The Fall of Anil Ambani | From $45 Billion to $0 Net Worth | Dhruv Rathee

The video discusses the dramatic rise and fall of Anil Ambani, once the 6th richest person in the world, whose fortunes dwindled due to a series of business missteps and intense rivalry with his brother, Mukesh Ambani. The narrative traces their journey from inheriting their father Dhirubhai Ambani's business empire to their eventual split in 2005, which saw Anil taking on debt-heavy ventures while Mukesh retained core businesses. Anil's financial troubles escalated, culminating in a ban from the Indian market by SEBI in 2023. The story underscores the impact of familial discord and strategic errors on Anil's downfall.

• Debt Accumulation: Anil Ambani's companies accrued debt amounting to ₹1,720 billion.
• International Loans: Loans were taken not only from Indian banks but also from Chinese banks.
• Blame on Mukesh Ambani: Anil attributed his business failures to his brother Mukesh Ambani.
• Legal and Regulatory Issues: Anil faced multiple court cases and a ban from SEBI for five years starting in 2024.

"Anil Ambani's companies were in debt to the tune of ₹1,720 billion."

• Anil's businesses accumulated significant debt, creating a financial crisis.

"Not only from Indian banks, but he had also taken loans from Chinese banks."

• Anil's debts included international loans, complicating his financial situation.

"He started blaming all his business failures on Mukesh Ambani."

• Anil shifted responsibility for his failures onto his brother Mukesh.

"Debtors are chasing after him. There are several court cases pending against him, and SEBI has now banned him from the Indian market for the next 5 years."

• Anil's financial woes led to legal troubles and regulatory bans.

• Dhirubhai's Preferences: Dhirubhai Ambani preferred Mukesh over Anil for business leadership.
• Marriage Controversy: Anil's marriage to Bollywood actress Tina Munim was opposed by the conservative Ambani family.
• Mukesh's Marriage: Mukesh married Neeta Dalal, chosen by his mother, and she became an integral part of the family.

"Mukesh Ambani was a bit of an introvert. So, he used to handle operations."

• Mukesh was responsible for operational aspects of the business.

"Anil Ambani was an extrovert. That's why he became the public face of Reliance."

• Anil managed public relations and corporate affairs.

"Anil Ambani's decision to marry Tina Munim... Dhirubhai Ambani opposed this marriage."

• Anil's choice of spouse created family tensions due to cultural differences.

"Mukesh married the girl his mother chose for him. His mother, Kokilaben, saw Neeta Dalal in a Bharat Natyam dance recital."

• Mukesh's marriage was arranged and approved by the family, strengthening his position within it.

• Role Distribution: Mukesh handled operations and mega projects, while Anil managed public relations and lobbying.
• Internal Conflict: The brothers' differing visions led to a division within Reliance.
• Dhirubhai's Merger: Dhirubhai attempted to unify the company to prevent division but was unsuccessful.

"Mukesh started taking over more and more of Reliance's activities."

• Mukesh gradually assumed greater control within the company.

"The Reliance Group was divided into two factions. The Pro Mukesh Group and the Pro Anil Group."

• The company split into factions supporting either Mukesh or Anil.

"In March 2002, he announced a mega-merger of the Reliance companies."

• Dhirubhai's merger aimed to consolidate the company under joint leadership.

• Dhirubhai's Death: After Dhirubhai's passing in 2002, Mukesh took over as the head of Reliance.
• Financial Powers: The Reliance Board restricted Anil's financial powers, granting full control to Mukesh.
• Neeta's Role: Neeta Ambani's increasing influence in Reliance Infocomm added to the tensions.

"6th July 2002, Dhirubhai Ambani passed away. After this, Mukesh Ambani took over Reliance's control."

• Mukesh assumed leadership following their father's death.

"In July 2004, Reliance Board restricted Anil Ambani's financial powers and gave Mukesh Ambani full financial powers."

• The board's decision significantly reduced Anil's authority within the company.

"Neeta Ambani's role in Reliance Infocomm role was on the rise. She was looking after Reliance Infocomm's advertising and branding."

• Neeta's involvement in the business increased, causing further disputes.

