Fall of Anil Ambani

Anil Dhirubhai Ambani, who in 2008 was listed as the 6th richest person
in the world by Forbes is now trying his best to prevent his reputation
and a jail sentence. This comes due to the debt amounting Rs 571
crores due to the Swedish telecom gear maker Ericssson. But how did
this situation fall upon once one of the wealthiest man in the world. His
fall in a period little over a decade shows how uncontrolled ambition
and too much leveraging of debts can cause a lot of damage.

After the death of Dhirubhai Ambani, both brothers were supposed to

work together, but around 2005 a spat occurred between them and
Reliance had to split into two parts. By that time through many series of
forward and backward integration in petrochemicals Reliance had
become country’s largest manufacturer of fibre. After the split, Mukesh
Ambani was handed over the petrochemicals business whereas Anil
was handed the telecom business.

Anil started making investments like Adlabs and became owner of over
700 screens even outside India. He also made investments in power
and infrastructure. Like in 2008 and 2009 he grabbed 3 mega power
projects in central and southern parts of India. At the same time
Reliance Infrastructure was continuously bidding for projects in power,
railways and road development.

Things were going well but too much ambition, not judging dynamic
environment, Reliance Group started going into debts. All of them were
quickly losing revenue and registering close to 0 profits. The worst
situation is being faced by Reliance Communications. As of 2018 the
company has debt of over Rs40000 crores and incurring losses for the
past two years. Anil was questioned in 2011 by the CBI following the 2G
spectrum controversy in which then telecom minister, A. Raja was
accused of illegitimate allocation of spectrum to many companies with
Reliance Communications being one of them. He also clashed with his
brother in a legal battle over the price of gas from Mukesh’s oil fields in
the K-G Basin which ended up with the government deciding upon its
price.

After the non- compete pact was scrapped in 2010 Anil’s brother
Mukesh immediately stared entering the telecom business and
launched Jio in 2016 and shocked everyone in the industry including
Reliance Communications.

With Anil focusing on the telecom sector and his other ventures facing
a lot of difficulties he was left with no other option than selling his
assets. His 24000 MW power producing plants have been closed due to
non- availability of gas. The defence sector, which he chose to enter in
2015 by buying Pipavav Defence is covered in controversy as he has
been accused by Congress that he unduly benefitted $ 8 billion in the
Rafale deal. By 2018 the cumulated debt of all his ventures amounted
to a staggering Rs 1.7 lakh crores and he was being forced to sell assets
and sometimes entire of businesses.

Experts believe that he took projects without a proper strategy and was
always power hungry. So whats next for him? Some say that different
companies under him will be consolidated and the ones doing badly will
opt for insolvency.