According to India's Ministry of Commerce, bilateral trade between China and India reached $77.7 billion in 2020, and China has replaced the United States as India's largest trading partner.
As geopolitical neighbors, China and India's economic and trade cooperation seems like a natural fit. Even in 2020 the impact of the new crown epidemic and the deterioration of Sino-Indian relations, China still exceeded the United States to become India's largest trading partner, visible in China and India in the economic ties between the strong and deep. And in the future, as the epidemic situation improves and bilateral relations warm up, China-India economic and trade relations are bound to develop further.
So we're going to write about India's big business groups and startups to get a sense of our important trading partners. And when it comes to Indian business, those who know a little bit about it may think of India's richest man, Ambani, and his Reliance Industries group.
Why Reliance first? Because it's India's largest company by market capitalization, and its influence continues to grow, while its sister company owes tens of billions of dollars to Chinese banks, in addition to the audience's delightful "family division of the family fortune" drama.
Started as a spice seller, and made a fortune in politics and business
In the 1960s, Dhruber Ambani and his cousin founded Reliance Commercials, the predecessor of Reliance Industries, in Mumbai. Its office was a mere 30 square meters and its total assets consisted of a desk, a telephone, and three chairs. Reliance started by importing polyester yarn from Yemen, an Arab country, to India, and exporting spices from India to Yemen, which was, to put it bluntly, buying and selling.
Yemen is where Ambani Sr. got his first pot of money.
In 1948, Ambani Sr. and his cousin came to the Yemeni port of Aden to work at a Shell gas station. A chance encounter, the old Ambani found that the value of the silver content of the local coins is actually higher than its face value, and then he decided to mint these coins into silver bars to earn the difference in the middle price. The Yemeni government soon realized that the number of coins on the market was rapidly decreasing and sent someone to investigate the matter. The elder Ambani's money-making scheme was foiled and he was deported to his home country. It was in Aden that the old Ambani had his first son, the future richest man in Asia - Mukesh Ambani.
With the good relationships he had built with his suppliers, Ambani Sr. managed to convince them to sell him the monopoly of spices. With this business alone, Reliance Business was able to make two times the profit from it. With Sr. Ambani's efforts, Reliance Commerce's business took off.
A friend of Ambani Sr. once described him as an affable but extremely adventurous man. Soon he was not satisfied with his current profitable business.
In 1965, Ambani Sr. parted ways with his cousin and then founded Reliance Industries. He believed that it was important to build his own brand and keep expanding its popularity through brand marketing. At that time, Reliance Industries was spending as much as $1.2 million a year on advertising.
In 1975, Reliance Industries grew profits by as much as 700 percent; in 1977, it went public and raised $1.8 million. By 1979, the company had annual sales of $190 million and had become India's largest textile producer.
The combination of politics and business is the usual business tactics of Indian big business. The old Ambani won in the treasure bet on the "Iron Lady of India" known as Indira Gandhi. In the Indian election, he gave Indira full financial support. After Indira took office, the Indian government gave Reliance Industries a series of concessions. At its peak, this company controlled 50 percent of the country's spinning capacity. In addition, the Indian government also agreed to various expansion requests of Reliance Industries, and successively obtained the power, communications, energy, infrastructure construction and other natural monopoly nature of the national livelihood industry business license.
In 1996, Reliance Industries became the first private sector company in India to be rated by an international credit rating agency.
By the beginning of the 21st century, Reliance Industries had become India's largest company. In 2004, Reliance Industries had total revenues of $17 billion, or 3.5% of India's GDP that year; its gross profit was $2.5 billion, or almost 30% of all private sector profits that year; and as many as a quarter of the country's shareholders held Reliance Industries shares. ......
Western media said the old Ambani in India to create a Mobil, General and AT&T complex, Ambani family is India's "Rockefeller family". Many Indians jokingly say that the largest political party in India is the Reliance Party.
The brothers turned against each other, and the family divided the family property drama
The second son of the old Ambani, Anil Ambani, was born in 1959, two years younger than his older brother, Mukesh Ambani. Anil has said in interviews that his father would take them on "motivational outings" where he would get a box of mangoes for completing a 10-kilometer trek, but would also be punished for behaving badly in front of guests. It is not clear whether Ambani Sr. kept the two brothers in competition from a young age, which ultimately led to the brotherly rivalry and led to the sensational "sharing of family assets" drama across India.
In 1980, Reliance Industries was awarded the license to manufacture polyester, despite stiff competition from more than 40 large companies, including the Tata Group and the Athiya Birla Group. To help build the plant, Ambani Sr. called back Mukesh, who was pursuing an MBA at Stanford University, and Anil, who graduated from Wharton in 1983, also began helping his father with the day-to-day affairs of the group.
