Today, a Reliance company is going bankrupt—Reliance Communication or RCom, which is part of the business of Dhirubhai's younger son Anil Ambani who broke away from elder brother, Mukesh Ambani, in 2006.
The National Company Law Tribunal has admitted three insolvency petitions filed against RCom and its subsidiaries by telecom gear maker Ericsson to recover Rs 1,150 crore in dues. Crisis-ridden for long, RCom was aiming to sell its towers, fibre, spectrum and nodes to elder brother's company Reliance Jio for about Rs 18,000 crore. Now it cannot sell any of its assets. The brand 'Reliance' had come to be so big that few could imagine a Reliance company being chased by creditors and going bankrupt, even though the business of Anil Ambani group has not been as big and promising as that of Mukesh Ambani.
The fall of RCom is part of the long decline at the Reliance Group. Personal fortunes of Reliance Group chairman Anil Ambani too have shrunk ever since he and Mukesh Ambani split the family business in 2006.
In 2007, Anil Ambani had a net worth of $45 billion, according to the Forbes Rich List. His biggest asset was a 66% stake in telecom venture Reliance Communications. Elder brother Mukesh had a net worth of $49 billion. In the 2017 Forbes Rich List, Anil's net worth had shrunk to just $3.15 billion while Mukesh's was $38 billion.
The group companies too reflected this trend. The 10-year compounded annual growth rates (CAGRs) of Mukesh's Reliance Industries have been 11.2 (sales), 9.4% (profit) and 17.8% (returns), according to a Bloomberg report. The same rates for Anil's Reliance Group have been 9.4%, -12.6% and -1.7%.
The gap in market value of both the groups too has widened since 2006. The market capitalisation of Reliance Industries rose six times to nearly Rs 6 lakh crore, while the combined market value of Anil's firms—Reliance Capital, Reliance Infrastructure and Reliance Communications—declined about 17% to 47,017 crore. This market cap also includes the value of Reliance Nippon Asset Management and Reliance Home Finance Ltd both of which listed last year.
Post-split market cap of Mukesh's Reliance Industries rose from Rs 96,668 crore to 5,90,500 crore. Combined market cap of Anil's companies declined from Rs 56,600 crore to Rs 47,000 crore.