Why Mukesh Ambani is richer than Anil Ambani - Everything you need to know

Mukesh Ambani, left, and Anil Ambani, right, in 2015.Bloomberg

The proud stakeholders of one of the richest business dynasties of India, Mukesh Ambani and Anil Ambani are among the top billionaires in India. The independent fortune building stories of these two brothers began 16 years back when their father Dhirubhai Ambani passed away without making any will. Before his death, the legendary industrialist had built a vast empire comprising of a wide portfolio of businesses. The feud between the two brothers on inheriting the father’s legacy was finally sorted out by the intervention of Kokilaben, their mother. Following the settlement, Mukesh Ambani had got the full control over the oil refining and petrochemicals business of their father while the power generation and financial services of Dhirubhai Ambani went to Anil Ambani. Thus, the independent journeys of the two brothers started.

Mukesh Amabni steers his growth forward

Mukesh had also taken over the telecom unit and went for an aggressive expansion by bundling phones and network connections at unbelievably lowest prices. During those times, the wireless segment gave Anil Ambani some encouraging opportunities. When the crude oil prices went up to $60 a barrel in 2005, the margins of the refiner came down drastically. Till 2010, a non-compete clause kept Mukesh from attempting anything in the telecom arena. Once it elapsed, Mukesh quickly reacted by pumping in over Rs. 2.5 trillion to build a high-speed 4G network over the next seven years for the Reliance Jio Infocomm Limited. Jio proved to be the biggest bet for Mukesh Ambani. By September 2016, Reliance Jio had 252.3 million users and started making a huge profit. The strategy embarked on by Mukesh by stepping in beyond the energy sector changed the game in his favor. The oil and petrochemical business inherited from his father was still accounting for his company’s 90% profit. The cash flowing from this segment gave him a large pool of capital to invest in other businesses.

Anil Ambani faces bad luck and misfortune

Meanwhile, Anil was seen selling his assets in order to quell the concerns of the investors about the debts suffered by his company. This led to the decline of his shares. Though Anil Ambani had also invested a huge sum of money to expand his portfolio, he did not have a cash-generating pump like the oil and refinery business that his brother had. Hence many of his companies were entangled with increasing debts.

Due to a $210 billion stressed debt forced Anil Ambani to sell his assets. The worst decline was seen by the business Reliance Naval and Engineering Limited which lost 75%. Amidst the cautions by the Auditors regarding the firm’s ability to survive, Anil had to confront lawsuits to send Reliance Naval into insolvency. The other groups also were facing similar such difficulties. Also, Anil’s Reliance Defense Limited came under scrutiny due to the 2016 negotiations between France and India for the Rafale fighter jets. Anil’s Reliance Infrastructure Limited and Reliance Power limited were also facing turmoil due to defaulting payments. The biggest challenge came from his brother’s Reliance Jio and lead to the collapsing of Anil’s wireless assets and mobile phone business.

In this way, a huge gap of $41 billion divided the two Ambani brothers and made Mukesh Ambani several times richer than Anil Ambani within a matter of few years.
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