From heading a conglomerate that had a market cap bigger than the Tata Group in 2007 and being the sixth richest man globally, to having to declare himself bankrupt earlier than a UK courtroom in 2019, Anil Ambani’s fortunes have mirrored that of his flagship monetary providers agency.
The troubles started with the worldwide monetary disaster in 2008, which strained liquidity for monetary providers corporations. As a substitute of consolidating, ADAG Group continued its enlargement, making huge ticket investments in a three way partnership with Steven Spielberg’s Dreamworks. There was additionally a string of acquisitions together with World Cloud Xchange, a worldwide online game maker which was renamed Zapak, UTV Tv, Pipavav Shipyard and MTS telecom.
The group’s diversification into infrastructure, significantly Reliance Energy, defence and media took its toll on funds because the entry was on the fallacious finish of the enterprise cycle and made issues worse.
Reliance Communications (Rcom), which was anticipated to be a money cow, additionally took a success due to extra leverage. Additionally, the truth that Rcom was operating on code division a number of entry (CDMA) know-how, which was shut down as business shifted to GSM, additionally impacted enterprise.
Whereas different group corporations confronted their very own challenges, on the core of Reliance Capital’s downfall had been governance points, significantly related-party transactions. Reliance Capital’s two predominant lending subsidiaries, Reliance Dwelling Finance and Reliance Industrial Finance, went into default. The first purpose for the default was that these two corporations had prolonged loans to associated events, which subsequently defaulted. Sebi’s newest actions in opposition to Ambani and different senior officers of the ADAG group pertain to those transactions performed by Reliance Dwelling Finance.
The ultimate nail on the coffin for the monetary providers agency was the tightening of liquidity after the dual failures of IL&FS and DHFL. Due to governance points, Reliance Capital’s auditor PWC refused to signal the FY19 steadiness sheet resulting in the Reserve Financial institution of India lastly superseding the agency’s board initiating chapter proceedings in November 2021.
Ambani inherited the monetary providers, energy and telecom companies after his father and founding father of Reliance Industries Dhirubhai Ambani’s demise in 2002.