• Political Ties: Anil's connections with politicians like Mulayam Singh Yadav and Amar Singh were a point of contention.
• Mukesh's Discomfort: Mukesh was uneasy with Anil's political associations, which he believed were detrimental to the business.

"Anil's closeness with Samajwadi Party's Mulayam Singh Yadav and Amar Singh."

• Anil's political ties were a source of discomfort for Mukesh.

"Mukesh was very uncomfortable with this."

• Mukesh's unease with Anil's political connections contributed to their strained relationship.

• Anil Ambani's close ties with the Samajwadi Party caused friction with Mukesh Ambani.
• Anil's Rajya Sabha nomination and victory with the help of Amar Singh and Mulayam Singh Yadav were seen as problematic by Mukesh.
• Mukesh was concerned about the Congress party's reaction, as they were rivals to the Samajwadi Party at the time.

"Anil Ambani filed a Rajya Sabha nomination as an independent candidate from UP. And he won with Amar Singh and Mulayam Singh Yadav's help."

• Anil's public declaration of wealth during his nomination process was another source of Mukesh's displeasure.

"When Anil Ambani had filled his nomination for Rajya Sabha, he had to declare his and his wife's wealth. This was another reason for Mukesh's displeasure."

• Mukesh was unhappy with Anil's power generation project in Dadri, which he believed was influenced by political motivations.

"Mukesh believed that Anil had forced this project on Reliance only because Anil wanted to please Amar Singh and Mulayam Singh Yadav."

• The relationship between the brothers deteriorated, leading to public awareness of their feud.
• Mukesh Ambani's revelation about his incomplete education at Stanford shocked many and hinted at internal issues within Reliance.

"In the seminar, he said something very shocking. He said in his batch at Stanford Business School, there were only 2 people who dropped out in the first year. Steve and Mukesh Ambani."

• Mukesh publicly acknowledged ownership issues within Reliance, which he later retracted, but the media had already picked up on it.

"He said that there were ownership issues within the Reliance Group but it was in a private domain. No one was sure why he said so publicly."

• The feud escalated to the point where government officials, including the Finance Minister and Prime Minister, intervened.
• Family members, including their mother Kokilaben and family friend K.V. Kamath, also played a role in mediating the conflict.

"The FM asked them to stop fighting. There was government pressure too. Prime Minister Dr Manmohan Singh had to put pressure on them as well."

• A truce was reached in June 2005, dividing the Reliance empire between the two brothers.

"Mukesh got flagship companies like RIL and Indian Petrochemicals Corporation Ltd. On the other hand, Anil Ambani got Reliance Infocomm, Reliance Energy, and Reliance Capital."

• A 10-year non-compete agreement was signed, preventing each brother from entering the other's business sectors.
• Mukesh received 60%-70% of the assets, while Anil got 30%-40%.

"Both brothers signed a 10-year-long non-compete agreement. If one of them was working in any sector, the other brother will not try to compete with it for at least 10 years."

• Anil's net worth tripled by 2007, but he faced significant challenges, including the failed Reliance Power IPO and the MTN deal.
• Mukesh was accused of sabotaging Anil's ventures to prevent him from surpassing Mukesh's wealth.

"Anil claimed that Mukesh's companies were doing this. Anil complained to SEBI that within 4 minutes of the share allotment, 7 Mauritius-based companies started selling the shares."

• The MTN deal fell through due to Mukesh's invocation of the right of first refusal clause in their agreement.

"Mukesh opposed it. Mukesh Ambani cited the agreement between the two brothers to stop this deal."

• Anil accused Mukesh of using political influence to undermine his business efforts, including bids for airport privatization and coal-based methane extraction contracts.

"Anil's company had participated in the privatization bid of Delhi and Mumbai airports and was the highest bidder. And finally, the government decided that there was a significant conflict of interest in the company, so the contract was awarded to the second-highest bidder."

• The most significant conflict revolved around the gas exploration and extraction business.
• Mukesh controlled the gas business, while Anil focused on power generation, leading to ongoing disputes.

"As per the settlement between Mukesh and Anil in 2005, the gas exploration and extraction business went to Mukesh. And the power generation business went to Anil."

