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Anil Ambani Story – Riches to Rags Journey of Once India’s Richest men: Do you think that it’s possible to lose wealth worth $42 billion? Yet somehow Anil Ambani who once was once one of the richest men in the world has managed to do just that. Today we find out how Anil Ambani managed to become arguably the greatest destroyer of wealth in the last 100 years and become the prime example of riches to rags.

Anil Ambani was once the sixth richest person in the world after inheriting his wealth and the chairman of the Reliance Anil Dhirubhai Ambani Group ( Reliance ADAG). Some of the major companies that constituted the group included Reliance Communications, Reliance Capital, Reliance Power, Reliance Infrastructure, Reliance Naval, etc. The wealth of the Ambani family started with his father Dhirubhai Ambani.

The tycoon started out as a gas station attendant in Yemen and is the perfect example of a Rags to Riches story. He went on to become the richest man India had ever seen and is the reason behind both Anil and Mukesh’s initial success. Today, we cover the Anil Ambani Story. Let’s get started.

Anil Ambani Story – The feud between brothers

Sadly Dhirubhai passed away after suffering from a stroke in 2002. This led to complications in the Ambani family dynamics as he died without a will. The brothers at first seemed to cooperate. Anil even stated, “two bodies, one mind”. The Reliance conglomerate which was then an Rs.28,000 crore business was headed by Mukesh as its chairman and Anil as Managing Director. It however didn’t take much time for the news to spill out that there were strains in the relationship between the two brothers. Mukesh viewed himself as the undisputed leader of the conglomerate being the eldest scion whereas Anil considered himself to be equal.

The quarrel escalated to a point where each was taking decisions for the company without consulting the other. Anil went on to announce a power project and Mukesh restructured the entities that managed the shares of the family in the company. Both these decisions were taken without the notice to the other. Two years after their father’s death the board under Mukesh passed a resolution. It indicated that Anil would henceforth be “under the overall authority of the chairman” which was held by Mukesh.

Anil saw this public humiliation as the last straw which led to an open feud within the company. Anil would refuse to sign financial statements. The directors from a subsidiary run by Anil turned in their resignation as an act of solidarity. It eventually reached a stage where the Finance Minister of the country pleaded with the brothers to make amends.

Kokilaben at this point had seen enough and decided to intervene. She realized there was only one way out that included splitting the company between the brothers. Anil received the telecom, power generation, financial service, and infrastructure business. This pegged Anil’s net worth at $4.5 billion. Mukesh, on the other hand, received oil and gas, petrochemical, refining, and manufacturing business. Mukesh was now worth $4.9 billion.

The split also included a non-compete clause between the two brothers in order to maintain the truce. The clause forbade the brothers from entering each other’s industries.

Anil Ambani Story – The Rise

The years that followed were favorable towards Anil Ambani. By 2007 he was worth $45 billion and was conferred with many business awards. This increase in wealth was thanks to him receiving Reliance’s crown jewel in the split i.e. Reliance Communications. His wealth was also evident in his lifestyle. It was under Anil that the country saw India’s largest IPO of Reliance Power in 2008 which was subscribed in just 60 seconds. This was the fastest in the Indian Capital market history.

Anil’s Reliance Infrastructure also built Mumbai’s first metro line. Anil also invested a portion of his enormous wealth in Steven Spielbergs DreamWork Pictures. The joint venture is known to have produced films like Lincoln which won an Academy Award and The Fifth Estate, a film about Wikileaks’ Julian Assange. Thanks to this partnership we soon saw the legendary director visiting BTown. At times the Mumbai elites were invited to his home for a screening of upcoming releases. Mukesh however was not seen among the guests.

Anil Ambani Story – The Downfall

Anil’s downfall began during the financial crisis of 2008. Reliance Power in its IPO had raised Rs. 11,563 crores. This was supposed to be used to fulfill Anil’s ambitious 13 projects of gas, coal, and hydropower. These projects required the availability of gas at reasonable rates. The 2008 environment did not enable this dream. Authorities now mandated lower electricity rates. This now meant that around Rs.1.2 lakh crores were stuck in these projects.

Mukesh however saw an opportunity here. He offered a supply of natural gas provided that the non-compete clause was annulled. Anil agreed and this allowed him to make his failing power plants viable. This however allowed Mukesh to enter industries Anil existed in, including the communication sector.

