-Samrudh Rahul, R Chandrashekhar
HISTORY OF ANIL AMBANI:
Anil Dhirubhai Ambani was born on 4th June 1959. He is an Indian businessman. Anil Ambani has an elder brother Mukesh Ambani. Their father, Dhirubhai Ambani, started and set up Reliance in 1977 and showed significant success. His two sons followed to become chairman and managing director of the Reliance, respectively. Dhirubhai used to say, “if you don’t build your dream, someone else will hire you to help them build theirs.” After Dhirubhai’s death, their paths started to turn away, the relationship between brothers severed to splitting of the empire and then becoming direct competitors.
THE PARTITION:
In 2004–05 after separation, Mukesh Ambani got the so-called old economy companies that include Reliance Industries Ltd, Reliance Petroleum Ltd, Indian Petrochemical Corporation Ltd, Reliance Industry Infra Ltd, a total value worth $43 billion. Anil Ambani got the so-called ‘new economy’ companies which include Reliance Communications Ltd, Reliance Capital Ltd, Reliance Natural Resources Ltd, Reliance Energy Ltd, Reliance Broadcast Network Ltd, with a value worth $42 billion. It made him the world’s 6th richest man, a step behind his brother Mukesh Ambani.
He renamed his industry as Reliance ADA group. Many expected that Anil would do better than Mukesh in the long run as he had control over the ‘sunrise’ sector.
ANIL’S GROWTH:
Then Anil Ambani bought ADLAB Films and the chain of theatres, BIG CINEMAS. By 2008 it became the most significant network chain of theatres consisting of around 700 theatres around the country. Subsequently, he signed a deal of $1.2 billion with American filmmaker Steven Spielberg’s production company. He reached a zenith level, and in 2008 Anil floated an IPO of Reliance Power, which became India’s largest of the time, being subscribed in less than a minute. Even many celebrities like Amitabh Bachan once said, “Anil Ambani is my younger brother.” Anil also became a Rajya Sabha member.
THE START OF DOWNFALL:
Even though he was at his peak, he could not stop comparing himself with Mukesh Ambani. It is evident from his construction of a grand house “Abode” — costing 5,000 crore INR — after seeing the construction of his brother’s house, which costs around 5,000 crores. Also, he took Mukesh to court over the supply of gas from Reliance Industries Ltd when Mukesh refused to supply him gas at the contracted price. The court’s ruling came out to be in favour of Mukesh quoting the government policy regulations. Anil bought the gas at $4.24 MMBtu, where the older contracted price was $2.34 MMBtu. It was the first big hit in his career after the business partition with his brother.
The next hit was in his telecom industry-RComm. Anil Ambani preferred CDMA (Code Division Multiple Access) technologies, which support only 2G and 3G. Many companies used the technology of GSM (Global System for Mobile Communication), which can be easily updated to support 4G and 5G. CDMA, on the other hand, was not suitable when people upgraded to 4G and 5G. The driver of this 4G revolution came out to be Mukesh Ambani’s Jio, which simply crushed the already shaky business of RComm. The rise of Jio crashed the entire telecom industry, even the big ones like Airtel. After three years of Jio’s launch, RComm’s 1.65 lakh crores rupees market capitalization lost over 98% of its value and went into insolvency proceedings in May 2018.
By May 2018, the company had a burden with a loan amount of 1100 crores to pay to Ericson. At present, the loan amount is around 50,000 crores. To compensate for the loan amount, Anil Ambani sold BIG cinemas to Carnival for 710 crores. This deal was said to reduce Reliance’s non-core investments in the media and entertainment sector.
Two years later, parts of the TV and FM radio business bought earlier were sold to ZEE for 1872 crore INR. It further reduced the loan amount to a controllable level, and Anil Ambani was slightly back to track, but this didn’t last long. The Reliance Infrastructure Ltd, in partnership with Astaldi of Italy, bagged the contract to build the 17.17-km Versova-Bandra Sea link project in Mumbai for Rs 6,994 crores and did the city’s Versova-Ghatkopar metro projects at below cost. He also tried a hand in the defence sector and failed. The furore over the Rafale deal in parliament also added to his woes.
In 2017–18 the profit-making business Reliance Energy was sold off to Adani for 18,000 crores to pay off debts. In May 2019, Reliance Capital sold its entire stake in Reliance Nippon Life Asset Management Ltd (RNAM) for 6,000 crore INR and reduced the loan amount to some extent. This fall completely collapsed Anil Ambani and made him lose hope that he would ever be back on track.
Owing to a total debt of around 6 billion, he left all ongoing projects. By 2019, his net worth drastically dropped to $1.7 billion. The coffin’s final nail came when the COVID-19 pandemic worsened the last successful unit, Reliance Capital. Now three Chinese banks-Industrial and Commercial Bank of China, the China Development Bank, and the Export-Import Bank of China have decided to pursue their rights and take enforcement actions and recover around $680 million from Anil Ambani.
“Management is all about managing in the short term while developing the plans for the long term.” -Jack Welch.
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