These notes encapsulate the intricate details and key themes from the transcript, providing a comprehensive study guide on the Ambani brothers' feud and its impact on their business empire.

• Initial Agreement: Mukesh Ambani promised to supply gas to Anil Ambani at $2.34 per million British thermal units for 17 years, with a daily supply of 28 million standard cubic meters.

  "Mukesh promised to supply gas to Anil at $2.34 per million British thermal units of gas. And every day, for 17 years, 28 million standard cubic metres a day gas was to be supplied."

  • Anil needed gas for his power plant in Dadri, UP.
  • Agreement details: Price and quantity of gas to be supplied.

• Government Intervention: Ministry of Petroleum and Natural Gas refused to approve the price, asserting that gas prices are set by the government.

  "The Ministry refused stating that the government decides the price of natural resources."

  • Mukesh's company sought approval from the Ministry.
  • Government's role in pricing natural resources.

• Legal Battle: Anil Ambani accused the government of favoring Mukesh. The empowered group of ministers set the gas price at $4.21, almost double the agreed price.

  "Anil claimed that this decision was aimed at benefiting Mukesh."

  • Anil's claim of government bias.
  • Price set by government higher than agreed price.

• Court Rulings: Bombay High Court ruled in favor of Anil, but Mukesh's company appealed to the Supreme Court. The government intervened, claiming natural gas is a national property.

  "The Bombay High Court stated that Mukesh Ambani should honour the family agreement and sell the gas at the price of $2.34."

  • High Court ruling and subsequent appeal.
  • Government's position on natural gas ownership.

• Allegations of Bias: Anil accused the UPA government, particularly the Petroleum Ministry, of acting in favor of Mukesh.

  "Anil Ambani accused the UPA government of acting in Mukesh Ambani's favour. Especially the Petroleum Ministry."

  • Alleged favoritism towards Mukesh.
  • Accusations against the Petroleum Ministry led by Murli Deora.

• Public Campaign: Anil's companies published ads accusing the government of financial bias towards Mukesh.

  "Anil's companies started publishing front-page ads in newspapers. Saying that the government and the Petroleum Ministry were working to benefit Mukesh even at the cost of hurting the government treasury."

  • Media campaign to highlight alleged biases.
  • Financial implications for government treasury.

• Sabotage Discovery: Technician Bharat Borge found pebbles in Anil Ambani's helicopter fuel tank, indicating deliberate sabotage.

  "Bharat Borge found that the filter neck of the helicopter was not fitting properly. He opened it to fix it and found small, peanut-sized stones inside."

  • Discovery of sabotage in helicopter.
  • Potential threat to Anil's life.

• Borge's Death: Bharat Borge was found dead with a suicide note mentioning threats from Mukesh's company officials.

  "A technician, Bharat Borge found that the filter neck of the helicopter was not fitting properly. He opened it to fix it and found small, peanut-sized stones inside."

  • Borge's death under suspicious circumstances.
  • Allegations of threats from Mukesh's company officials.

• Court's Decision: Supreme Court ruled that gas is government property, and only the government can set its price.

  "The court said that gas is a government property and only the government can decide its price, not the Ambanis."

  • Supreme Court's ruling on gas ownership and pricing.
  • Implications for both brothers' businesses.

• Impact on Anil: The ruling favored Mukesh, leading to significant financial losses for Anil.

  "This judgement meant that Mukesh Ambani would become rich by several billions of rupees, and Anil Ambani would suffer losses to the tune of billions of rupees."

  • Financial impact on Anil's companies.
  • Market reaction to the judgment.

• Non-Compete Scrapped: Both brothers agreed to end their non-compete agreement, allowing them to venture into each other's businesses.

  "Mukesh and Anil's companies issued a press statement and said that their family agreement was a non-compete agreement, but the brothers decided to scrape it."

  • Decision to end the non-compete agreement.
  • Potential for direct business competition.

• Land Acquisition: Anil faced issues acquiring land for his power project in Dadri, with legal challenges from farmers.

  "Land was needed for the project and in 2004, UP's Mulayam Singh Yadav government used an emergency provision and handed over this land to Anil Ambani."

