From sixth richest in the world to possible arrest: The fall of Anil Ambani

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Indian billionaire Anil Ambani has spent years defending himself against creditors and suing critics of his business empire for debt. But your account counting moment may have arrived, as it runs to pay debts or face a possible jail sentence.

On Feb. 20, India’s Supreme Court said the Reliance Group phone unit had disobeyed a decision to pay about $ 77 million owed to the local subsidiary of provider Ericsson AB, adding that the tycoon will personally face three months of jail unless payments are made within four weeks The Ambani group said it will comply with the request and make the payments within the required time.

It is an extraordinary fall for a man included in the list of Forbes magazine in 2008 as the sixth richest person in the world. The court’s decision comes after a difficult year for Ambani, as parts of his empire saw losses and competition in India’s telecommunications market became increasingly brutal. Its history also provides information on the extent to which India has arrived to put an end to the vanquished borrowers and curb the financial impunity of its richest citizens.

“It has reached the final weeks of the battle,” said Arun Kejriwal, director of KRIS, an investment advisory firm based in Mumbai. Ambani can fight Ericsson and other creditors, but he can not fight with the nation’s highest court, he said.

Anil Ambani took over the telecommunications business after fighting his elder brother, Mukesh, in a high-profile dispute over control of the expanding conglomerate built by his father, who died in 2002 without a will. Before the death of the patriarch, the Ambani brothers served as executives in their father’s company. Three years after the death of his father, the dispute was resolved by dividing the empire in two, placing Ambanis among the ranks of the richest businessmen in India.

The death of the founder left the children in charge of the massive family business just as India was about to enter a growth outbreak driven by a rising middle class. Even though Anil’s star has faded, his older brother, Mukesh, has become the richest man in Asia. Representatives of both brothers did not comment.

Bloomberg News is currently defending the lawsuits filed by Anil Ambani, 59, and Reliance Communications Ltd. in connection with previous Bloomberg reports.

Here you can see how the rivalry between brothers in the Ambani family, the problems in the telecommunications business and India’s tougher credit stance contributed to the decline of Anil’s fate.

Fortune divided

When the family dispute was resolved in 2005, Mukesh gained control of the petroleum and petrochemical refining business. Anil, on the other hand, acquired the new businesses, such as power generation, financial services and a telecommunications business, which was considered one of the main growth perspectives.

From there, Anil companies took loans to diversify and build a credible conglomerate that could generate the kind of revenue that Mukesh’s refining firm Reliance Industries Ltd. would enjoy.

Wind against telecommunications

A non-competition clause between the brothers kept Mukesh out of telecommunications until the agreement was eliminated in 2010. The brothers’ return to telecommunications resulted in the creation of Reliance Jio Infocomm Ltd., which built a wireless network 4G nationwide.

At the same time, Ambani’s younger brother faced increasing competition in the rapid growth of the wireless phone business. As the operators fed from the subscribers, Reliance Communications generated loans to keep up. Even so, the airline lost its rank as the number 2 airline in a fall that accelerated when Mukesh fatally broke into the market. Jio’s entry into the market in 2016 put pressure on all rivals, including Anil’s company, because it attracted many of its customers with free calls and cheap plans.

“Telecom was a disaster story for Anil due to fierce competition, which led to industry consolidation and over-indebtedness,” said Alok Shende, principal analyst at Ascentius Insights consultancy, based in Mumbai.