Anil Ambani Case study

Anil Ambani Story

We all love the story of People Turning Poor to Riches But how many times have you heard about someone going from multi-billion dollar riches to empty pocket Poor?

Well, that’s exactly what happened to an Indian businessman, Anil Amani from the most expensive sibling rivalry in the world, to jail bailout scandals, and a mind-boggling 7 billion debt.

Here’s How Anil Ambani went from 42 billion to zero.

Who is Anil Ambani?

So who exactly is Anil Ambani and how did he fall so far?

Well, to get an understanding, first, we need to take a trip back in time to mid-20th century India, Anil Ambani was born in Mumbai, then known as Bombay on June 4th, 1959, the youngest son of the founder of one of the most powerful companies on the planet Dhirubhai Ambani at the age of 17.

Dhirubhai Ambani migrated from India to Yemen and To started his career in Yemen As a clerk at Besian co a large trading firm here, he learned skills in trading and accounting and got a taste for entrepreneurship. Ready to strike out on his own. Dhirubhai Ambani returned to India in 1958, where He started his own Business Trading of Spice.

Which eventually developed into his Venture Reliance Commercial Corporation while Dhirubhai Ambani and his wife Kokilaben had already had their first son Mukesh on April 19th, 1957.

Once back in India, they welcomed little Anil Ambani. As a young family, the Ambani were living in a humble two-bedroom apartment at Bhuleshwar, Mumbai, but Dhirubhai Ambani’s business was on the up.

He soon expanded into the textiles industry and followed a strategy of offering high-quality products at a much lower cost than his competitors. This risky approach, which depended on high volume sales to be profitable was a raging success.

Hence, saw the business grow quickly. Soon. Dhirubhai Ambani was able to move the Ambani clan into a six-story apartment in the Usha Kiran building in Mumbai.

Considering his humble beginnings Dhirubhai was determined that his sons should learn the value of hard work and would often organize incentive, oriented family outings. Anil Ambani later recalled that he and his elder brother would go out on challenging six-mile treks in the pouring rain and receive a box of mangoes as a reward to show them that hard work and determination pay off.

But we’ll soon. See how successfully those attempts to inspire business savviness worked out for each of Dhirubhai’s sons.

By the 1980s, Reliance had begun to expand into other industries, including the profitable industry of petrochemicals. By 1983, reliance had gone from a single minimal office in Mumbai to being worth 122 million as profit continued to pile in dear high, purchased a colossal 14-story Highrise Property in cuff parade, a significant business district in Mumbai.

Later became the official Ambani family home. There was never any question of whether brothers Anil Ambani and Mukesh Ambani would join the family business. And by their mid-twenties, both had important roles within Reliance industries aged just 24 at the time of their respective inductions into reliance Mukesh joined in 1981 as a hands-on facilities manager.

And Anil Ambani came through the door in 1983, as an executive, dealing with business investors in the press. The roles suited each man perfectly Mukesh was the more low key rigidly focused businessman who liked spending his evenings with his wife Nita and two children.

Anil Ambani, on the other hand, was a little more extravagant. Enjoying running with Mumbai’s elite crowd mixing with socialites and Bollywood stars, and developing a reputation as something of a Playboy while Mukesh, Took away from the spotlight, and relished in it. But Anil Ambani’s love of stardom proved quite a problem in more ways than one.

Anil Ambani’s Love.

While Anil Ambani loved mixing with those in the Bollywood hall of fame to strengthen business relationships. He also had his very own romance with a Bollywood actress. Tina Munim, him, while they say love is blind Anil’s family. Certainly weren’t when it came to Tina’s profession. At that time being in the film industry was slightly taboo for a traditional family, like the Ambani’s. Anil and Tina were soon encouraged to call it quits.

However, after a lot of convincing Anil Ambani’s parents, reluctantly gave their blessing and in February 1991, Anil Ambani and Tina Munim were finally married.

Anil Ambani might have thought that this was the last major feud he’d have with his family members. He had no idea the storm that was coming by 2002 reliance had grown into a 15 billion conglomerate.

Ambani civil war.

The tragedy was about to strike the Ambani family on July 6th. That year Dhirubhai Ambani died suddenly of a heart attack aged 69. At the time of his unexpected passing, Dhirubhai was ranked among the 138 richest men in the world. According to Forbes with a net worth of $2.9 billion.

At the time, the parliament of India had strict rules about inheritance and the Ambani had to follow a law called the Hindu Succession Act under the Hindu succession act, the personal property of a man who dies without leaving a will, has to be divided among his widow and to children.

In the case of the Ambanis, the responsibility of running reliance was the biggest issue to Iron. As the eldest Mukesh took on the mantle as chairman of the family business and Anil Ambani became the vice-chairman. While this might seem like a logical conclusion to the problem of succession.

