A perfect storm is perhaps the best description of what Anil Ambani is going through right now.
His debt-stricken company Reliance Communications is in the drain with the stocks depreciating a whopping 54.3 percent to Rs 5.3 on Monday and the company filing for bankruptcy.
According to ET, he is also facing a possible case by the Swedish company Ericsson over non-payment of dues.
What seems to be the final nail in the coffin is the fact that the younger Ambani’s personal worth has reduced to a mere $2.4 billion from $45 billion in 2007.
Anil Ambani split from his elder brother Mukesh in 2006. Anil took over electricity, telecom and financial services and Mukesh had control of oil and gas, petrochemicals, refining, and manufacturing.
The jewel in Anil’s crown was Reliance Communications, also known as RCom.
In 2010, RCom had a market share of more than 17 percent and by 2016, its market share was less than 10 percent. Its losses mounted and debt rocketed to a figure of Rs. 45,000 crore.
In a cruel twist of fate, RCom was forced to seek a deal with Mukesh Ambani’s Reliance Jio. But that too was blocked by the government due to RCom’s debt. Another company of his, Reliance Naval and Engineering reported a loss of about Rs 372 crore.
Even his ventures which were successful earlier, like Manmohan Shetty’s Adlabs turned loss-making.
All in all, Anil Ambani’s fortunes have not fared well while his brother’s fortunes have skyrocketed. Considering the fact that both were allotted roughly an equal slice of the Ambani empire during the split, what factors could possibly induce such a huge gap?
It can be said that the main difference between Anil and Mukesh are their strategies to do business. While Mukesh opted for slow and sustainable growth, Anil opted for a quick rise to the top.
This is evident in Mukesh’s approach towards Jio where he was in no hurry to get cash back in and the entire focus was on scaling the business up. This approach reaped rich dividends with the success that Jio enjoys currently.
Additionally, Mukesh invested in businesses that would always be essential like telecom, pharma, energy etc. His recent investment in the e-commerce space is just another one following the same trend.
On the other hand, Anil’s focus on quick money making ventures and not sustainable long-term growth is what essentially made his companies run into the ground.
One could also argue that had the brothers stayed together, the fate of the empire would have fared even better since Mukesh was a known business builder and Anil was an excellent finance man and an even better public face of the company.
As for a personal takeaway, there are three things which come to mind:
1. Focus on business which always have a demand and not fads which come and go.
2. Build. Build. Build. Solid sustainable growth is the only way out.
3. Play to your strengths and not your weaknesses.
Reach the blogger at: @tanmaymay_
Image source: Google Images
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