Industrialist Anil Ambani's equity wealth has seen steep value erosion as it crashed by 73.43 per cent in the last six months to just Rs 970.10 crore ($ 136.6 million) on Wednesday, as against Rs 3,651 crore on June 11. At the peak of his fortunes in 2008, Ambani was ranked the sixth richest man in the world with a wealth of $42 billion. It is thus hard to believe that the value of Ambani's equity-- after excluding pledged shares--stands at just Rs 144.60 crore ($ 20.4 million). In 2018-19, some of India Inc's most well paid CEOs such as AM Naik (chairman, L&T) and CP Gurnani (MD, Tech Mahindra) took home salary and benefits totaling that amount.
The aggregate market value of Anil Ambani's Reliance Group companies crashed to a low of Rs 2,361 crore, compared to the peak of over Rs 4 lakh crore in 2008. MCap of the five listed group companies was at around Rs 7,539 crore as on June 11. Value of the shares of promoters and promoter companies has been counted as Ambani's equity wealth. On June 11, BusinessToday.in reported that Anil Ambani had crashed out of the billionaire club as his equity wealth stood at Rs 3,651 crore ($523 million) at that time.
At present, the group has five companies listed on stock exchanges--Reliance Infrastructure, Reliance Power, Reliance Capital, Reliance Naval and Engineering and Reliance Home Finance--without considering the bankrupt Reliance Communications. RCom's MCap was also considered for calculating the wealth in June. Among the group's listed entities, no company has market cap exceeding Rs 1,000 crore now. RPower is the most valued company in the fold with a market cap of Rs 943 crore. RInfra is second at Rs 584 crore, followed by RNaval at Rs 413 crore.
Since most of the shares Ambani holds in these companies have been pledged, the group is struggling to retain them within the fold. The entire promoter stake in RNaval has been pledged to the banks. In RInfra, 98.11 per cent of the promoter stake has been pledged, while 96.39 per cent stake in RCap has been pledged by the promoter. Also, 82.53 per cent stake in RPower has been pledged, according to the September-end quarterly filings.
"The group companies are highly indebted and making heavy losses and most of them are struggling to meet repayment commitments," says a market analyst with a Mumbai-based brokerage. Ambani said in the last annual general meeting (AGMs) of RInfra that the company would cut debt to become asset-light.
Facing headwinds, RCap, which had credit as well as insurance and mutual fund businesses, has decided to shut its two lending arms--Reliance Home Finance and Reliance Commercial Finance-by December. RCap had sold its mutual fund business to its partner Nippon India to partly repay its debts. The company will be left with only insurance business after departing from lending business.
RCom is now at the National Company Law Tribunal (NCLT) and waiting for the new promoters to acquire it. In November, Ambani quit from the post of chairman of RCom and the move courted controversy as the lenders wanted him to cooperate for the resolution process.
The group has been doing well in infrastructure and power businesses. But RPower made a loss of Rs 2,952 crore in the last financial year, while RInfra posted a loss of Rs 2,323 crore. RNaval had a loss of nearly Rs 11,000 crore in 2018-19.