The two brothers were very different and cracks began to show. As soon as the power shift occurred, the eldest Mukesh saw himself as the sole boss of things, whereas ane saw the two as equal and it reached a point where each brother was making important decisions for the company without consulting the other.

Sibling rivalries. Aren’t exactly uncommon, especially when it comes to arguing, who’s the best, but the role of reliance had become so important for India’s economy that something needed to be done.

Things got so bad that even India’s finance minister tried stepping in to get these bickering brothers to make up, to know a veil. It was going to take even more than a government official to quash the most expensive sibling rivalry of all time. And no one was more suited to settle this rift than Mother Kokilaben Ambani.

Kokilaben Ambani, however, despite Kokilaben’s attempts to knock some sense into her sons, the issue of leadership remained and neither brother was budging on the all-important point of who was to have ultimate control of the reliance empire. Eventually, Kokilaben was able to get the squabbling boys to settle on a solution.

Reliance was to be split in two, one half owned by Mukesh Ambani and one by Anil Ambani while their views on who should be running things differed, greatly keeping reliance as a multi-industry enterprise was one thing the brothers could agree on.

Mukesh took on the already established profitable companies, namely Reliance Industries Ltd and Reliance Petrochemicals, whose main business was selling gas.

Anil Ambani, on the other hand, wanted to take on the newer flashier companies that showed great promise for growth, including Reliance Communications and reliance power.

The split included a fraternal truth in which neither brother could enter the others industries to compete with their business for 10 years. It also contained another agreement called the Right of First Refusal. This allowed either side to get a chance to buy out the other ahead of any other interested parties in the case of business shares being sold.

But while the truths seemed like a great solution, they would ultimately contribute to some of the worst problems the brothers would ever face. After three years of negotiation, the Reliance split was finalized and approved by India’s Supreme court.

In December 2005, the brothers were able to go their separate ways. Each gives a soft rebrand to their respective halves of the business. Mukesh dubbed his venture reliance in industry’s limited and Anil Ambani’s side became Reliance Anil Dhirubhai Ambani Group, more commonly known as Reliance ADA.

By 2006, each was settled in their new roles as leaders of two of the biggest corporations in all of India, while they were still living under one roof at the Ambani huge family home, there couldn’t have been more distance between the two and both were determined to become the most successful Ambani.

Golden Years of Anil Ambani

The golden years of his early years as a solo act, Anil Ambani thrive. His first big venture was into the world of telecoms and he successfully disrupted the industry with a low-cost mobile network provider, dubbed reliance communications. This venture saw Anil Ambani invest around 2 billion in securing 3g wireless signal technologies.

To keep up with the advancements being made in the telecoms industry in the late naught. 3g was the height of tech and soon reliance on communications was the number one mobile provider in all of. Anil Ambani didn’t stop to enjoy his success though and pushed on to the next, in his quest to further strengthen his hold.

Anil Ambani purchased the profitable AdLab films in their chain of movie theaters in 2005, renaming it Reliance Media Works by 2008. Anil had become the owner of the largest multiplex operator in India. With more than 700 screens.

Anil Ambani also made Hollywood connections. And signed a 1.2 billion deal with American filmmaker, Steven Spielberg, to help fund his production company Dreamworks in 2008. His collaboration with Dreamworks meant that anil reaped the benefits from some financially acclaimed titles. We may recognize including Warhorse Lincoln and bridge of spies.

In 2012, Reliance Media Works helped fund movies, garnering 11 Oscar nominations, including a win for Octavia Spencer’s performance in It.

Anil Ambani even held private screenings of his Hollywood hits at his home and had a star-studded roster of guests that included everyone who was anyone in Mumbai’s society, all except for Mukesh that is.

In 2008, Anil Ambani’s golden years peaked. He made Indian stock market history. When he put shares in Reliance Power up for sale at an initial public offering (IPO) the company finished with a demand for 10.6 times the number of shares available.

All of which were bought up for $3 billion total in just 60 seconds to cap off his financial successes. Anil Ambani was finally listed on the Forbes 2000 date list of billionaires as the sixth richest man in the world, with an astonishing $42 billion to his name.

Despite all this, it still wasn’t enough. Anil Ambani still felt he was in the shadow of his older brother, who was just one step ahead of him in position number five, a billion dollars, richer, little did ane know, however, that his jealous ambition was about to see him come tumbling down

Telecom Industry problems.

Anil Ambani’s problems really started when he discovered that his mobile company, Reliance Communications needed to drum up a higher number of sales. If they were to continue to succeed in the market to fund his plans for a mega extension anil took out numerous massive loans to prop up reliance communications in a bid to keep up with advancing technology.

Anil Ambani’s 2 billion investment into acquiring 3g capabilities. It’s estimated that this 3g expansion accounted for around 50% of Reliance Communications’ debt. However, there was a light at the end of the tunnel, as at the time Reliance Communications was in talks with South African mobile company MTN to combine the two companies together into one mega mobile merger.