  • Government's role in land acquisition.
  • Opposition from farmers and legal challenges.

• Court Ruling: Allahabad High Court ruled in favor of farmers, requiring a No Objection Certificate for land acquisition.

  "Allahabad High Court passed its judgement in the favour of the farmers. The court said that if the government wanted to handover the farmers' land to a company like they did, it should have gotten a No Objection Certificate from every farmer."

  • High Court's ruling on land acquisition.
  • Requirement for farmer consent.

• Debt and Investment: Anil's telecom business faced heavy debt due to investments in 3G technology and failed merger plans.

  "Anil started investing in 3G. Because of this, his company Reliance Communications went into debt of ₹300 billion."

  • Financial strain from 3G investments.
  • Failed merger with GTL Infratech.

• 2G Spectrum Scam: Anil was interrogated by CBI regarding his role in the 2G spectrum scam, leading to further challenges.

  "The alleged 2G spectrum scam took place, and 122 telecom licences across the country were cancelled. One of these licences belonged to Anil Ambani."

  • Impact of the 2G spectrum scam on Anil's business.
  • CBI investigation into Anil's involvement.

• Competition from Jio: Mukesh Ambani's preparation to launch 4G network Jio posed significant competition to Anil's telecom business.

  "Mukesh Ambani was preparing to launch his 4G network Jio."

  • Competitive threat from Mukesh's Jio.
  • Strategic shift in the telecom industry.

• Reliance Communications chose CDMA technology, while competitors like Airtel and Hutch chose GSM.
• CDMA SIM cards were limited to 2G and 3G technology and did not support 4G.
• Transitioning from CDMA to GSM was necessary for 4G services, which was challenging and costly.

"The problem with the CDMA SIM card was that it could only run 2G and 3G technology. It didn't work with 4G."

• CDMA's limitation to 2G and 3G hindered Reliance Communications' ability to offer 4G services.

"Within a year, he needed to shift all the SIM cards from CDMA to GSM. Doing so was challenging, and would cost billions of rupees."

• Transitioning from CDMA to GSM was financially and logistically demanding.

• By 2012, Vodafone had surpassed Reliance Communications, and by 2016, it had fallen to the fourth place.
• The company faced increasing debts and operational difficulties.

"By 2012, Vodafone had surpassed Reliance Communications. And by 2016, Anil Ambani's Reliance Communications had fallen to the fourth place."

• Reliance Communications lost its market position to competitors.

"The debts were increasing, there was no end of difficulties and amidst all this, Mukesh Ambani announced Reliance Jio."

• The company struggled with rising debts and operational issues.

• Reliance Jio, launched by Mukesh Ambani, offered free 4G services, attracting a large customer base.
• This move further weakened Reliance Communications' market position.

"Reliance Jio offered free 4G services to snatched away all customers."

• Reliance Jio's free services drew customers away from Reliance Communications.

"Jio's data, voice, video, will be available for everyone, absolutely free."

• Jio's comprehensive free service offerings disrupted the market.

• In 2017, Anil Ambani attempted to merge Reliance Communications with Aircel, but the deal failed.
• Subsequent deals, including a tower deal with Brookfield, also fell through.
• Reliance Communications eventually announced the closure of its 2G and 3G business.

"As the last option, Anil Ambani tried to merge his company with Aircel in 2017. But that deal failed too."

• Anil Ambani's attempt to merge with Aircel was unsuccessful.

"Reliance Communications announced the closure of its 2G and 3G business."

• The company ceased its 2G and 3G operations due to financial troubles.

• By 2017, Reliance Communications' debt had risen to ₹430 billion.
• Efforts to sell assets to reduce debt failed.
• Anil Ambani faced legal challenges, including a contempt petition from Ericsson.

"By 2017, Reliance Communications's debt had risen to ₹430 billion."

• The company's debt had escalated significantly by 2017.

"The Supreme Court gave Anil Ambani a deadline of 30th September 2018, to return Ericsson's ₹5.5 billion."

• Anil Ambani faced a court-ordered deadline to repay Ericsson.

