Riches to Rags

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How often do we come across people who had to fight for survival every day but eventually gain everything they desire with sheer hard work and dedication. But how often we hear stories where someone having all the resources at their arm’s length weren’t able to sustain it and now fight for survival. The latter seems strange because it does not fit into the common persona that one needs resources to be successful. It’s not entirely incorrect but just having resources with you does not mean you can relax and let the resources work for you. 

1- VIJAYPAT SINGHANIA : 

Vijaypat Singhania, the owner of a billion-dollar Indian textile empire is now in a situation where he is struggling to make the ends meet and one of the people to be blamed for his hand-to-mouth existence is none other than his son, Gautam. 

The problem started when he handed over the business to his son in the year 2015 and since then the father-son relationship has drastically disintegrated. Vijay handed over his shares worth 1000 crores to his only son Gautam. This situation didn’t turn out to be the way he had imagined and just two years later, he said in an interview, “In the 79 years of my life, I’d never thought I would have to take a family dispute to court after giving everything I had and that I wouldn’t even have a roof over my head.” Vijay accused his son of cheating him out of an apartment which was promised to him in an agreement in 2007 to settle the family dispute. The apartment was in the 36 storied JK House in Malabar Hills. The price agreed was far below the market rates but Gautam advised the Raymond board against “selling” a valuable company asset. He also charges his son for unceremoniously kicking him out of the company offices, a company that he nurtured and took to even greater heights than his ancestors. The tycoon now regrets his decision. Sometimes you get mesmerised when you inherit your ancestral wealth and especially an empire like Raymond that has dominated the textile business in this country. 

2- ANIL AMBANI :

We all have heard of the patriarch of the Reliance group, Dhirubhai Ambani. One of the biggest business tycoons this country has ever seen, he was and is an inspiration for many. He set up a multi-billion dollar business and that too from scratch. He passed away on 6th June 2002 leaving behind his legacy and his business without leaving a will for it. Anil Ambani took over the telecom, electricity, and the part of the financial services of the venture, and a drastic rise was seen in the company wealth and it rose to around 1.9 billion dollars.

Problems started knocking on his doors in the year 2007-08 which was an outcome of some wrong decisions. A downfall of 72% was seen by the company and from being one of the biggest gainers of the year 2007, he was amongst the biggest losers in 2008 (according to Forbes ). The company has been dependent on debts as a source of capital since then and that hasn’t helped them at all and they have been facing this downfall since then. Some controversial deals like the 2G spectrum scam which forced the company to hold certain projects which led to a loss of around 2 lakh crores. As of 2018, the company is under a debt of Rs. 1.72 lakh crores as a result of which Anil announced that they would not be moving further in the telecom sector business. He was also forced to sell certain assets of Reliance power which were worth thousands of crores due to lack of availability of raw material and financial crisis. The sixth richest man in the world with a net worth of 42 billion dollars was crushed to 144.60 crores (20.4 million dollars) as of 2019. Anil Ambani inherited the biggest business empire in this country but he is not able to efficiently handle the riches. 

3- The Ranbaxy Brothers :

Parvinder Singh wrested control of Ranbaxy and one of his biggest milestones came in the year 1992 when his company signed a marketing agreement with the US drugmaker Eli lily. The sales jewel Ranbaxy to Daiichi Sankyo of Japan in 2008 for a whopping 4.6 billion dollars and the Singh brothers acquired the capital needed to fuel their ambitions, but a decade later, no one has any idea where the amount went.

The United States food and drug administration banned any kind of import of two of the generic drugmaker’s Indian plants. The department of justice launched a probe that eventually resulted in a guilty plea by Ranbaxy and a 500 million dollar settlement for selling adulterated drugs. The conditions for the Singh brothers even deteriorated when Delhi high court upheld an international arbitration order and directed them to pay back 3500 crores to the Daiichi Sankyo of Japan for misleading the information during the deal.

4- Vijay Mallya:

The story of the flamboyant son of Vittal Mallya is not unknown. Vijay Mallya inherited his father’s empire after his sudden death. He embarked on a career that transformed the UB group which went on to became an international conglomerate and Mallya acquired a hold on about 50% of the liquor market of the country and also became one of the biggest spirits producer. His flamboyant nature and lavish lifestyle are never hidden which earned him the title of The King of Good times. 

It was 2005, the year when he launched the Kingfisher airlines and was billed as a five-star hotel in the air and was based on a low-cost business model. It was like a change in the air travels for India which had the best-in-class in-flight services but this did not end well for them. Despite having some initial profits, the company started to face a drastic loss when the world was hit with a period of recession in the year 2007-08. He was aware of this situation but he went on adding new services and aircraft in his airlines and kept on signing deals and to do that he started visiting the banks for loans. 17 Indian banks together claimed that he owned more than 1.15 billion pounds in principal and interest and was never intended on repaying it. The company was severely hit and the creditors demanded repayment and thousands of Kingfisher employees demanded their salaries. He fled to London in March 2016 on the eve of an arrest warrant issued for him for money laundering and fraud.

One of the most common traits that can be seen in all the above cases is a series of bad decisions. Relying on loans as a source of capital instead of focusing on problems and finding solutions proved to be fatal for these people and their companies. Having a wealthy ancestral lineage and a ready-made business empire is a good thing but what’s more important is having the right mindset and better ideas to run the business. Just sitting around and waiting for the situation to be better won’t help but increase the problems. 

Reference/s :

https://www.livemint.com/Companies/qtfOwrskdEFz1TTfU7Ci6K/How-the-Singh-brothers-squandered-their-business-legacy.html

https://www.deccanherald.com/business/business-news/anil-ambanis-tale-of-riches-to-rags-724063.html

https://www.scribd.com/document/453149704/Siddharth-vs-Vijay-Malya-incomplete-docx

https://www.globalvillagespace.com/indian-father-and-son-battle-for-billion-dollar-empire/