This was expected to spawn a powerful global telecoms firm spanning two growing mobile markets in India and South Africa touted at over $70 billion in value. But disastrously, the plan failed. And all, thanks to a member of Anil Ambani’s family clan.

Remember that right of The First Refusal Agreement, which the brothers signed in 2005. Well, that deal gave Mukesh priority claims on shares of reliance communications in the event of a sale or merger. This created a legality issue that meant MTN was unwilling to close the deal and it fell through in July 2000. Anil Ambani’s hopes for a debt-clearing way out were dashed as if things couldn’t get any worse.

In April 2011, Anil Ambani’s managing director and two vice presidents were arrested on suspicion of conspiring to acquire mispriced mobile network licenses for companies. Reliance communications invested to deceptively bolster its share price.

Now in a sea of debt and scandal, it seemed that the only way forward was to borrow even more money to pay back the money Anil Ambani had already borrowed in 2012, Anil Ambani secured yet another loan from three Chinese banks, the industrial and commercial bank of China, China development bank, and Exim Bank of China between the trio of banks.

Anil Ambani secured a whopping 1.2 billion to help repay the 7.19 billion pile That had stacked up around Reliance Communications by 2011, but as dire as the situation was getting, the worst was yet to come

Brotherly Betrayal.

Another bank-busting venture had begun germinating in 2010 when Anil Ambani took out a loan of $922 million from EXIM bank to build a huge 780-megawatt power.

This seemed like a feasible way to eventually turn a profit. Considering that as a family agreement, Mukesh had agreed to sell Anil Ambani’s companies, the gas necessary to construct and fuel the venture at half the rate of government prices. However, when construction began, the government would not approve the brother’s previously agreed deal.

As the court argued, gas prices must remain fixed to be fair to the wider economy. Unfortunately for ane and very fortunately for Mukesh, this ruling would mean Mukesh’s gas profits from the power plant construction would double feeling that this was just another ploy in the ongoing sibling rivalry. Anil Ambani publicly claimed at several press conferences in the late naughties.

That Mukesh was trying every trick in the book to back out of his contractual obligations, the very public power struggle didn’t do much for Anil Ambani’s image And when the court ruled in Mukesh’s favor, many of Anil Ambani’s companies plunged in value on the stock exchange in the aftermath of the exhausting case, and the brothers agreed to scrap the non-Competition agreement, brokered for them by their mother back in 2000.

While the new agreement, Sam Macke promised to not enter the gas-based electricity generation business until April 2022, the brothers were now free to compete on any other remaining industrial turfs, each occupied. And there was one of Anil Ambani’s industries that Mukesg had plans for big plans. Connection lost while his younger brother was sinking.

Things had been looking up for Mukesh in more ways than one in 2012, Mukesh moved into his own patch of paradise in Mumbai and it’s a paradise. All right. This is not so humble. One of the world’s largest and most elaborate private homes. Scaling 568 feet with 27 stories taking four years to build at an earth-shattering cost of 1.2 billion in building such over-the-top home.

One can’t blame Anil Ambani for feeling like Mukesh Ambani was rubbing his face in all this excessive wealth Dubbed Antilia. This skyscraper mansion is beyond extravagant and includes a six story, 168 car garage and nine ornately decorated elevators. Antilia even has it’s very own private 50-seat, movie theater.

Although it looked like watching drama on the big screen, just wasn’t enough. Mukesh Ambani was about to put on real life. Of brotherly betrayal in September 2016, six years after the new agreement that allowed the brothers to compete.

Mukesh Ambani entered the communications industry with a bang and launched his own mobile network called Jio. Jio quickly racked up more than 150 million customers after offering low cost 4g mobile coverage, leaving other big players in the market scrambling to keep Jio changing the face of the Indian telecom industry.

Anil’s reliance communications couldn’t afford to keep up given their colossal debts. Once the largest mobile company in India, Anil Ambani’s telecom company, unbelievably lost over 98% of its value over a three-year period.

It’s unclear what exactly Mukesh Ambani’s motives were for moving in on his younger brother’s industry like this, but Jio’s success was making yet another one of the holes that were continuing to grow in Anil Ambani’s pocket.

Hero to zero.

In the aftermath of Mukesh Ambani’s success in the telecoms market, Anil Ambani landed in even more trouble. He was hit with a lawsuit from former partner and Swedish network company Ericson

In 2016, when he couldn’t keep up with debt repayments for the $80 million, he owed them and was ordered by the Indian Supreme court to pay up with interest or go to Jail with just days to go before the deadline help arrived from an unexpected source straining to find a way to keep the Ambani name far away from any association with financial ruin.