After his first stroke in 1986, Ambani Sr. gradually handed over control of Reliance Industries to Mukesh and Anil, with him remaining chairman of the company and Mukesh and Anil as managing director and deputy managing director.
On June 24, 2002, Ambani Sr. suffered another stroke and died on July 6th. Atal Bihari Vajpayee, a three-time Prime Minister of India, reminisced: What can an ordinary Indian, inspired by the spirit of enterprise and driven by determination, achieve in his own lifetime? This country has just lost its iconic evidence.
The elder Ambani, who died suddenly, did not leave behind a single word, nor did he set up a trust for his children to distribute his property, as many Western family founders do, setting the stage for the Ambani family's later split.
Under the Indian Succession Act at the time, male offspring had the same heirship (amended in 2005 to make daughters ****same heirs). But in Indian tradition, the eldest son still has the right to inherit most of the estate. What's more, Mukesh has been involved in the rapid development of Reliance Industries almost in its entirety, and it is widely believed that there is little doubt that Mukesh will be the new helmsman.
As the eldest son, Mukesh was utilized by his father at a very early age and started working with him at the age of 16 in the business. When the textile mills that laid a solid foundation for Reliance Industries were set up from scratch, Mukesh helped out alongside Ambani Sr. Later, Mukesh set up Reliance Communications and at the age of 24 was responsible for the construction of the Patalganga Petrochemical Plant. It is safe to say that Mukesh took his father's textile factory to unimaginable heights.
Anil was no playboy either. After graduating from Wharton, he joined the group and was mainly responsible for investment and financing, and utilized his extraordinary interpersonal skills to make his way among the rich and famous, becoming the company's representative to the outside world. He has also been active in the mobile communications and power businesses, and has had considerable influence in the Group.
Since 2004, Anil has repeatedly complained to Mukesh about his exclusion from major decisions in the group, even suggesting that his elder brother was manipulating the board. He said in exasperation, "The change is sad now that we are no longer trying to consolidate the business left by our father as we used to."
On November 22, 2004, Mukesh said in an email to all the company's employees that he would take full charge of Reliance Industries' affairs and that the issue of ownership of the group had been properly resolved. Thoroughly enraged, Anil submitted a 500-page report to the board of directors, listing Mukesh's mismanagement, accusing him of falsifying accounts, and even taking him to court.
This family infighting became the most talked-about story in India's media, and the brothers' attacks on each other and their insults on TV even became the most watched program in the country.
In 2005, the brothers' conflict finally broke out in full force. The feud between the brothers even alarmed the then Finance Minister P. Chidambaram and Prime Minister Singh personally intervened, but to no avail, the entire Indian economy is also affected.
In December 2005, under the mediation of his mother Kirjina, Mukesh and Anil finalized the separation agreement. Under the agreement, Mukesh got 30 percent of Reliance's total assets, including oil and gas, petrochemicals, refining, and manufacturing; Anil got the same 30 percent, taking over power, telecom, and financial services. Kirjina retained 30% of Reliance's shares and the remaining 10% was divided equally between the elder Ambani's two daughters. The agreement also stipulated that both parties would completely erase each other's holdings in their own companies, while both would stay in their own businesses and would not compete directly with each other, even in new markets, for a period of 10 years.
After the separation, Mukesh continued to use the name Reliance Industries, while Anil loaded his share of the company into the newly formed company, named Reliance Group. It is said that this was their mother's intention to join forces to make the Reliance brand bigger and stronger.
The end of the feud also gave Indian shareholders a piece of mind. The day after the agreement was reached, the Indian stock market rose sharply, and Reliance's companies also rose to varying degrees. Many Indians predicted that the competitiveness of the Reliance Industrial Group would decline after the split, and the Ambani family would go into decline, but the reality is quite dramatic.
After the split, Reliance Industries and Reliance Group, under the leadership of Mukesh and Anil, respectively, have made great strides in their respective fields. In the 2008 Forbes list of the world's richest people, both brothers were ranked in the top 10, with Mukesh at the fifth position with $43 billion and brother Anil at the sixth position with $42 billion.
But after the financial crisis in 2009, Anil became the "fastest shrinking man", with his assets shrinking by nearly $30 billion to $12 billion.
Ten years later, his brother Mukesh's Reliance Industries has gone from strength to strength, becoming Asia's richest man. Anil, on the other hand, went bankrupt and defaulted on tens of billions of dollars in loans from Chinese banks, and almost went to jail.
