Anil Ambani No Longer A Billionaire, But His Woes Don’t End There

Chinese lenders such as China Development Bank, Exim Bank of China, and Industrial and Commercial Bank of China are demanding their dues worth thousands of crores from Anil Ambani’s Reliance Communications (RCom) and have even moved India’s bankruptcy court. Ambani’s conglomerate, the Reliance Group, has recently crashed in value, revoking Ambani’s billionaire status.

In a list disclosing its creditors, RCom showed that China Development Bank loaned it Rs 9,863.89 crore, Exim Bank of China extended Rs 3,356.44 crore and Industrial and Commercial Bank of China Head Office gave Rs 1,619.21 crore while the Mumbai office gave Rs 278.48 crore.

China Development Bank is RCom’s largest creditor overall while State Bank of India is its largest Indian creditor.

The three Chinese lenders have approached the National Company Law Tribunal (NCLT) in an effort to get RCom to repay a total of Rs 15,118.02 crore or around $2.1 billion. The bankruptcy court is currently hearing the lenders’ case.

RCom’s debt troubles

Ericsson India filed three bankruptcy petitions against Ambani not repaying dues worth Rs 1,150 crore. It even called for Ambani to be put in a “civil prison” until he complies and makes the payment.

The Supreme Court told Ambani that unless he repays Ericsson within the month, he will be sentenced to three months in jail for being in contempt of court.

But, in March, Ericsson confirmed that Ambani and repaid his debt of approximately Rs 550 crore. In a statement, Ambani thanked his brother Mukesh and sister-in-law Nita for “timely support”, leading to speculation that the couple paid Ambani’s debt on his behalf.

Ambani was also spared the jail term.

“My sincere and heartfelt thanks to my respected elder brother, Mukesh, and Nita, for standing by me during these trying times, and demonstrating the importance of staying true to their strong family values by extending this timely support. I and my family are grateful and deeply touched with their gesture,” said Ambani.

Auditors in three of the six companies in the conglomerate— Reliance Capital, Reliance Home Finance and Reliance Infrastructure— have resignedfrom the bankruptcy resolution process claiming that Reliance was uncooperative and has committed wrong-doings.

However, in June, Ambani said that the Reliance Group has already repaid Rs 35,000 crore worth of loans in the past 14 months and is working towards a “bare minimum” debt.

Anil Ambani is no longer a billionaire

Ambani was previously the sixth richest man in the world with an estimated value of $42 billion in 2008. However, his glory days are long gone. Today, his full conglomerate, the Reliance Group, is only a shadow of its former self.

Ambani holds less than 75% of shares in the six companies he owns— Reliance Infrastructure, Reliance Naval & Engineering, Reliance Power, Reliance Capital, Reliance Home Finance, and Reliance Communication that is no longer functional.

Business Today reports that now, Ambani’s Reliance Group is worth only $523 million or Rs 3,651 crore. The value of his real equity, without pledged shares (shares used as collateral against loans), is even lower at Rs 765 crore or $109 million.

Ambani’s company’s value is barely twice that of his $50 million chartered Bombardier Global Express jet. He has blamed “unwarranted rumour-mongering” for his stocks nosediving.

According to the Economic Times, one of the reasons for Ambani’s wealth crash is the sale of his stake in reliance Nippon Life Assets Management, a joint venture with a Japanese insurance company that is valued at Rs 13,500 crore. This insurance firm was considered to be one of Ambani’s most valued assets.

Reliance Communications has also been embroiled in bankruptcy proceedings with a huge Rs 58,000 crore debt. The global financial crisis of 2008 has also had a negative impact on the Reliance Group because it Ambani’s net worth was hovering around $10 billion by mid-2009.

In contrast, Mukesh Ambani’s wealth has skyrocketed to $43 billion, making him the richest man in India and in Asia. Even his luxury home, Antilla, is rumoured to be worth more than Ambani’s Reliance Group.

He has found much success with his telecom venture Reliance Jio and petrochemicals company Reliance Industries and is known for his lavish spending.

Mukesh has also made an effort to stay ahead of his competitors by diversifying his businesses, most recently by buying Hamleys, London’s most iconic toy store.

He was even in talks with Saudi Aramco, the world’s most profitable companywith a net income of $111 billion in 2018. Saudi Aramco’s value is twice that of Apple and Mukesh was looking to sell it a 25% take in Reliance Industries.

While RCom and Reliance Naval & Engineering are no longer functional and involved in bankruptcy court proceedings, the rest of Ambani’s companies need urgent attention for the thousands of crores of debt they have racked up.―Qrius