— Reliance Communication

Reliance Communication the crown jewel made up 66% of Anil Ambani’s wealth. RCom however had a technological limitation. When it was set up in 2002 it chose CDMA ( Code Division Multiple Access). Other network providers like Airtel and Hutch provided GSM(Global System for Mobile communications). Anil had dreamt of creating wonders with the CDMA technology but it was unfortunately limited to only 2G and 3G. This meant that when 4G arrived he would have to once again build the mobile network from scratch. In the midst of this Anil acquired GLT Infra in his plans to expand 3G and set up a sister company for an undersea cable network.

Mukesh on the other hand began pouring money he earned from his oil and petrochemical business into his upcoming mobile network. This was a huge bet as investors saw him pour money for over 5 years.

Eventually, Mukesh launched Jio with 4G. The poor management of the company, its inability to provide 4G, and the price war that followed led to RCom’s downfall. In order to keep the capital-intensive company’s hopes alive, Anil had only one option i.e. take on debt. By 2016 the company was debt-ridden.

In 2017 Anil realized that his company was out of the market and he couldn’t afford a 4G makeover. He decided to sell the wireless business to Aircel. The infrastructure i.e. the cell towers would be sold to a Canadian company called Brookfield Group. Unfortunately both the deals fell through. Aircel itself went bankrupt and the failure t execute this deal led to the fallout of the Brookfield deal. If Anil had seen the red flags hoisted by the CDMA technology he would’ve been able to sell off the business quicker in order to avoid losses.

The biggest challenge here however was posed by Jio. This however was the biggest and one of the riskiest bets placed by Mukesh. Its entry with 4G immediately saw RCom lose 8 crore customers. RCom shut its wireless operation in 2017. In 2019 RCom’s undersea cable company filed for bankruptcy in the US.

— Failure of Defense Companies

Another decision that worked against Anil was his move to venture into the Defense sector. He had two companies in the business – Reliance Defence Ltd. and Reliance Naval & Engineering Ltd. He bought Pipavav Defense which already had a debt of around Rs. 7000 crores. The company was hard o turnaround and eventually was admitted to insolvency proceedings of NCLT. Reliance Defense Ltd on the other hand was embroiled in accusations of a scam. The Indian National Congress accused PM Narendra Modi of favoring Anil’s company over HAL in a fighter aircraft (Dassault Rafale) deal worth Rs. 58,000 crores. Allegations were made that Reliance Defence went onto become the biggest beneficiary in the deal.

To add to the controversy one of Anil’s businesses partly financed a French Film in which the former French President Hollande’s then-partner had acted in, around the same time the deal was finalized.

— Other Anil Dhirubhai Ambani Group Companies

Reliance Capital, Reliance Infrastructure, Reliance Power, and Reliance Home Finance too were performing poorly. The economic slowdown of 2008 had affected Reliance Capital gravely. It eventually exited the mutual fund business by selling its entire stake in Reliance Nippon Life Asset Management Ltd. (RNAM). The proceeds of Rs. 6000 crore received was used to reduce Reliance Capital’s outstanding debt by 33%. At the same time Reliance, Infra and Power were defaulting on loans. Reliance Home Finance had defaulted on bond repayments.

— Effects on Lenders

The default on loans from Reliance had adverse effects in an already ailing economy. One example is that of Yes Bank which had significant exposure to Anil Ambani’s companies. Another such example has been that of Franklin Templeton. Franklin Templeton had secured Non-Convertible Debentures in 3 of ADAG companies. They eventually did not sell the pledged securities and would 6 debt funds affecting 300,000 investors.

Anil Ambani Story – Lawsuits

— Anil Ambani v/s Ericsson

In 2019 Anil faced a lawsuit for non-payment of personally guaranteed debt that Reliance owed to Ericsson. In an attempt to diffuse the situation Anil Ambani offered to settle the matter outside court. But Anil has not been able to come up with the amount owed to the creditors even after signing the settlement. The court gave him a month to come up with Rs. 5.5 crore. At the time Anil and Mukesh entered into a deal where RCom would be sold to JIo, but this too was scrapped as the Telecom department asked Jio to take responsibility for RCom’s dues. Eventually, Mukesh agreed to bail out Anil by paying $77 million

It was reported by Bloomberg that Mukesh had made Anil ‘beg’ as the deadline neared before helping him out. The deal however did not come free of cost as Anil had to still surrender a pair of 99-year-old leases on office buildings in Mumbai.

— Anil Ambani v/s Chinese Banks

Anil Ambani has also defaulted on loans taken from three Chinese Banks – Industrial and Commercial Bank of China Ltd Mumbai Branch, China Development Bank, and Exim Bank of China. He is said to owe them $ 700 million after accounting for interest. On being asked to pay $ 100 million into court in the UK Anil stated “The current value of my shareholdings is down to approximately $82.4 million (approximately Rs 589 crore) 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.”. The banks found this hard to believe as Anil was still surrounded by his son, mother, and elder brother who are billionaires.