• Mukesh Ambani eventually intervened to prevent Anil Ambani's imprisonment by paying Ericsson's dues.
• This intervention highlighted the strained yet supportive relationship between the brothers.

"Mukesh helped him. By paying the pending dues to Ericsson, Mukesh Ambani saved his brother Anil from having to go to jail."

• Mukesh Ambani's financial support prevented Anil Ambani's imprisonment.

• In September 2019, the National Company Law Tribunal declared Reliance Communications insolvent.
• The company's assets were sold to pay off debts.

"On 25th September 2019, the National Company Law Tribunal declared Reliance Communications insolvent and started selling off the company's assets to pay off its debts."

• Reliance Communications was declared insolvent, leading to asset liquidation.

• Anil Ambani's problems were not limited to Reliance Communications; his other ventures also faced significant debt and operational issues.
• His business strategy often relied on large investments and political connections for funding.

"His problems began in 2014 when his companies started racking up more and more debts."

• Anil Ambani's financial troubles extended beyond Reliance Communications.

"Getting funding for projects from public sector banks using political connections, was Anil's strategy most of the time."

• Anil Ambani frequently relied on political connections for funding.

• Anil Ambani sold various assets, including Reliance Entertainment's multiplex chain and Reliance Infrastructure's Mumbai City Power Distribution business, to pay off debts.
• Several major projects, particularly in Reliance Power, were stalled due to funding and regulatory issues.

"In 2014, Reliance Entertainment had to sell its multiplex chain Big Cinemas to pay off its debts."

• Reliance Entertainment sold Big Cinemas to manage debt.

"In August 2018, Anil sold his Reliance Infrastructure's Mumbai City Power Distribution business to Gautam Adani for ₹188 billion."

• The sale of the Mumbai City Power Distribution business was another effort to reduce debt.

• Anil Ambani received cash-hungry businesses that required constant innovation and investment.
• Mukesh Ambani's businesses were more stable and required less frequent investment.

"During the asset allocation between the two brothers, Anil received cash-hungry businesses, that needed innovation and investment constantly."

• Anil Ambani's businesses required continuous investment and innovation.

"Mukesh got core businesses. Like oil and gas. Those businesses did not need as much innovation."

• Mukesh Ambani's businesses were more stable and less investment-intensive.

• Anil Ambani faced lawsuits from Chinese banks over unpaid loans.
• He claimed his net worth was zero, but the court doubted his statements.

"Three Chinese banks, controlled by the Chinese government, filed a lawsuit in London's High Court that Anil took a loan of $925 million for Reliance Communications in 2012."

• Chinese banks sued Anil Ambani for unpaid loans.

"He was a personal guarantor for this loan but the loan wasn't being repaid."

• Anil Ambani personally guaranteed the loan but failed to repay it.

• SEBI banned Anil Ambani from being a director in any listed entity due to fund diversion charges.
• He resigned from the boards of Reliance Infrastructure and Reliance Power.

"In February 2022, SEBI banned Anil Ambani from being associated as a director in any listed entity on charges of diversion of funds."

• SEBI imposed a ban on Anil Ambani due to fund diversion allegations.

"In March 2022, Anil Ambani resigned from the Boards of Reliance Infrastructure and Reliance Power."

• Anil Ambani resigned from key positions in his companies.

• Anil Ambani has become more religious and spiritual, distancing himself from public life.
• He continues to seek ways to recover but faces significant challenges.

"According to a Bloomberg report, his acquaintances say that he has now become religious and spiritual."

• Anil Ambani has shifted his focus towards spirituality and religion.

"He is still trying to look for ways to turn things around and change his fate. But now, considering his situation, it seems nearly impossible."

• Despite his efforts, Anil Ambani's prospects for recovery appear bleak.

• The video concludes with reflections on the importance of family and humility over material wealth.
• It suggests that cooperation between the Ambani brothers could have led to different outcomes.

"No matter how much money you have, even if you are the richest person in the world, money cannot replace your family."

• The video emphasizes the value of family over wealth.

"Think about it, had these two brothers lived and worked together instead of fighting each other, their lives could have been vastly different."

• Cooperation between the Ambani brothers could have changed their fortunes.