Back in 2006, Anil Ambani was the third richest Indian as per Forbes with a net worth of $14.8 billion. His biggest asset was a 65% stake in telecom venture Reliance Communications (RCom), his flagship company. Come 2019, RCom filed for bankruptcy and Ambani's personal net worth has reportedly slumped 26% since the beginning of this year to $1.2 billion.
According to Bloomberg data, Ambani, the Chairman of the Reliance Group, has lost close to $408 million of personal wealth this year till February 19. Then came yesterday's bloodbath when shares of Reliance Group companies ended in negative terrain after the Supreme Court held Ambani guilty of contempt of court in a petition filed by Ericsson India against him over non-payment of dues worth over Rs 550 crore.
The shares of RCom declined as much as 9.46% while stocks of Reliance Capital, Reliance Infrastructure and Reliance Power closed up to 4.26% lower.
In addition, the top court has directed Ambani, and two directors of his telecom arm, to pay Rs 1 crore fine for failing to meet past deadlines fixed by the court in this case. If Ambani does not clear Ericsson's dues within four weeks, he faces a jail term of three months. This state of affairs has RCom's worried about recovering their money.
The company reportedly owes a debt of about Rs 46,000 crore to 39 lenders. Citing analysts, The Business Standard reported that Reliance Group's stocks could remain under pressure in the short to medium term and hence investors are suggested to steer clear of them till there is clarity on corporate developments and business plans.
"This surely is a setback for the promoter, who will now have to pay up," G Chokkalingam, Managing Director and Founder, Equinomics Research, told the daily. "Over the past year, the markets have severely punished Reliance Nippon Life Insurance, Reliance Infrastructure and Reliance Capital. Among the ADA group stocks, these three should stage a recovery.
The reaction on Wednesday after the court verdict makes valuations of these three even more attractive." While Ambani's fortunes been eroding steadily over the past decade on account of a failing businesses - his media venture collapsed in 2014 and Reliance Natural Resources (RNRL) vanished from public domain in 2006 - matters actually started snowballing only this month.
Badly affected by Jio's arrival - ironically after the Ambani siblings scrapped their existing non-compete agreements in a move towards reconciliation - RCom's market cap had declined by over 90% since its BSE debut. Hence, on February 1, the company opted for insolvency resolution. This announcement triggered off panic selling in other Anil Ambani led companies and in the bargain the Reliance Group's market cap dived nearly 55%, losing Rs 13,000 crore in market cap, over just four days in the first half of the month.
That's the story of how Ambani lost a bulk of his fortune. Hard to imagine that in 2006, he had stood just one rank and $3.7 billion lower than older brother Mukesh on the Forbes India ranking.