Closing Thoughts

Although both the brothers started out with similar capital, Mukesh Ambani is currently worth over $80 billion and is arguable the most powerful man in India apart from PM Narendra Modi. Anil on the other hand has not only managed to achieve negative growth but claims to be in deficit. Observers have stated that although external factors were involved reckless growth plans and unchecked ambition too had a role to play.

Anil Ambani is currently still battling courts over the settlement of his dues. Apart from this he still maintains his fitness standards and it is rumored that he has come out more religious out of this whole ordeal and finds material success hollow when compared to spiritual fulfillment.

Aron Almeida

Aron, Bachelors in Commerce from Mangalore University, entered the world of Equity research to explore his interests in financial markets. Outside of work, you can catch him binging on a show, supporting RCB, and dreaming of visiting Kasol soon. He also believes that eating kid’s ice-cream is the best way to teach them taxes.

A case study on Mukesh Ambani vs Anil Ambani: Ever since the Cain and Abel fallout at the beginning of time, sibling rivalries haven’t been uncommon. Cleopatra securing the throne by killing her siblings, Adolf and Rudolf Dassler’s tussle which led to the formation of Adidas and Puma.

Similarly, the unfortunate split of Liam and Noel Gallagher eventually led to the breaking up of the Oasis band. And also the recently famed but unworthy (probably staged) Rob and Kim Kardashian squabble. Today we take a look at the most famous sibling feud in the Indian Subcontinent. The Mukesh vs Anil Ambani row. Here, we’ll discuss what went right or wrong in the case of the brothers.

Mukesh Ambani vs Anil Ambani: The BAD

Indian business tycoon Dhirubhai Ambani bought into existence the Reliance organization. At the time of his death in 2002, he had founded Reliance Capital, Reliance Infrastructure, Reliance Power, and Reliance Industries. But the lack of a will led to a scrimmage for assets between his two sons, Mukesh and Anil Ambani.

Until 2002, Anil was the face of the company attracting foreign investment. Mukesh after dropping out of Stanford worked behind the scenes. He focussed on running the organization and also building Reliance Communications (RCom).

(Right to Left: Mukesh Ambani with Mother Kokilaben Ambani and Brother Anil Ambani)

Tensions began when Anil demanded RCom to even out the assets. Eventually, their mother had to step in to resolve the feud that had now spilled into the public eye. The assets were finally split, with Mukesh getting Oil and Gas, Refining, and petrochemical companies. Anil got what was called the rising sun companies- Electricity, Telecom, and Financial services segment.

The companies under Mukesh were known as Reliance Industries. The companies under Anil were known as Reliance Anil Dhirubhai Ambani Group or Popularly the Reliance Group. The split of assets also came with a non-competition clause. According to this, the brothers were not allowed to venture into each other’s businesses for a decade.

The Reliance Industries Journey with Mukesh at its Helm

Under the leadership of Mukesh Ambani, Reliance Industry slowly but steadily scaled new heights. By 2007, it was the first Indian company to exceed $100 billion in market capitalization. Although luck also played a role as Mukesh has been handed the petrochemical segment. The segment was based in the Krishna Godavari Basin. The basin has an excess of 1.2 billion barrels of crude oil. As time went by Reliance Industries ventured out into other segments that included the retail business, logistics, solar energy, entertainment (Reliance Eros), cloth, and SEZ development.

The most notable industry entered would be when Mukesh Ambani led Reliance Industries ventured back into the telecom industry. It used its earlier acquisition of a telecom company called Infotel and came out with Jio Infotel popularly known as Jio. His new venture, Jio, caused severe disruption in the Industry. Its entry led existing players in losses, merging with one another to weather the storm. Its entry also meant the end of the road for his brother’s Rcom.

— Where has Mukesh Ambani reached

It can be said that Mukesh Ambani has had a lot of Sunshine. Reliance Industries was ranked 106th on the Fortune Global 500 list of biggest corporations as of 2019. The company has been responsible for almost 5% of the revenue the government of India earns from Customs and Excise duty. Mukesh Ambani is said to have a net worth of $53 billion as of 2020.

According to Bloomberg, his wealth could help the Federal government for 20 days in 2018. This makes him Asia’s richest, a billion short of getting his entry into the top 10 richest list. He currently resides in Antilla which is claimed to be the world’s most expensive home at $1 billion. So much for a student at Stanford who wanted to work at World Bank or become a professor!

