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Downfall of Once Asia’s Richest Man

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This article is centered around the downfall of the world’s sixth-richest man back in 2008. See how things turned against him. “A rich man was not born rich but earned dignity and wealth with time.”
Asia's Richest Man

Anil Ambani

This article is centered around the downfall of the world’s sixth-richest man back in 2008. See how things turned against him.

“A rich man was not born rich but earned dignity and wealth with time.”

Once among the world’s richest men or members of billionaire’s club is now struggling as a defaulter facing a jail term. It started with his business crashing with a total of $523 million. This could be one of the biggest downfalls in the history of the modern corporate world as the man, who owned a net worth of $56 billion is now operating in zero net worth after the calculation of all his debts he took for his ventures. 

Companies owned by Anil Ambani:

  1. RCom(Reliance Communications) – RCom was launched on July 31, 2002, led by Anil Ambani after the split of Reliance Group. This was started with the first service of voice calling. In 2019, the company was filed for bankruptcy for not being able to pay the due debt which was found 50000 crore excluding assets worth 18000 crore in total.  
  2. RCL(Reliance Capital) – RCL formerly known as Reliance Capital and Finance Trust Limited was started in 1986 as one of India’s leading private financial companies. In 2017, the net worth counted to 16548 crore and in 2018 it ranked 77 in Fortune India 500 while 5th in no banking finance.
  3. Reliance Energy – This incorporated in 1995 under the leadership of Anil Ambani. Its basic service is to develop, construct, and maintain power projects of Anil Dhirubhai Ambani Group(ADAG). In 2019 it ranked 176 in the list of Fortune India 500 and 9th in the power category.
  4. Reliance Entertainment – It was incorporated in 2005 having Tina (wife of Anil Ambani) as the director and Anil Ambani as chairman.
Anil Ambani's Ventures
Anil Ambani’s Ventures

What took to his downfall?

To start these companies Anil Ambani took huge loans to set up big power plants. This was the most risky investments he made. In the rat race, Anil secured three of the major ultra mega power projects auctioned by the government in 2008 and 2009, at Sasan in Madhya Pradesh, Tilaiya in Jharkhand and Krishnapatnam in Andhra Pradesh. Meanwhile, Reliance Infrastructure was bidding for projects in railways, power, and roads. Due to the failure in coping with the difficulties of the power industry debt raised unexpectedly. Not just this Anil Ambani took a loan for RCL too, though faced problems with the advent of Jio in the market, and RCL crashed and landed him in huge debt too. 

Series of downfall:

  • In 2008, he gifted her wife a yacht worth Rs 4 billion and in the same year lost USD 30 billion as the stock market crashed leading to the drop of his net worth to USD 12 billion.
  • In 2011, his net worth dropped to USD 8.8 billion due to 2G scam.
  • Even with dropping net worth, he signed Maharashtra government’s dream project of “The Mumbai Metro” which landed his net worth falling to USD 5.2 billion.
    In 2018, Reliance Infrastructure’s Mumbai power distribution business was sold to Gujarat-based Adani Group. Heavy debts took their toll on RCom. 
  • In 2019, the real fall down came in when Reliance Communications had to declare bankruptcy and warned by the Supreme Court to either pay dues to vendor Ericsson or move to jail.
Series of Downfall
Series of Downfall

Since all his ventures were capital intensive and left with no investment he went on stacking debts one after the other now left with zero net worth. This resulted due to his wrong diversification in business channels. Though in the meantime Mukesh Ambani, his elder brother saved him from going jail by paying dues of Ericson.

Once when Anil Ambani was one of the Richest Businessmen in Asia he had $1.7 Billion net worth on 3 April 2019. He was #1349 on Forbes billionaires list and #68 in India’s richest person and now in 2020, he says “My net worth is zero after taking into account my liabilities. In summary, I do not hold any meaningful assets which can be liquidated for the purposes of these proceedings.” 

There is a sweet message in his downfall, ”Don’t be impulsive while making any decision, it may lead to a crash or a downfall.”

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