, Reliance Defence Limited, just 12 days before Prime Minister Narendra Modi visited France in April 2015, shows the record with the Ministry of Corporate Affairs. The ministry’s website also shows that Reliance Defence Limited was started with a paid-up capital of just five lakh Indian rupees.

On April 10, 2015, PM Modi announced a new deal with France-based Dassault Aviation Limited to supply 36 Rafale fighter jets to India. The French company subsequently entered into a joint venture with Anil Ambani’s company.

The announcement was made on the first day of PM Modi’s state visit to France on April 10, 2015.

Quoting a French Ministry source, Reuters had then reported that “the deal announced in 2015 was separate from the original negotiations.”

It is important to highlight that the authorised capital of the company floated by Anil Ambani was also Rs 5,00,000. It raises doubts over the intention of the promoter, said an analyst.

The authorized capital of a company is the maximum amount of share capital that the company is authorized to issue to shareholders.

It is rare and unusual for a company with such a low authorised capital to be allowed to sign a deal worth of thousands of crores, raising suspicion that rules were compromised and norms violated.

The Modi government first allowed a company with a Rs 5,00,000 authorized capital to sign a deal worth thousands of cores and later changed the clauses of the deal laid down by the previous UPA government to benefit one man, said an expert.

Congress President Rahul Gandhi had alleged that the private parent company( ADAG) which had a “debt of Rs 35,000 crore” “benefited to the tune of Rs 45,000 crore” by the Rafale deal.

Hitting out at Prime Minister Narendra Modi, Rahul had called him a “collaborator” in Rafale deal during the debate on the no-confidence motion on July 20.

“Modiji had said he wanted to be made the watchman guarding the country’s assets, but he is no watchman, he is a collaborator (in the loot),” Rahul had said during his speech.

Without naming anybody, the Congress president asked PM to explain to the country why a Rs 45,000-crore contract was taken away from the state-owned Hindustan Aeronautics Limited (HAL) and handed over to a “corporate friend” who had “never, ever built an airplane and had a debt of Rs 35,000 crore,” a cryptic reference to Anil Ambani.

Rahul had mentioned the “magic” by which the price of a Rafale aircraft had skyrocketed. He had said, “The price of a Rafale aircraft negotiated by the UPA was Rs 570 crore. Modiji goes to France and does magic to jack the price to Rs1,670 crore.”

Minor correction

This article was updated at 3.19 pm on July 31, 2018 to correct an inadvertant error in the headline. Anil Ambani floated Reliance Defence 12, and not 10, days before Modi announced Rafale deal