Also read: Top 10 Richest Person in India (As per Forbes Ranking)

The Reliance Groups’ journey with Anil at its Helm

Anil Ambani also saw immense growth in wealth in the initial stages. Anil Ambani began his solo ride by investing in industries that provided quick returns. It goes without saying that the risk was high too. In 2005, he bought Adlabs which got him into the entertainment business. A few years later in 2008, he signed a deal with Steven Spielberg’s DreamWorks. The Film Lincoln produced by DreamWorks also won an Oscar.

In 2008, Anil was the world’s 6th richest person with $42 billion in wealth. One of the most notable investments was the Mumbai Metro project.

2014, however, started brewing trouble for Anil Ambani as his companies had taken huge debts. This year his media venture with Adlabs also collapsed and he had to resort to selling the screens. He also began selling a stake in the remaining TV businesses to Zee Entertainment. Other bad decisions quickened his wealth loss. This included venturing into the defense segment in 2016 with Reliance Naval and Engineering.

By 2019 the valuation of the defense company fell 90%. 2016 was also the year in which Mukesh Ambani’s Jio entered the Telecomm industry. This catapulted RCom further into losses. By end of 2019, Rcom had lost 98% of its valuation. This hit Anil hard as he held 66% of its stake.

— Where has Anil Ambani Reached

As of March 2018, the Reliance group had a total debt of 1.7 lakh crore. This led to affected his wealth and also his Rs 13,500 crore investment in Nippon the financial segment. By 2019 things got so bad for Anil, that he was threatened with jail if he did not pay dues to Ericson.

Anil Ambani was also summoned by the UK court where he was directed to repay 100 million loans from Chinese banks. He claimed in courts that he would not be able to pay as his net worth was zero.

Mukesh Ambani vs Anil Ambani: The UGLY

— 2008 Anil’s Intelligence Agency

The court approved spit of assets in 2005 did not end the rivalry between the two brothers. In 2008, Anil filed a defamation case against Mukesh suing him Rs 10,000 crores. This was due to an interview given by Mukesh to the NYtimes. Mukesh claimed that the distinguishing factor of Reliance from its competitors was the intelligence agency run by his brother which included a network of lobbyists and spies. They had infiltrated New Delhi to find facts that may seem trivial and other vulnerabilities of the bureaucrats to gain greater control.

— 2009 Pricing feud

The 2005 split of assets also included an agreement where Mukesh Ambani’s Reliance Industries would supply his brother’s electricity generation segment fuel at $2.34 per million British thermal units. This was agreed for a period of 17 years.

However, Reliance Industries began setting a different price. They sold fuel to the Reliance group at $4.20 in 2009. The disagreement was dragged into the courts until the government intervened. The government allegedly did so as the government also has a share in the profits made by Mukesh. The cost of production to Reliance Industries was only 1$.

Anil took the spat into the front pages of the Times of India. Here Anil Ambani placed an advertisement accusing the Petroleum Ministry of favoring Reliance Industries. The Ad campaign further intensified the feud between the two brothers. In the end, the ruling was in favor of Mukesh.

— Outside Corporate

The competition between the two brothers was not limited to business. When Mukesh had bought a $52 million jet for his wife it was alleged that Anil bought his wife an $80 million yacht. The feud at this scale sounds bizarre as the brothers shared the same house till 2012. When Mukesh moved out to his $ 1 billion Antilla, Anil was building one for himself of the same value.

— Other controversies that involved the brothers

Infotel broadband

The Comptroller and Audit General of India alleged rigging in the auction mechanism for the 4G license. Infotel had acquired the license by bidding 5000 times its net worth. Infotel was then mysteriously sold to Reliance Industries.

Reliance vs. Kejriwal

Delhi CM Kejriwal in 2014 had filed an FIR alleging irregularities in the pricing of natural gases from Krishna Godavari Basin. He alleged that the gas was priced at 8$ even though it cost Reliance only 1$ in its production.

Proximity to politicians

Both the brothers have been accused of their proximity to politicians to gain an influential role. PM Modi’s close proximity with Anil Ambani also is alleged to have a role in the Rafale controversy which was later quashed by the courts.

Mukesh Ambani vs Anil Ambani: The GOOD

Even though the brothers have torn into each other in the last two decades, it is noteworthy that they also once ran Reliance together. It is also said that during the period they knew each other so well that they would finish each other’s sentences.

The biggest test of brotherhood in the Ambani family came when the younger was threatened to be jailed over non-payment of Rs 550 crore in dues. Mukesh swooped in for the rescue by clearing the dues on Anil’s behalf. Also, considering that Anil has no been convicted by the UK courts over a loan from Chinese banks, it looks like he received a lot more help.

Aron Almeida