Why is Anil Ambani’s net worth zero?: “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,” he told the court in 2020.

Source: ET Now Digital, updated on November 14, 2021. 

Who is Anil Ambani?

Anil Ambani is the son of the biggest industrialist of late. Mr. Dhirubhai Ambani is the younger brother of Mr. Mukesh Ambani.

Anil Ambani's Father and Brother
Source: https://bit.ly/3m488Qy

Ambani Brother’s Business Portfolio:-

Anil Ambani happened to be the sixth richest person in the world with a net worth of $42 billion in 2008. Since then, his misfortune has occurred.

When Dhirubhai Ambani died in 2002 without a will, Mukesh was made the Chairman and Anil the Managing Director of Reliance Industries. The business conglomerate was valued at Rs. 28,000 crore at that time.

Suddenly, the rift between the two brothers started, and in 2005, the company announced a split.

Anil was in charge of telecom, power generation, and the entire financial services sector at the time, while Mukesh was in charge of oil refining and petrochemicals.

Both the brothers entered into non-compete clauses till 2010.

What happened to Anil Ambani’s Net Worth?

The following are the main factors that led Anil Ambani’s net worth to zero. Some of the main reasons are as follows:

The immense fall of Reliance Communication (RCom):-

When RCom was started as Reliance Infocomm in 2002, it chose CDMA (Code Division Multiple Access), which was flourishing at that time. However, other companies, like Airtel and Hutch, used GSM (Global System for Mobile Communication).

The main reasons behind the failure of Reliance Communication (RCom) are as follows:

  • With the advancement of technology, the company was at a disadvantage because the CDMA concept only supported 2G and 3G. But with 4G, the company was rightly thrown away. To save the company, Anil tried to expand the business rigorously by diversifying network expansion, entering various business deals, and setting up a sister company with an undersea cable network.
  • After the non-compete clause ended in 2010, Mukesh entered the telecom sector and took over Infotel Broadband. In 2016, he took over the entire telecom sector to a very new level with the launch of “Reliance Jio Infocomm”.
  • When Anil wanted to sell his RCom to Jio, the department also demanded that Jio take the responsibility for his dues, which Mukesh wasn’t ready to do, leading to a spar in the company.
  • The company went into insolvency proceedings in May 2018 with the National Company Law Tribunal (NCLT). Three petitions were filed against the company by Ericsson. Ericsson claimed that RCom owed Rs. 1100 crore in dues to them. The Supreme Court at that time threatened to imprison Anil if he failed to pay Rs. 5.5 billion to Ericsson within a month’s time. At the last moment, his brother, Mukesh Ambani, stepped in and made the payment for his brother and saved him from jeopardy.
  • At the 14th Annual General Meeting held in September 2018, Anil made a headline and addressed his shareholders: “We have decided to not proceed in this sector. Many other companies have taken such a similar call. This is very much in itself the writing on the wall.”
  • Three Chinese banks-Industrial and Commercial Bank of China Ltd. (ICBC), China Development Bank, and the Export-Import Bank of China sued Anil Ambani in the High Court for more than $708 million, including interest on the loan they gave to RCom in February 2012, when Ambani refused to accept the claim that he had provided regarding his personal guarantee for the loan.

What happened to Reliance Capital:-

In May 2019, Reliance Capital sold the entire stake of its Mutual Funds business to Reliance Nippon Life Asset Management Ltd. (RNAM). Both the brothers had a 42.88% share in the company, while the rest was with the public.

The entire proceeds of the company, nearly amounting to Rs. 6000 crore, will be used to reduce the company’s outstanding debt by 33%.

In July 2019, the company raised nearly Rs. 217 billion by selling assets of its general insurance business, private equity/ real estate business, and radio business.

Reliance Home Finance made defaults in bond repayments.

In September 2019, Reliance Capital took an exit from its lending business and allowed its insurance units to become long-term value creators.

Anil Ambani made an announcement to the shareholders when Reliance Capital suffered such a big loss. He told the shareholders that the company had suffered collateral damage because of the crisis in the financial services sector, irrational action by auditors and rating agencies, and the economic slowdown.

Reliance Infrastructure and Power Business:-

Reliance Infra and Reliance Power defaulted on paying loans.

On January 7, Reliance Power informed the stock exchanges that the company had defaulted in repaying the loan of Rs. 685 crore in Q3. After hearing this, Yes Bank acquired a 30% stake in Reliance Power, a subsidiary of Rosa Power Supply, with the help of pledged shares.

As the reports suggest, Adani Group was in talks with Reliance Power to acquire one of its subsidiaries, Vidarbha Industries Power (VIPL), which supplied electricity to Adani Electricity Mumbai.

After buying two transmission projects from the company, Adani also acquired the Mumbai electricity distribution business from Reliance Infrastructure in 2017.

In September 2019, Reliance Infrastructure had a debt of Rs. 148 billion.

Anil Ambani: Other Businesses:

As on 31st December 2019, the entire ADAG group, i.e., Anil Dhirubhai Ambani Group, including Reliance Communications, Reliance Power, Reliance Infrastructure, and Reliance Naval & Engineering, defaulted in paying loans amounting to over Rs. 43,800 crore.

In January 2020, Reliance Naval & Engineering had outstanding loans amounting to Rs. 9492 crore, which was admitted for insolvency proceedings by the Ahmedabad Bench of NCLT.

Reliance undersea cable company GCX also filed for bankruptcy protection when GCX Company defaulted in payment of its $350 million of 7% bonds that were due on maturity.

Conclusion:

Whereas the net worth of Mukesh Ambani was $103 billion (Rs. 7.8 lakh crore), Anil’s fortune tumbled over recent years, losing his billionaire status. Once considered among the world’s richest, Anil Ambani is currently struggling to pay off his dues as well as those of his indebted companies.

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Prashant Raut is a successful professional stock market trader. He is an expert in understanding and analyzing technical charts. With his 8 years of experience and expertise, he delivers webinars on stock market concepts. He also bags the ‘Golden Book of World Record’ for having the highest number of people attending his webinar on share trading.