The Fall of Anil Ambani

The fall of Anil Ambani changed the course for many entrepreneurs in India. Dhirubhai Ambani was a business tycoon who had two sons, Mukesh Ambani and Anil Ambani, who studied from best schools and colleges while their father built a huge empire. Anil Ambani used to be a share market player and therefore was more famous and growing than Mukesh Ambani. All the financial matters were taken care by Anil and the industrial affairs by Mukesh at the time of Dhirubhai Ambani. After their father’s demise, there was equal distribution of wealth and heated arguments began to take place regarding the distribution and maintenance of business. In 2005, two parts of Reliance from which Mukesh got companies like Reliance Petrochemicals and Anil got Telecommunications, Financial Services and Energy business. Both grew separately and got their names in the Forbes list 2007. Anil Ambani standing at whopping 45 billion dollars and brother Mukesh at 49 billion dollars. In 2008, after the public issue of Reliance power people thought that Anil would outgrow Mukesh Ambani. Today, Mukesh Ambani stands at 6.24L crores and Anil Ambani at only 600 crores. How did this happen ?
Anil had Power, Telecom and real estate and had interest in Telecom as he thought that this will be the future of India. Reliance Communication, in 2002 started by name Reliance Info Comm, chose CDMA which turned out to be the biggest mistake because it was limited to 2G and 3G networks when global market introduced 4G and 5G networks. To stay in market, Reliance Communications took huge loans from different banks. In 2008, Reliance communications got the spectrum but till that time it had a huge debt of 25,000 crores. Mukesh Ambani gave the final blow to Anil after the termination of 5 year non-compete agreement by entering the telecommunication market in 2010. By 2016, Jio flushed down not only Anil Ambani but other telecom companies as well like Airtel and Vodafone. Above all this, Anil Ambani got trapped in 2G spectrum scam of 200,000 crores. In 2015, Anil Ambani tried to enter the defense industry and bought ‘Pipavav Defense’ and this company already had 7000 crore debt which increased to 10,700 crores after which IDBI bank and IFCI bank dragged it to National Company Law Tribunal (NCLT). In 2018, Ericsson sued Reliance Communications for a debt of 1,100 crores and the Supreme Court clearly decided that if Anil Ambani fails to return the debt in 1 month, he will have to go to jail. Mukesh Ambani stepped in to help his brother from not going to jail. After this Anil Ambani announced his exit from telecom industry. In 2020, Reliance Communications debt reached 50,000 crores (26,000 crores of Indian banks). All the assets of the company were sent for auction where the highest bidder were Mukesh Ambani’s Reliance Infratel and ARCL. Three banks of China, Industrial and Commercial Bank China (ICBC), China Development Bank (CDB) and Export-Import Bank of China (EIBC). filed a case against Anil Ambani in London Court for $708 million. Reliance Power also faced damage because of Anil Ambani’s bad decisions. Central Government took Reliance Powers to Supreme Court in 2010 for gas prices issue. Supreme Court judgment ruled in favor of Central Government and said that gas is a national resource and Anil Ambani has to buy gas on market price. After this the share price of Reliance Powers dropped drastically. Except Reliance Communications, other businesses like Reliance Capital and Reliance Infrastructure still have 20,739 crores loans out of which only Reliance Infrastructure is cleared. Anil Ambani’s journey from $42 billion to only 600 crores was an eye opener for the nation. Anil Ambani has declared himself bankrupt in most of the courts but still is in the market as Reliance Capital and Reliance Infrastructure are operating and in better position than before.

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