Mukesh Ambani is gaining popularity because of his business’ stellar performance. Similarly, Anil Ambani is also in the limelight but for a different reason. Anil Ambani’s net worth became zero in February 2020, is now bankrupt. He was once on the list of rich people across the world.
Anil Ambani is the owner of the Reliance ADA group, formed after the demerger of Reliance Industries Limited. To carry forward the legacy of Dhirubhai Ambani, both sons (Mukesh and Anil Ambani) expanded the business to include textile, telecommunication, petroleum, power, e-commerce, etc.
Early Life
Anil Ambani was born in 1959 in Mumbai, Maharashtra. He is the son of Dhirubhai Ambani, the founder of Reliance Industries Limited, and Kokilaben Ambani. He is the younger brother of Mukesh Ambani.
Anil Ambani grew up in a two-bedroom apartment in Bhuleshwar. Later his family shifted to a 14-floor apartment in Colaba.
He completed his Bachelor of Science degree from Kishinchand Chellaram College under Mumbai University. Later, he did his Masters in Business Administration from Wharton School of the University of Pennsylvania in 1983.
Career
Dhirubhai Ambani died in 2002 without leaving any succession plan. Later, Kokilaben Ambani split the family-owned business between the two brothers.
Anil Ambani owns telecom, financial services, entertainment, power, and infrastructure of the Reliance Group. Reliance Power is one of the largest IPOs. It got subscribed in less than 60 seconds.
In 2005, Anil Ambani acquired Adlabs Films and entered the entertainment industry. The company focuses on production, film processing, digital cinema and exhibition. In 2009, he renamed the company Reliance MediaWorks. In 2008, he entered into a joint venture contract of $1.2 billion with Steven Spielberg production, making his business global.
But after the formation of the Reliance ADA group, headed by Anil Ambani, the market cap declined by 90%. Anil Ambani was known as the fastest destroyer of shareholders wealth.
In 2019, a court in Mumbai held Anil in criminal contempt for non-payment of personally guaranteed debt Reliance Communications owed to Ericsson, a Swedish company. Mukesh Ambani came to the rescue and bailed him.
Later, in 2020, he was locked up in battles with three Chinese banks. He had to set aside $100 million, due to which the UK court declared that Anil Ambani’s net worth is zero after considering all the liabilities.
Recently in 2021, Anil Ambani’s name was in the Pandora papers. Pandora Papers disclosed secret offshore accounts of world leaders, billionaires, and celebrities. Approximately $32 billion falls under money laundering or black money. In Defense, Anil Ambani said that Reliance conducts business globally. He established various offshore companies to fulfil legitimate business and regulatory requirements.
Anil Ambani’s net worth from $42 billion to zero
Earlier, Anil Ambani was the sixth richest man with a net worth of $42 billion. But in February 2020, the UK court declared that his net worth has trimmed to zero.
The court was hearing claims from three Chinese banks – China Development Bank, Exim Bank of China, and Industrial and Commercial Bank of China Ltd Mumbai Branch. Anil Ambani owes $680 million to these banks in dues after breaching a personal guarantee on a refinancing loan of $925 million.
The younger Ambani had investments worth $7 billion in 2012, now $89 million, and his net worth is zero after considering his liabilities. A feud broke out between the brothers to take control of the business after their father’s death. Anil Ambani got the best assets- new-age telecom, financial services, energy and infra. On the other hand, oil & gas, refining, petrochemical and manufacturing assets went to Mukesh Ambani.
Mukesh Ambani has become the richest man in Asia, but the younger one becomes a case study regarding- how to lose a billion-dollar empire.
Anil Ambani wanted ADA group businesses to grow at a quick pace. The debt-fueled ambition to do everything at once, lawsuits and mismanagement of companies led to the failure.
Anil Ambani’s Assets
Reliance Power
Reliance Power Limited, previously known as Reliance Energy Generation Limited, is the sole generator of power in the Mumbai suburbs. But in 2017, Ambani sold the operations to Adani power. It also provides services such as natural gas exploration, transportation and distribution.
Reliance Power was founded in 1995. It merged with Reliance Natural Resources in 2021.
There are 50 subsidiaries. It is developing 13 medium and small-sized projects. The key persons are Anil Ambani, the chairman, and Raja Gopal Krotthapalli, the CEO. R-Power has the 9th rank in the ‘Power sector’ category and 176th largest corporation in India.
In September 2021, the net sales amounted to ₹ 1847.24 crores, down by 24.58% YoY. There was a net loss of 146.42% on a sequential basis. EBIDTA stood at ₹ 835.42 crores, down by 30.42%.
Reliance Power has given 393.33% returns over the past 12 months.
Reliance Power issued IPO in 2008. The 11,000 crores initial offering received a euphoric response from the investors and 7 lakh crore bids on the first day of subscription. But billions of dollars were wiped off on the day of listing. The stock went down by 14% on the last day from the IPO price.
DBS Bank and IDBI Bank have a loan exposure of ₹42 crores and ₹113 crores, respectively. R-Power defaulted on payment of interest worth ₹1.17 crores and ₹44 lakh to DBS and IDBI Bank. The total outstanding borrowings are ₹1,194 crores. Total financial indebtedness, including short-term and long-term debt, stood at ₹1,440 crores.
