Web Desk (November 23, 2017): Mukesh Ambani’s Reliance Industries Ltd sold dollar bonds at the cheapest rate by a non-financial Indian issuer this week. That came days after his younger brother Anil Ambani’s Reliance Communications Ltd defaulted on its bond payments.
It somewhat sums up how the fortunes of the billionaire siblings have diverged since their split in 2006.
As part of the family settlement, the older Ambani got oil refining, exploration and petrochemicals businesses housed under RIL, the owner of the world’s largest refinery in Jamnagar, Gujarat. The faster-growing financial services, infrastructure and telecom businesses went to the younger brother.
More than a decade and a gas dispute later, Mukesh Ambani now also has a large retail business and a data-driven wireless carrier that has triggered a tariff war. Anil Ambani’s businesses haven’t fared that well. Reliance Communications, under pressure due to piling debt and falling profitability, has been among the worst hit.
BloombergQuint brings a snapshot of how the Ambani brothers have fared since the split.
Debt Comparison
Reliance Industries’ debt more than doubled to Rs 1,96,601 crore in the last five years as it invested in its telecom arm – Reliance Jio Infocomm Ltd.
Anil Ambani-led businesses’ debt rose at an unsustainable pace. Reliance Power Ltd’s total debt nearly doubled in the last five years. It also rose substantially for Reliance Infrastructure Ltd and Reliance Communications.
Mukesh Ambani Outperforms
Mukesh Ambani’s flagship RIL has outperformed his younger brothers’ businesses on profitability and returns since the split. Its revenue and profit rose at an annualised rate of 11.2 percent and 9.5 percent, respectively.
Anil Ambani’s group companies have lagged. While Reliance Capital Ltd’s revenue rose at a higher annualised rate of 23.3 percent since the split, profits rose at a compounded annual rate of 4.4 percent.
Reliance Power was excluded since it wasn’t part of the combined group and was set up by the younger Ambani after the split.
Market Value Gap Widens
Since 2006, the market capitalisation of Reliance Industries rose six times to nearly Rs 6 lakh crore.
It includes the value of recently listed Reliance Nippon Asset Management and Reliance Home Finance Ltd.
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