|THE DEN|
Peak net worth : $42billion
Current net worth : 0
What would you do if you had $42 billion ? Well, Anil Ambani lost it all ? Too much ambition and bad timing made Anil Ambani lose $42 billion dollars to bringing his net worth to zero.
The Mukesh-Anil feud
In the beginning, after the demise of Dhirubhai Ambani, the Ambani brothers stayed united calling themselves, “two bodies, one mind” and Mukesh stayed as the Chairman while Anil as the Managing Director but when you have billions of dollars lying around and two authoritarians, not everyone can manage them without a tussle.
Both the brothers started taking decisions without consulting the other. Anil announced a power project without informing Mukesh and Mukesh restructured the entities managing the family’s share in the company. The last straw was Mukesh passing resolution with the board of directors that the “Managing Director would henceforth be under the overall authority of the chairman. Quarrels became never-ending with the directors from a subsidiary run by Anil handled in their resignations as an act of solidarity. It reached a point where the then Finance Minister had to intervene between the brothers.
The Kokilaben step-in
Their mother, Kokilaben had enough by this point and decided to distribute the companies between the brothers. Of the diverse group, Anil received telecom, power generation, financial services and infrastructure business making Anil’s net worth at $4.5 billion. The division also brought in a non- compete clause forbidding one brother to enter the line of the other’s industries.
The Rise of Anil Ambani
The next few years, Anil Ambani did wonders in the economy. His wealth increased from $4.5 billion to $45 billion in 2007. His IPO for Reliance Power was fully subscribed in just 60 seconds.
He built Mumbai’s first metro line, invested in Steven Spielberg’s DreamWork pictures and expanded into various other sectors including two companies in defence, Reliance Defence Ltd. and Reliance Naval & Engineering Ltd
The Fall of Anil Ambani
Too much ambition and wrong timing with failed gambles contributed to the fall of Anil Ambani.
2008 Financial Crisis
With, 1.2 lakh crores invested in Reliance Power feeding to 13 projects of gas, coal and hydropower; the 2008 economic scenario did not favour the younger Ambani. With the government pressurising on lower electricity rates, he needed gas at affordable prices. Mukesh Ambani moved in to offer the same in lieu of waiver of non-compete. Taking a business minded decision, he agreed to the same.
Technological barrier of Reliance Communication
Anil Ambani had astronomical plans and hopes for Reliance Communication, but back in 2002, the company opted for CDMA ( Code Division Multiple Access) which had technology to support 2G and 3G but would be obsolete once 4G technology arrived. With the non-compete off the table, Mukesh Ambani was already working on his telecom project that is now known as Jio. Anil acquired GLT to develop the infrastructure which went bankrupt. To keep the company alive, he took debt. By 2016, the debt was unaffordable. In 2017, realising on time he decided to sell the business to Aircel and infrastructure to Brookfield. But, before the deal could go through, Aircel itself went bankrupt, in turn the Brookfield deal dependant on Aircel deal too fell through.
The last straw was Jio, which immediately led to loss of 8 lakh customers fromReliance Communication as soon as it launched.
Defence Bet & Rafael Scam
With two companies in the defence sector, Reliance Defence Ltd. and Reliance Naval & Engineering Ltd, Anil Ambani bought Pipavav Defense which already had a debt of Rs. 7.000 crores. Pipavav Defense soon went bankrupt and then came in the Rafael scam. Anil Ambani was sought to have gained the biggest chunk in Rs. 58,000 crore deal. At the same time, Anil Ambani’s company financed a French Film in which the former French President Hollande’s then-partner had acted in.
Exit Strategy
With Reliance Capital, Reliance Infrastructure, Reliance Power and Reliance Home Finance performing poorly, Reliance Capital was most affected by the 2008 financial crisis. Anil exited the mutual fund business by selling its entire stake in Reliance Nippon Life Asset Management Ltd for 6,000 crores reducing 33% of Reliance Capital’s debt but Anil’s other companies were also defaulting on loans.
The suits that followed
Anil Ambani VS Ericsson
In 2019, Anil Ambani lost a suit to Ericsson in which he had to pay Rs. 550 crores to Ericsson as a personal guarantee debt. Mukesh Ambani stepped in to help him at the last moment in order to avoid jail time. Mukesh entered in a deal with Anil where Reliance Communication would be sold to Jio which would bring alive the Brookfield deal too and Mukesh would get a pair of 99 year old leases of office buildings. But, the Telecom department asked Jio to take responsibility for RCom’s dues which again failed the deal. The deal would have fetched Anil Ambani Rs. 18,000 crores.
Anil Ambani VS Chinese Banks
Anil Ambani owed approximately $700 million to three Chinese banks, Industrial and Commercial Bank of China Ltd Mumbai Branch, China Development Bank, and Exim Bank of China. With proceedings in a UK court, he was asked to deposit $100 million into the court, Anil Ambani stated, “The current value of my shareholdings is down to approximately $82.4 million and my net worth is zero after taking into account my liabilities. In summary, I do not hold any meaningful assets which can be liquidated.”
Maybe an intelligent business play even at the end
Anil Ambani, once the sixth richest man in the world, proudly claims that his net worth is zero despite his lavish lifestyle consisting of a $3 million (Rs 21.4 crore) fleet of luxury cars, a luxury yacht named Tian now worth $56 million (Rs 400 crore) which he had gifted his wife, a Bombardier private jet, and the two floors of Seawind, the 17-storey property in Cuffe Parade, Mumbai, “that is thought to be wholly owned by the Ambani family, albeit via investment entities and/or shell companies.
Anil Ambani says he owns none of these assets and they are owned by the family members personally who are still billionaires. Legally, he has no money while he enjoys all the luxuries in life. This is a response that can only be set up the best business minds in the world. Anil Ambani gambled with a lot, it just that his cards were having a bad day and it was a bad time.
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