Also, ICRA gave a ‘D’ rating to the long- and short-term loans of R-Power.
Reliance Communication
Reliance Communication Limited is different from Reliance Jio.
It was a mobile network provider offering 2G and 3G solutions which was founded in 2004 by Anil Ambani.
They offered mobile telephony, wireless internet, digital television, cloud networking, and enterprise voice services.
Later, in 2019, the company was declared bankrupt because of its inability to pay off its dues and sell assets. It had an estimated debt of ₹50,000 crores against ₹18,000 crores assets.
In 2020, the company reframed its strategies. Now it operates as a 4G data provider. It also offers fixed-line communications, enterprise solutions, data centre services, and subsea cable networks under ‘Global Cloud Xchange’.
The net sales decreased by 36.72% on a YoY basis. The company has a quarterly net loss of ₹1372 crores, up by 13.95% on a QoQ basis.
The EBIDTA is negative 24 crores, but up by 41.46% from September 2020. Reliance Comm has given 14.58% returns over the last six months and 77.42% in one year.
Reliance Communications continues to incur losses, and current liabilities exceed current assets. It has also has defaulted in repayment of borrowings, payment of regulatory and statutory dues and pending renewal of telecom licenses. These events indicate material uncertainty and the company’s inability to continue as a going concern.
Reliance Capital
Reliance Capital Limited is a holding company of ADA group. It provides financial services such as mutual funds, life and general insurance, stockbroking, private equity, wealth management, and commercial finance.
It is listed on Nifty Midcap 50 and MSCI Global Small Cap Index.
In 2017, the net worth was ₹16,548 crores. In 2018, It was the 77th largest corporation in India and 5th in the Non-banking space. It has a customer base of 20 million with 15,600 employees as of May 2017. Anil Ambani is the founder, while Amitabh Jhunjhunwala is the vice-chairman.
Unfortunately, the net sales stood at only five crores in September 2021, down by 98.18% on a YoY basis. The net loss widened to ₹253 crores, up by 89.78%. EBIDTA stood at ₹153 crores.
It has given 127.71% returns in the past year.
In December 2021, RBI referred Reliance Capital Ltd National Company Law Tribunal (NCLT) after supplanting its board and seizing control. Reliance Capital’s bondholders urged RBI to initiate the insolvency resolution. They faced challenges in the non-cooperation and asset monetization process from the company. Vistra ITCL, constituting 96% of Reliance Capital’s debt, has put several company assets on sale, including its insurance ventures, asset reconstruction firm and securities.
Reliance Entertainment
Reliance Entertainment is an entertainment and media company. It was established in 2005 as Reliance Big Entertainment and BIG Pictures. Later in 2009, the two companies merged into Reliance BIG Pictures. In 2010, the company was renamed Reliance Entertainment.
The focus is on movies, gaming, music, sports, Internet & mobile portals, and delivering it across various digital distribution platforms: digital cinema, DTH and mobile TV.
Shibasish Sarkar, the former CEO, is going to acquire Anil Ambani’s Reliance Entertainment through his new venture International Media Acquisition Corp. The completion of the deal will take place in April 2020. The step will help the debt-laden company exit the movie business, with capital in exchange for Intellectual properties.
Reliance has film franchises such as Golmaal, Singham, Simmba and Sooryavanshi, and dabbles in gaming and animation as well, could benefit from overseas distribution and investors. Moreover, media consumption is at its all-time high since the pandemic, global audiences are inclining towards Indian content. Moreover, Indian film studios are global companies like Disney, Sony or Viacom18. Thus, Reliance could benefit from a similar arrangement and expertise. The merger of Sony-Zee will strengthen the trend.
Reliance Infrastructure
Reliance Infrastructure Limited is an enterprise involved in power generation, infrastructure, construction and defense. The company’s Chairman is Anil Ambani and Punit Narendra Garg is the Chief Executive Officer. The company interest fields are power plants, metro rail, airports, bridges, toll roads, and defense. It is also a major shareholder in the other group company Reliance Naval and Engineering Limited and Reliance Power.
In 2019, Reliance Infrastructure was ranked as the 51st largest corporation in India with 1st place in the ‘Infrastructure Development’ category. It has 56 subsidiaries, 8 associate companies, and 2 joint ventures.
The company has signed various orders including ₹7,000 crore Versova-Bandra Sea Link project, ₹3,647 crore Uppur Thermal Power Project, ₹1,881 crore National Highway projects from NHAI in Bihar & Jharkhand, ₹1,585 crore Mumbai Metro Line-4 project, and others.
The net sales in September 2021 increased by 10.71% YoY. The net loss inflated on a YoY basis by 3.52%. The EBITDA is ₹ 680.90 crores up 11.65% from last year.
Reliance Infra has given 62.83% returns over the last six months and 313.85% in the past year.
Conclusion
There are a few things that one can conclude from Anil Ambani’s glory to bankruptcy story. Firstly, always focus on the business which is in demand and remain updated about the changing trends. Secondly, build a sustainable business. Thirdly, the most important one, focus on your strengths and not on your weaknesses, quality becomes important than quantity.
