Eleven years ago, Anil Ambani was one of the wealthiest men in the world. As per Forbes valuation, the younger son of industrialist Dhirubhai Ambani was listed as the world's sixth richest person in 2008. Just after a decade, he is now struggling to save his reputation.
On Friday, the National Company Law Appellate Tribunal (NCLAT) refused a plea seeking the tribunal to direct a group of lenders led by State Bank of India (SBI) to release Rs 260 crore of tax refunds to Reliance Communications. Notably, the amount is due to be paid to Ericsson for which the Swedish multinational networking and telecommunications company has approached the Supreme Court (SC).
The judgment is a huge setback for Anil Ambani-led Reliance Communications. As per the directions of the apex court, RCom is bound to pay Ericsson its remaining dues of Rs 453 crore by Tuesday to ensure that Ambani doesn't go to jail. RCom has cleared partial dues of Rs 118 crore of the total Rs 571 crore.
How did one of the world's wealthiest men come this to the sorry state? Let's find out.
After the death of his father Dhirubhai Ambani, Reliance Industries was divided into two in 2005 with Mukesh Ambani, his elder brother, getting control of the flagship oil-refining and petrochemicals business. Anil got hold of newer businesses for example power generation, financial services and telecom business, having a high potential of growth back then. From this very moment, Anil Ambani-led companies started borrowing heavily to diversify and create a conglomerate that could generate as much wealth as Mukesh's refining firm Reliance Industries created.
Anil Ambani's RCom was doing fairly good till 2010, the year a non-compete clause between him and his elder brother was scrapped which kept Mukesh Ambani out of telecom business. In the cut-throat competition in the growing telecom market, RCom kept borrowing to remain in the fight. RCom started losing position as the No.2 carrier in the telecom market which was further accelerated when Mukesh Ambani-led Reliance Jio entered the market and completely disrupted it with free calls and data.
Today, Anil Ambani is facing arrest due to non-payment to the Swedish telecom equipment maker. RCom offered to settle the case but since last year, things have not appeared to reach any conclusion. Only, time will tell Anil Ambani's fate.