Here’s how Mukesh Ambani lost $5.8 billion in a day
Mukesh Ambanilost about $5.8 billion as RIL stock crashed this week.
- This comes after crude oil prices fell more than 31% fearing coronavirus spread that may lead to a global recession.
- Not only did
Ambanilost his crown, his Reliance industry also lost the title of being the company with “highest market capitalisation.”
On Monday, RIL recorded its highest fall at 13% since October 2008 and its market cap fell to ₹7 lakh crore, losing its tag as India’s most valued company to TCS. As a result, Ambani lost $5.8 billion of his personal wealth on March 9, according to the Bloomberg Billionaire Index.
While this index never placed Ambani amongst the top ten richest men like Hurun and Forbes, it said that Ambani also lost the richest Asian man tag to internet billionaire Jack Ma. As per this index, Ambani is the 19th richest man with $42.3 billion.
If he falls below Jack Ma, this means Ambani might have lost his place in other rich lists too which do not give out real-time data. Until two weeks back, Hurun calculated his riches at $67 billion as the ninth richest man along with Steve Ballmer, the former Microsoft head.
As per Hurun list, if Ambani’s place would have fallen below Jack Ma whose rank is at 21, then Ambani could have lost at least 12 ranks thanks to the stock fall. As Ambani controls almost 42% of Reliance Industries, his coffers are linked to the stock performance.
A crude awakening
Indian stock markets have lost at least ₹6.5 lakh crore in the last few weeks as fears of a Coronavirus-led slowdown are fast spreading. The cases in India also doubled in the last one week to 62, making businesses and people weary.
Ambani however has bigger problems. While his telecom and retail businesses are going strong, his oil refining business is directly linked to the price of crude oil. As Saudi Arabia and Russia wage a price war, the commodity will wreak havoc with its complicated calculations as an offshore refiner -- keeping investors on the edge. As much as three-fifths of RIL’s operating profits come from oil and petrochemicals.
The deal in question
RIL’s fortunes are also tethered to the outcome of oil war and how well Saudi is successful in ‘stabilizing’ them. Investors fear Reliance Industries might not be able to close its $15 billion deal with Saudi state-owned company Saudi Aramco it announced in August last year.
This deal is key to cutting down the massive $21 billion debt that the group has run up, Ambani has promised that he will turn RIL into a zero net debt company by 2021.
However, even the Narendra Modi-led BJP government is throwing spokes in the wheel.
The government filed a petition that sought a halt on the sale of stake, saying, RIL owed them money over its stake in Panna Mukta Tapti fields. Last month, Ambani won the case. That however does not change the fact that Ambani’s throne is not as stable as it was, a few months back.