Time is not forever: A billionaire who was once richer than Mukesh Ambani, ended up being insolvent

Once one of the wealthiest men on the planet, Anil Ambani is currently in a terrible situation. This once-billionaire, engulfed by billions of dollars of debt, faced a terrible moment, as the equity value of his entire company dropped to 4292 crore ($523 million) in 2019. After inheriting his wealth, Anil Ambani was named chairman of the Reliance Anil Dhirubhai Ambani Group (Reliance ADAG) in 2008. Forbes listed Anil Ambani as the sixth richest person in the world in 2008, with a net worth of $42 billion, or 3447 thousand crore. Reliance ADA Group comprises several prominent companies, including Reliance Communications, Reliance Capital, Reliance Power, Reliance Infrastructure, Reliance Naval, and Reliance Home Finance.

Multi-billion dollar family business  

Mukesh and Anil Ambani's father, Dhirubhai Ambani, established the multibillion dollar family business empire. Dhirubhai started out as a petrol station attendant in Yemen before rising from humble beginnings to become the epitome of the Rags to Riches tale. As the present situation indicates, the exact opposite seems to have happened with his younger son, Anil Ambani.

Anil Ambani: A Perfect Start 

In 1983, Anil Ambani took over as co-CEO of Reliance Industries, his father's business. Anil Ambani was an intelligent businessman who graduated from the University of Pennsylvania's Wharton School in 1983 with a master's degree in business administration. He is well-known for having played a key role in the development of the Indian financial industry, having introduced global depositary receipts, bonds, and convertible securities to international capital markets. Under Anil Ambani's leadership, Reliance Industries raised $2 billion from the global financial market. Anil Ambani was also selected to be a member of the Rajya Sabha in 2004.

Split with big brother Mukesh Ambani 

In 2002, Dhirubhai Ambani passed away without leaving a will. After his father's passing, Anil was named managing director of Reliance Industries. At the time, the company was a Rs 28,000 crore business empire, and Mukesh was named chairman. In 2005, there was a hint of tension between the brothers. The corporation was split in half as a result of the brothers' legal dispute over the gas supply. Anil acquired the telecom, power generation, and financial services industries, while Mukesh was given the oil-refining and petrochemicals companies. They also entered into a "non-compete pact" that lasted until 2010.

Rise to the pinnacle 

In 2007, Anil Ambani's total wealth exceeded Rs. 4 lakh crore, and he was the recipient of multiple business honours. This fame and wealth were sparked by Reliance Communications. Not only that, but in 2008 he created history by obtaining a full subscription for the Reliance Power IPO in under 60 seconds. It was the largest initial public offering (IPO) the Indian market had ever seen.

Time is not forever 

The first of many challenges that faced Anil Ambani was dealing with the fallout from the 2008 financial crisis. The record-breaking Rs.11,563 crore raised during the Reliance Power IPO supported a number of upcoming projects. It was challenging to find natural gas at a fair price, which was required to start the projects, because of the 2008 financial crisis.

Major Causes of downfall

• Reliance Communications played a major role in his financial success, but the company failed to compete in the telecom market and was shut down in late 2017. This resulted from the company's incapacity to transition to 4G networks, its debt-ridden state, and its dependence on hazardous business endeavours to maintain its financial stability. An even bigger threat came from his older brother Mukesh Ambani's Jio 4G network.
• In a disastrous move, Anil Ambani bought Pipavav Defence, which had debts totaling Rs. 7000 crore. Furthermore, Pipavav was brought before the NCLT for an insolvency action by IDBI Bank and IFCI as a result of its incapacity to pay its debts.
• Anil Ambani's relationships with other banks and lenders suffered as a result of his loan defaults. When he was eventually brought before the courts, he claimed he had run out of assets to sell and filed an appeal.

From his descent from wealth to poverty to fending off court summonses and making an effort to fulfil his debts, Anil Ambani appeared to have gone through it all. In 2023, his wealth was only Rs 250 crore, compared to Rs 4 lakh crore during the 2008 financial crisis. Additionally, experts have asserted that this abrupt decline was caused by his poor business judgement and inability to compete in a competitive economic environment. Time will tell what lies ahead for Anil Ambani, as it seems that his situation is far from over.