India media baron Subhash Chandra’s insolvency settlement sparks feud with Mukesh Ambani

Good morning. A final definitive report into last year’s Air India plane crash in Ahmedabad is expected to be released next month. The president of the Federation of Indian Pilots told my colleagues at the FT that the initial focus on the fuel switches, which moved to the off position soon after take-off, was misplaced. He said that other explanations, such as possible electrical problems, needed to be investigated. Family and friends of the 260 victims have now been waiting more than 14 months for answers about what happened during the 32 seconds that the flight was in the air.

In today’s newsletter, following a few tumultuous quarters, HDFC Bank chief Sashidhar Jagdishan has decided to step down. But first, Subhash Chandra takes on Mukesh Ambani. 

Subhash Chandra gets a big haircut

India’s insolvency tribunal has handed Essel Group chair Subhash Chandra a big reprieve: he can settle claims arising from personal guarantees on his group’s borrowings for just Rs65mn ($683,000) — a 99.9 per cent haircut on the Rs220bn his companies have defaulted on. The order has reignited scrutiny of India’s personal guarantee framework, which is meant to give lenders recourse beyond the borrowing entity but, on this evidence, offers little certainty of recovery. The tribunal took the view that a bankruptcy proceeding against Chandra would leave creditors with even less.

Ten banks and lenders backed the proposal. A handful of dissenters — HDFC Bank, LIC Housing Finance and Canara Bank among them — opposed it because they would recover so little of their money, but they represented less than 20 per cent of the vote share. Dissenting lenders also want Chandra’s declared net worth investigated further: certified figures put it at Rs406bn in 2018 and Rs459bn in 2017. This was the basis on which the guarantees were extended, but that figure fell to Rs320mn in 2024. In its order, the tribunal noted that Chandra’s estate “comprises very few assets with negligible value”. A higher tribunal will be hearing an urgent appeal by some of these dissenting lenders today.

Chandra, who was at one time a powerful and influential businessman with interests spanning India’s largest listed TV network, packaging, infrastructure, and direct-to-home television, also served in the Rajya Sabha, the upper house of India’s parliament, as an independent backed by Prime Minister Narendra Modi’s Bharatiya Janata Party.

But his fortunes unravelled rapidly after a 2018 marketwide liquidity crisis, which began with the collapse of infrastructure lender IL&FS, left his highly leveraged group unable to raise more money. Much of Essel’s debt was secured against pledged shares, and as share prices plummeted, margin calls forced further liquidation at depressed prices. Some group companies were eventually sold, while others entered insolvency proceedings. 

The ruling has also triggered an unusually public feud. Chandra released two videos accusing Network18, a media group owned by Mukesh Ambani’s Reliance Industries, of misrepresenting the size of the claims against him — he puts the personal guarantee claims at Rs39.9bn, not the headline Rs220bn, which he says relates to claims against the underlying corporate borrowers rather than him directly. Chandra went further in a second video, accusing Ambani of trying to acquire his media enterprise Zee on terms favourable to Chandra’s family but not minority shareholders, an offer he says was rejected on those grounds.

Reliance Industries has denied the allegations, telling stock exchanges it “noted with dismay the baseless remarks” and that its media brands “have never been used to attack anyone, nor will they ever be”.

Public spats of this kind are rare between big Indian business houses, most of which have their own glass houses to protect. Whatever the outcome, the case leaves questions hanging over the personal guarantee framework and no shortage of intrigue.

What do you think of Chandra’s settlement and his allegations? Hit reply or email me at [email protected]

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HDFC Bank will get a new leader

Sashidhar Jagdishan, chief executive of India’s largest private sector lender, HDFC Bank, has announced that he will step down when his term ends in October and will not seek an extension. The bank’s board of directors will fast-track the search for his successor and aim to appoint one well ahead of the deadline.

The past few months have been rocky for Jagdishan. The biggest blow came in March, when the bank’s part-time chair, Atanu Chakraborty, resigned, citing ethical concerns about the bank’s operations. But troubles had been brewing for a while. Last year, Dubai’s Financial Services Authority restricted an HDFC Bank branch from taking on new clients, citing procedural deficiencies related to the mis-selling of Credit Suisse AT1 bonds.

More recently, Jagdishan, the bank’s chief financial officer and another senior official were fined by the bank following an internal review of its deposit arrangements, which found that their conduct amounted to “business over-reach”. Last week, some US investors initiated a class-action lawsuit over the matter, alleging that the bank had made materially false or misleading statements and failed to disclose adverse information about its business, operations and prospects.

Jagdishan oversaw the 2023 merger of HDFC Bank with its parent company, mortgage giant Housing Development Finance Corporation. The merger was hailed at the time as a major strategic move — one of the largest in the history of corporate India — creating a financial services behemoth. But the high cost of funds raised by the mortgage business has since weighed on the bank’s finances.

Market confidence in the lender has also been eroding. The stock has shed 27 per cent so far this year. Jagdishan’s departure, however, had a positive impact on the shares when trading started on Monday, although it ended the session in the red.

India’s largest private bank needs a reset and a fresh start. A new leader might be just what the doctor ordered. Local media are already speculating about who could succeed Jagdishan, and the board is expected to announce a name soon. The Reserve Bank of India, which found no material concerns regarding HDFC’s conduct after Chakraborty’s resignation, will also get an opportunity to weigh in on the new leader.

Do you have any guesses on who will replace Jagdishan? Hit reply or email me at [email protected]

Go figure

India registered better than expected economic growth for the first quarter of this financial year, according to data released by the government on Monday. This is higher than what the Reserve Bank of India had projected and came despite rising inflation and the energy supply crisis on account of the war in the Middle East. Here is a snapshot.

Quick question

After 15 years at the helm, Tim Cook hands over the reins of Apple to his successor today. Do you think incoming chief executive John Ternus will bring back a culture of audacious tech innovation to the company? Tell us here.

Buzzer round

On Friday we asked: which tennis player, who completed the men’s career Grand Slam before turning 23, returns to Flushing Meadows this week after a four-month injury lay-off?

The answer is my current favourite, Carlos Alcaraz.

Aniruddha Dutta was first with the correct answer, followed by Rai Mahimapat Ray, Milan D Golla, Siddharth Mishra, Rohan Nagpal and Mahithi Pillay. Congratulations!

Thank you for reading. India Business Briefing was edited by Michael Stott today. Please send feedback, suggestions (and gossip) to [email protected].