The TLDR: The far poorer Ambani sibling is back in the news, once again due to his financial woes. Three Chinese banks are suing Ambani Jr for $680 million in unpaid debt—demanding that he sell all his personal assets to pay. Anil Ambani’s response: My net worth is “zero.” We look at the precipitous fall of Chhota Ambani—and the role played by bada bhai Mukesh in nudging his sibling over the edge.

The big split

The Ambani bros: The two brothers were close as children, but vastly different in personality. As they grew older, Anil emerged as the flashy hare to Mukesh’s low-key tortoise. As Bloomberg News describes it:

“Mukesh wore little that was fancier than an untucked short-sleeve shirt, married a woman chosen for him by his parents at 27, and spent most evenings watching old movies at home. Anil, who slicked back his hair and dressed in sharp suits, was part of Mumbai’s fast crowd, friendly with socialites and Bollywood stars, whom he sometimes took on getaways in a corporate jet. He married at 31, late in India, and his parents made no secret of their disapproval of his choice of spouse, the actress Tina Munim. While Mukesh was rarely seen in public, on many evenings reporters could find Anil outside Reliance’s headquarters, sitting on the hood of a Cadillac and munching on street food while talking up the company’s prospects to anyone who’d listen.”

The split: That difference in temperament became the flashpoint for a raging civil war when Papa Dhirubhai died in 2002 without leaving any plan for succession. Mukesh became Chairman of the Reliance empire, while Anil was made Vice Chairman—but there was a slight problem: “Mukesh saw himself as the undisputed boss, whereas Anil considered himself an equal partner.”  

As the family feud turned ugly, Mummy-ji, Kokilaben, brokered a division of the spoils. Mukesh got the refinery and petrochemicals businesses, while Anil took over financial services, power generation, and telecommunications. 

Point to note: The two brothers also signed a 10-year non-compete agreement—pinky-promising not to stray into the other’s territory.

Anil’s fall from grace

The good times: In the early years after the split, Anil appeared to thrive. According to Forbes India, Anil’s net worth tripled to $45 billion in 2007, making him the third-richest Indian—a mere $4 billion behind his brother. 

The fatal flaws: were in evidence at the very outset, and there were three:

One: Anil continually invested all his money in highly capital-intensive industries—telecommunications, power and defence—that required vast infusions of money. For example, Anil successfully landed three giant power projects auctioned by the government in 2008 and 2009—while bidding on other projects in railways, power and roads.

Two: He borrowed to spend big. He dealt with each setback by raising vast sums of money. As one stock market analyst says, "His decisions did not come out of a carefully crafted strategy; they were driven by ambition.”

Three: Anil had a weakness for celebrity, spending big on the entertainment business. He partnered with Steven Spielberg’s DreamWorks Studios, to make movies for a global audience. At home, he bought the multiplex chain Adlabs from Manmohan Shetty for Rs 3.5 billion in 2005—and became the largest multiplex owner by 2008 with 700 screens in India and abroad.

The result: The sixth-richest man in the world in 2008 was worth a paltry $20.4 million in 2019.

The fall: Anil’s slide into bankruptcy is linked directly to his telecommunications arm, Reliance Communications—and the role Mukesh-bhai played in nudging him over the edge. Here’s a quick timeline:

• After he split with his brother, Anil renamed the family’s telecom biz—which soon became the darling of the newly burgeoning mobile business. 
• But there was a big roadblock looming ahead. Anil’s biz was based on one kind of tech platform—CDMA (Code Division Multiple Access)—but it only supported 2G and 3G. 
• In 2012, when the market and his rivals jumped to 4G, he had to rebuild his network from scratch.
• Strike one: To do that, Anil borrowed $925 million from three state-controlled Chinese banks—Industrial & Commercial Bank of China Ltd (ICBC), China Development Bank and Export-Import Bank of China—which are suing him now. 
• Strike two: Anil’s power plants were failing, and he turned to his brother to supply natural gas at a discount to keep them viable. But bada bhai slapped on a big price tag: Mukesh insisted that the non-compete deal be annulled—with his eye clearly on the juicy telecom sector.
• Strike three: In 2016, Jio entered the industry with a big bang, and undersold everyone in the business—driving out Anil, who told shareholders in 2018: "We have decided we will not proceed in this sector. Many other companies have taken a similar call. This is very much the writing on the wall."

The current bankruptcy debacle

It’s gone quickly downhill ever since for Anil. 

First: RCom shut shop in 2017. And Anil announced a deal to sell its assets to Mukesh—who backed out when the government asked him to pay off its debts.

Then: in 2019, Ericsson sued Anil for failing to honour an agreement to Rs 5.5 billion—personally guaranteed by him. The Supreme Court ruled against Anil, giving him one month to pay the amount. Mukesh-bhai finally stepped in to bail him out. But he refused to buy out RCom’s assets. The reason: the decision nudged RCom into bankruptcy. And now bada bhai can get those same assets for a song.

Point to note: In 2018, Anil Ambani's empire owed a grand total of Rs 1.7 trillion. In 2019, RCom headed to the bankruptcy court with a debt of Rs 460 billion. 

And now: Anil is once again being sued for $680 million by the three Chinese companies who funded his transition to 3G—this time in a UK court. They too claim that Anil personally guaranteed the debt—i.e. they can lay claim to his personal assets, and not just that of the company. 

Whither bada bhai? Back in February, the court told Anil to set aside $100 million—to which he said: “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.” To which the judge said:

“Anil has ‘clearly got more assets and income than he’s letting on,’ the judge said. ‘What I’m dealing with is an extraordinarily wealthy family who have helped each other in the past.’ Waksman said he didn’t believe that Ambani’s family ‘have firmly and irrevocably brought the shutters down.’”

But this time, Anil is insistent that there is no prospect of a ‘fraternal bailout’, telling the court: “I confirm I have made inquiries, but I am unable to raise any finance from external sources.”

What’s next for Anil?

In his latest court deposition via video from Mumbai, Anil continues to insist that he is a simple man—teetotalling, non-smoking and vegetarian kind, no less—with very little money:

• He is living rent-free in a property owned by Mukesh-bhai. 
• The family art collection was owned by his wife.
• The luxury motor yacht was used by family members—but not by poor Anil who suffers from seasickness.
• It was Mummy Kokilaben who ran up big bills on his credit card spending at high-end shops like Harrods. 
• He can’t recall anything about a $66 million loan given by mom, or a $41 million loan from his beta. But he is very sure these were not gifts.
• And he has no share in any of the family trusts.
• In sum: “My expenses are minimal and are being borne by (my) wife and family.”

The Chinese companies aren’t buying the sob story, and issued this statement: “The banks will use the information from the cross-examination to pursue all available legal avenues to protect their rights and recover the outstanding loans owed to them.” But they will target his assets abroad rather than in India—where he is already in the hole for another Rs 12 billion in loans taken from the State Bank of India.

The bottomline: Bechara Anil is getting by with a little help from his fam—some of whom also helped along the forces of his misfortune. But as a source told Bloomberg News, it was never personal:

“According to a person familiar with Mukesh’s strategy, he saw the likelihood that Jio would crush his brother’s company as neither incentive nor deterrent. Rather, the person said, he saw Anil as simply another competitor, deserving of no special consideration as he moved into an industry he viewed as the future.”

Reading list

Bloomberg News has the juiciest read on the sibling rivalry. India Today and Business Today map Anil’s downfall. Business Insider offers an excellent timeline of Anil’s history as a corporate tycoon.