Mukesh Ambani knew he had to do something and swooped in with the cash needed to save Anil Ambani from going fully under while this might seem like an act of brotherly love being bailed out by his brother.

Like this would’ve been the peak of humiliation for Anil Ambani given their financial Aid. After the Erickson fiasco ane knew that his days in the telecom sector were numbered. And in February, 2019, Reliance Communications finally filed for bankruptcy as if things couldn’t get any worse. There were more lenders out there that were on Anil Ambani’s trail.

Anyone that wanted a piece of Anil Ambani’s dwindling fortune would have to get in line as he was being pursued by dozens of creditors in the latter half of the 2010s, the most significant were the three Chinese.

But still hadn’t repaid who brought a case against him in 2019 with claims that he had provided a personal guarantee that they would be reimbursed seven years after ane had borrowed that 1.2 billion.

He’d only managed to repay a small fraction and the banks were in hot pursuit for the remaining $717 million with the seemingly never ending sea of debts rising above his head. Anil Ambani finally reached a place that just 10 years earlier would’ve seemed Impossible.

On February 7th, 2020 to the shock of onlookers Anil Ambani made the extraordinary claim that the dazzling net worth of 42 billion he’d had in 2008 had now plummeted to zero.

On top of his ongoing feud with his brother, as well as his previous track record in business management, Anil Ambani had well and truly made his way from hero to zero and lost it all. Or so it may have seemed.

Despite claiming to have nothing and filing for bankruptcy. Anil Ambani somehow continued to enjoy the external indicators of vast wealth, including his luxury home, a private jet, and a 3 million fleet of cars, a yacht worth tens of millions of dollars.

Anil Ambani rebuffed, the claims that he owned this luxury yacht, and instead claimed it was owned by a company. So didn’t count as part of his Personal Wealth. But of course, that didn’t account for the rest of the numerous insanely valuable belongings he owned the truth is that wall Anil’s wallet and bank balance may have appeared empty.

When it came to liquid assets, it was still in possession of a lot of non-liquid assets. In terms of ownership, liquid assets are those that can be quickly and easily turned into cash, like money in a savings account while a non-liquid asset requires selling at the potential expense of considerable.

And the loss of value, like Anil’s extravagant fleet of cars in cases where a defendant is expected to pay a lot of money.

The court will often ask them to tap into their non-liquid assets to make payments. However, Anil Ambani claimed that he’d sold all his jewelry to pay for legal fees. He was able to get away without selling his $3 million worth of cars or lavish home by having his lawyers claim that he technically didn’t own those assets and that they were purchased in others’ names.

What’s more, in 2021 claims surfaced that ane had concealed millions of dollars in overseas accounts. So the reality of his allegedly empty pockets very likely has hidden depths during the case against the Chinese banks.

The judge also contested that Anil’s surely had the option for more financial assistance from his big brother Anil Ambani replied that he’d been told that his fraternal bailout was a gesture that would not be repeated.

Future fortunes.

As we’ve seen the Ambani brothers have had quite the diverging paths over the years in 2021, the fortune 500 lists ranked Miche reliance industries limited as 155th on their list of successful global businesses. Being worth an astounding 217 billion. Anil’s big brother continues to make waves in the world of business.

Making friends with the likes of Mark Zuckerberg, who made a deal to purchase around 10% of Mukesh Ambani’s mobile phone company, Jio in 2020 as of early 2022. Mukesh Ambani is the richest man in India worth a staggering $92.7 billion.

Anil Ambani has taken a more private lifestyle working tirelessly behind the scenes to attempt to rescue his companies and rein inflate his net worth however much.

It is been reported that he works six days a week. Anil Ambani wakes up at 5:00 AM and goes on a 10-mile. Run follows a no-sugar diet and works 12-hour days at the office between 9:30 AM and 9:30 PM. While he may be shady about how much money he actually has.

All he’s lost while his father’s story is one of Poor to riches. Anil Ambani’s is one of riches to rags, according to him, at least. After a complicated web of lawsuits and scandals, it’s almost funny to think that ane was once hailed as a business genius.

While Anil Ambani certainly had a few major successes in his career, it’s been argued that Mukesh’s slow, meticulously, strategized, sustainable growth approach, beat out Anil Ambani’s quicker money-making ventures in the long run.

Anil Ambani’s willingness to do everything to distance himself from his brother to claim the Ambani crown for himself may well have been the straw that broke Anil Ambani’s back But with Mukesh’s ability for business building and Anil Ambani’s people skills who knows what Heights the already hugely successful reliance corporation could have reached.

If they’d put their egos aside and learn to work together, one thing’s for certain, if you ever wind up filthy stinking, rich, make sure you keep your equally filthy stinking, rich family on Earth.

What do you make of Anil’s rise and fall? Could you ever feel sorry for a billionaire? Let Us know down in the comments below.

How big is Anil Ambani’s house?