How Anil Ambani Lost All His Money In 2 Years
Anil Ambani born 24 December 1957 is an Indian business tycoon, the younger brother of India’s richest man Mukesh Ambani and the former chairman of Reliance ADA Group. As of March 2013, he was worth $1 billion according to Forbes’ real-time rankings of the world’s billionaires.
However, on 30 September 2013, Bloomberg News reported that Anil lost all his money in 2 years due to his poor investment decisions with his debt-laden companies Reliance Communications and Reliance Power, although the exact figure remains unknown.
Introduction: The World of Anil Ambani
Anil Ambani is an Indian business magnate who is the chairman and managing director (CMD) of Reliance Group. He is also the older brother of billionaire Mukesh Ambani. He was ranked 36th on Forbes’ list of billionaires in 2016 and has a net worth of $7.3 billion as of March 2019.
He made his fortune in the telecommunications, power, entertainment, and infrastructure sectors. However, in just two short years, he lost everything. To understand how that happened, it’s important to know how the company got into trouble.
It all started with a telecom war between Airtel and Jio which led to massive losses for all telecom companies in India. One by one, other telecom giants were forced to close their operations which left Jio as the only game left in town. (Read How Aliko Dangote Became The 73rd Richest Person In The World).
But even they weren’t able to survive because they couldn’t get enough funding from banks due to their heavy debt burden following their year-long free services offer during Prime Minister Narendra Modi’s demonetization drive and consequent bad press coverage of what was seen as a badly-timed launch by Jio against public sentiment at that time.
The situation worsened when Mukesh Ambani announced plans to merge Jio with his own company and then sell shares in both entities this decision would have led to him owning a majority stake in both entities, but the plan did not materialize. For two years, over 8 trillion rupees went down the drain.
The Beginning of the End for Anil Ambani and His Company Reliance Group
As of 2008, Anil Ambani was one of the wealthiest people in the world. He was worth an estimated $42 billion. But then, over the next two years, he lost it all.
How did this happen? There are a few possible explanations for his downfall. One is that he may have overextended himself and taken on too much debt during the 2008 financial crisis.
Another is that his company got too complacent with its pricing, which led to lower-than-expected margins for energy contracts. The most likely explanation, though, is simply that Reliance Group just wasn’t making enough money anymore to pay back the loans they had taken out to keep going.
And when you’re talking about billions of dollars worth of debts, there’s not a lot you can do if the situation doesn’t change. So after running through their options – including borrowing more money from other companies and banks there really was only one choice left: sell off assets to raise funds for their debts. (Read The Complete Guide to Financial Advisors and How They Can Help You Achieve Your Financial Goals).
In December 2010, Adan sold off shares in many of his holdings, including stakes in gas fields belonging to Mukesh Ambani’s firm presumably part of a deal where Mukesh paid off some or all of Adan’s loan obligations. In 2011, both firms were auctioned off by government regulators as well.
What Happened to Anil Ambanis Net Worth?
Anil Ambani is an Indian business magnate who, until recently, had a net worth of $42.2 billion. He is the chairman of Reliance Group, which has interests in telecommunications, power, natural resources, and infrastructure. (Read The Top 7 Most Popular Cryptocurrencies and What Makes Them So Successful).
In February of 2018, however, it was reported that his net worth had fallen to just $1 billion. So what happened? What caused such a large drop in one year’s time? The answer lies in India’s growing middle class, and their increased demand for products.
One way for companies to keep up with this demand is by increasing production rates. For instance, every new mobile phone starts out at a cost of about $150-200 USD (depending on the model).
Manufacturing costs per unit are only going up as economies of scale shift from labor-intensive manufacturing to automation-based manufacturing. When we look at numbers like these, it’s easy to see how capital expenditure can get very high very quickly.
In 2009, when Ambani took over his father’s company and renamed it Reliance Industries Limited, he was faced with huge debts totaling nearly $3 billion because of interest payments from loans made decades ago. (Read Tesla increases the cost of its cars by thousands of dollars).
Ambani’s solution was to double down on the market strategy he used to grow RIL into one of India’s largest conglomerates: leveraging the company’s strengths in oil refining and petrochemicals into a global energy conglomerate through acquisitions like those of Dow Chemical Company, DuPont Industrial Chemicals Company LLC, Corning Incorporated’s Global Research Center and BP plc’s downstream assets in the Asia Pacific.
What Happens to The Reliance Group Now That It’s Been Sold?
Now that the Reliance Group has been sold, what will happen to it? The conglomerate was founded by Dhirubhai Ambani in 1966 and was run by his sons Mukesh and Anil after his death in 2002.
Mukesh Ambani is now the sole owner of the group after he bought out his brother’s stake in 2005. The group is currently worth an estimated $50 billion. However, this figure does not include the debt taken on by Mukesh Ambani for buying his brother’s stake in 2005.
The group was created with a philosophy of minimum investment and maximum profit. As such, the company developed one of India’s largest refining complexes Jamnagar Refinery which processes more than a million barrels per day as well as gas pipelines supplying gas to more than two dozen Indian states. (Read also The Urus is Lamborghini’s finest model, making headlines).
Today, they have interests in energy (coal mining), real estate (including construction), petroleum products (automobiles), telecommunication services (Reliance Communications Limited), etc.
The end goal of the group had always been to make life easier for the common man. They are deeply involved in philanthropy activities too. (Read Elon Musk is being sued for 258 billion USD for reportedly using a dogecoin Ponzi scheme to defraud investors).
After some financial struggles over time, Mukesh Ambani finally decided to sell most of his assets including stakes in several companies under the Reliance Group umbrella.
These assets were valued at US$5 billion as part of a deal with Anil Ambani. The agreement is conditional on how much money each party can raise from their respective shares.
It’s been speculated that Mukesh will raise more capital than his younger brother so the price tag could increase to US$8-10 billion.
Where Does the Debt Go? But there is another point of contention: Reliance Communications’ debt burden which amounts to US$7 billion!
A major reason why some analysts believe Mukesh Ambani sold these assets was that he wanted cash quickly to pay off this debt without being forced into bankruptcy proceedings by lenders.
Conclusion: What We Can Learn From Anil Ambani’s Journey To Becoming A Billionaire To Losing It All Again
Anil Ambani’s story is a cautionary tale for anyone who thinks they can make it big without a solid plan. He took too many risks, made impulsive decisions, and ultimately lost everything he had worked so hard to build. While it’s possible to make a comeback from such a financial setback, it’s not easy.
We can learn from Anil Ambani’s mistakes by being more careful with our money, investing wisely, and avoiding excessive risk-taking. Though we may feel the pressure to get rich quickly, at the end of the day what matters most is that we’re happy with how we live our lives.
If you’re just looking to make some extra cash in order to enjoy life, there are other ways to do so besides throwing your savings into risky investments. Investing time in your skills or talents will pay off as well; even if you don’t have any right now!
If you want to try your hand at entrepreneurship and become an entrepreneur, take a look at this list of all the things you need before becoming one! After reading about his journey from billionaire to bankrupt, what lessons did you learn?