Brother Asia's richest man, brother 10 billion old man
A lot has been written about Mukesh Ambani, which is simply summarized as "keep the business out of the strange", hold on to the main business of energy and petrochemicals, etc., and actively develop the new business - communication services and e-commerce. (Mukesh's telecom service provider, Jio, was founded at the end of 2015, so he kept his ten-year covenant not to compete.) As of July 9, 2021, Mukesh is the richest person in Asia with a net worth of $78.6 billion, ranking 13th on the world's richest list, according to Forbes.
Here we focus on Anil's path to failure and the old scoundrel who owes money.
In fact even after the separation of the two brothers, the fight continued. First Anil accused Mukesh of reneging on a gas supply agreement and filed a $2.12 billion defamation suit against Mukesh in 2008. That same year, Mukesh scuttled the merger of Anila's Reliance Communications with South Africa's No. 1 telecom company, MTN.
In 2009, Anil went on record as saying that Reliance Industries was insatiable in trying to sabotage the Reliance Group's business in every way possible, even with unseemly tricks.
And after 2016, Reliance Jio, the telecom operator founded by Mukesh, went on a price war, directly forcing more than a dozen telecom operators, including Anil's Reliance Communications, out of the market. In December 2017, Reliance Communications failed to sell to Jio and went on the road to bankruptcy.
The failure of Reliance Communications, one of the centrepieces of the Reliance Group, is just a glimpse of the collapse of Anil's empire. In fact, the Reliance Group's fall started accelerating from the beginning of the financial crisis in 2009. In the past, riding the wave of India's economic growth, the Reliance Group took advantage of the easy credit environment to raise huge loans for its huge asset-heavy businesses. And when the Indian economy slowed down, Reliance faced cash flow drying up in several of its investments.
On May 22, 2020, the Commercial Division of the High Court in London ruled that Anil Ambani should pay $716 million in arrears to three banks - the Industrial and Commercial Bank of China, the Export-Import Bank of China, and the China Development Bank - within 21 days, and also ruled that ￡750,000 in court costs should be borne by the losing party, Anil? Ambani to bear.
But Anil argued in court that the outstanding loans belonged to the Reliance Group, and that he himself had not signed a personal guarantee, and that he was now broke without a penny. Representatives of the Chinese bank's lawyers said that Mr. Anil led a lavish life, not only did he buy a yacht, but he also spent a huge amount of money on a small plane and a number of luxury cars.
Although Mr. Anil is personally bankrupt, the Reliance Group, which he heads, has six listed companies: Reliance Infrastructure, Reliance Power, Reliance Capital, Reliance Naval Engineering (yes, Reliance is the first private company in India to have the qualification to build warships), Reliance Telecom, and Reliance Healthcare. Anil's refusal to pay back the money over the years can be considered very egregious.
Why does Anil owe so much money to Chinese banks? It started in 2010, when Reliance Power, a subsidiary of the Reliance Group, ordered tens of billions of dollars worth of power equipment from Shanghai Electric Group, one of the largest commercial contracts signed between India and China at the time. India's rapidly growing economy at the time seemed like a good place for overseas business expansion, so several Chinese banks provided about $1 billion in financing for the deal.
In December 2010, Reliance received $1.93 billion from CDB, but much of that was used to pay off short-term debt, and in 2012, Reliance received another $1.3 billion in loans from CDB, Eximbank, and ICBC, which was also used to pay off maturing dollar-denominated convertible bonds.
This is, in fact, borrowing new money to repay old debts. In fact, Reliance Communications was already in a less optimistic situation. Public data shows that in 2010, Reliance Communications' net debt was nearly $7 billion, and its net debt had reached 4.4 times the earnings before interest, taxes, depreciation and amortization (EBITDA).
In June 2019, Reliance Telecom released a list of post-bankruptcy creditors, of which the debt owed to Chinese banks is as high as about CNY15 billion. According to the Reliance Telecom insolvency liquidation program, three Chinese banks lost about Rs 60 billion (about $6 billion).
And before that, in May 2018, Anil was embroiled in another legal dispute and even came close to going to jail. At that time, the Supreme Court of India said that Anil would face three months in jail if he did not pay the Rs 5.71 billion owed to Ericsson's Indian unit on time. Then, brother Mukesh reached out and helped his brother pay off the debt. Anil released a statement saying he was thankful to his brother and sister-in-law for their timely help, proving the importance of a strong family.
After nearly two decades of tension, the two Ambani brothers seem to have eased their relationship. The Indian media has even speculated that the stormy Reliance Group may be acquired by Reliance Industries, bringing the two groups back into one.
It is a little known fact that Anil's Reliance Entertainment and Spielberg's DreamWorks have worked together for many years. The two sides have produced many critically acclaimed movies together, including The Help, Bridge of Spies, and Lincoln. I wonder if it ever occurred to Anil that his brother Mukesh might be the "Lincoln" who ended the Civil War when he signed the separation agreement.